5940394 Elections, Board of - Receipt and Intent to Review Initiative Measure - Limited Gaming Initiative of 2016

BOARD OF ELECTIONS

NOTICE OF PUBLIC HEARING

RECEIPT AND INTENT TO REVIEW INITIATIVE MEASURE

The Board of Elections shall consider in a public hearing whether the proposed measure “Limited Gaming Initiative of 2016” is a proper subject matter for initiative, at the Board’s Meeting on Wednesday, May 4, 2016 at 10:30 a.m., One Judiciary Square, 441 4^th Street, N.W., Suite 280, Washington DC.

The Board requests that written memoranda be submitted for the record no later than 4:00 p.m., Thursday, April 28, 2016 to the Board of Elections, General Counsel’s Office, One Judiciary Square, 441 4^th Street, N.W., Suite 270, Washington, D.C. 20001.

Each individual or representative of an organization who wishes to present testimony at the public hearing is requested to furnish his or her name, address, telephone number and name of the organization represented (if any) by calling the General Counsel’s office at 727-2194 no later than Friday, April 29, 2016 at 4:00 p.m.

The Short Title, Summary Statement and Legislative Text of the proposed initiative read as follows:

SHORT TITLE

"LIMITED GAMING INITIATIVE OF 2016"

SUMMARY STATEMENT

This initiative, if passed, will:
- Expand the D.C. lottery by allowing for profit games such as poker and “21”, and any other games that do not involve gambling devices prohibited by the Johnson Act (“Limited Gaming”);
- Establish the initial Limited Gaming facility in Anacostia;
- Limit the temporary initial license to operate the initial Limited Gaming facility to an applicant possessing a more than fifty percent interest in the Anacostia site; and
- Create a procedure to permit additional Limited Gaming facilities to be established in the District of Columbia.
LEGISLATIVE TEXT

To amend the Law to Legalize Lotteries, Daily Numbers Games, and Bingo and Raffles for Charitable Purposes in the District of Columbia by adding new sections authorizing the licensing of Limited Gaming and recommending that revenues accruing to the District from the operation of Limited Gaming be distributed equally to a District of Columbia Public Schools Fund, the District of Columbia Housing Production Trust Fund, and the General Fund of the District of Columbia.

BE IT ENACTED BY THE ELECTORS OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "Limited Gaming Initiative Act of 2016."

Sec. 2. Findings and Purposes.

The people of the District of Columbia recognize and declare as follows:

(1) The District should create more jobs to address unemployment and to generate additional revenue to address areas of special concern to the residents of the District of Columbia. These areas of special concern are (A) programs to benefit the District of Columbia public schools by providing for the improvement of the educational content, physical condition, vocational programs, security, and general well-being of the District's schools, and (B) programs to aid District residents to obtain affordable housing. The District is strongly urged to increase funding for and create additional special purpose funds to support programs in these areas;

(2) The District would be best served if the needed revenue were generated by a new, self-sustaining program rather than through the imposition of additional taxes or fees on the incomes of District residents and District businesses;

(3) The District of Columbia Lottery has, since its inception, been a positive example of such a self-sustaining revenue generation program by providing needed revenues for the District through sales and fees on licensed lottery transactions;

(4) Based on this example, the people of the District of Columbia have chosen to enact the “Limited Gaming Initiative Act of 2016” to create a new source of lottery revenue by expanding the permissible forms of playing the District of Columbia Lottery to include the playing of Limited Gaming, as defined below, including but not limited to poker, “21” and any other games, including games of chance, not involving gambling devices prohibited by the Johnson Act, 15 U.S.C. § 1171 et seq.;

(5) In order to regulate, control, and limit the operation of Limited Gaming, and as set forth herein, (A) only entities licensed by the District of Columbia Lottery and Charitable Games Board (the "Board," as defined below) will operate facilities at which Limited Gaming is conducted, (B) such operations may only occur in facilities specifically designated for Limited Gaming, (C) the location of the initial Limited Gaming Facility is specifically restricted by this Law, (D) the Board will have licensing authority to allow additional Limited Gaming, and (E) any such expansion may occur only after such expansion is proposed by the Board and approved by the Council of the District of Columbia;

(6) In order to ensure that the operation of Limited Gaming provides ample revenues to accomplish the purposes of this Law, it is the strong recommendation of the people of the District of Columbia that a usage fee be charged against each licensed operator of Limited Gaming in an amount of 20% of the Net Limited Gaming Proceeds;

(7) In order to ensure that the majority of the revenues produced from Limited Gaming operations are used for the pressing needs identified by the people of the District in this Law, it is the strong recommendation of the people of the District of Columbia that there be established a "District of Columbia Public Schools Fund" and a supplemental funding for the District of Columbia Housing Production Trust Fund." It is the strong recommendation of the people of the District of Columbia that any revenue from Limited Gaming usage fees shall be allocated in the following manner: 33 1/3% percent to a District of Columbia Public Schools Fund, 33 1/3% percent to the District Housing Production Trust Fund; and 33 1/3% percent to the General Fund of the District of Columbia as general purpose revenue funds.

Sec. 3. Statement of law.

Title 22, Chapter 17 of the District of Columbia Code Shall Be Amended By Adding The Following Subchapter III. Legalized Table Gaming:

§ 22-1719. DEFINITIONS APPLICABLE TO THIS SUBCHAPTER

The following definitions apply to all provisions in this Title.

(1) "Board" shall mean the District of Columbia Lottery and Charitable Games Control Board, created pursuant to D.C. Official Code § 3-1301 or, pursuant to Section 207 of Public Law 104-8 and Section 2302 of Public Law 108-11, the Chief Financial Officer of the District of Columbia.

(2) "Designated Limited Gaming Site" shall mean a site, including the Initial Designated Limited Gaming Site, authorized for the conduct of Limited Gaming Operations by a Licensee under a License issued by the Board pursuant to the "Limited Gaming Initiative Act of 2016."

(3) "Eligible Applicant" means a Person who meets the requirements imposed in this chapter for obtaining a License to operate Limited Gaming within the District of Columbia.

(4) “Entity” means a Person that is not an individual.

(5) "Executive Director" shall mean the Executive Director of the Board, as appointed pursuant to D.C. Official Code § 3-1303.

(6) "Initial Designated Limited Gaming Site" shall mean an approximately 9,000 square foot area consisting of lots 5, 812, and 813 in square 5770 of Ward Eight that is targeted for redevelopment by the Anacostia Economic Development Corporation, and/or any parcels brought under common control with any Licensee under the Temporary Initial License or Initial License issued by the Board pursuant to the "Limited Gaming Initiative Act of 2016".

(7) "Initial License" means the License issued to an Eligible Applicant by the Board pursuant to section 5 of this Title.

(8) "License" means the authorization issued to an Eligible Applicant by the Board pursuant to the provisions of the "Limited Gaming Initiative Act of 2016" to: (A) operate Limited Gaming and conduct Limited Gaming Operations at a Designated Limited Gaming Site.

(9) "Licensee" means an Eligible Applicant issued a License by the Board in accordance with the "Limited Gaming Initiative Act of 2016".

(10) "Maximum Permissible Designated Limited Gaming Sites" shall mean the maximum number of Designated Limited Gaming Sites for which the Board may issue a License. The Maximum Permissible Designated Limited Gaming Sites shall be set in accordance with section 6 of this Title.

(11) "Net Limited Gaming Proceeds" means the total of all cash and property received by a Licensee from Limited Gaming Operations minus the amount of the Payout.

(12) "Payout" means premiums, merchandise, prizes, promotional complementaries or anything of value provided via a voucher and/or chip, which the player of Limited Gaming may be entitled to receive as a result of the playing of the Limited Gaming.

(13) "Permit" means any authorization (other than a License) issued to a Manufacturer, supplier, Service Technician or any person (other than a Licensee) by the Board under the provisions of the "Limited Gaming Act of 2016" to participate in Limited Gaming Operations and/or the provision, repair, maintenance and servicing of Limited Gaming and related equipment and supplies.

(14) "Permittee" means a Person (other than a Licensee) issued a Permit by the Board under the provisions of the "Limited Gaming Initiative Act of 2016".

(15) "Person" means an individual, partnership, limited liability company, corporation or any other legal entity or association.

(16) "Principal" means any Person who (A) holds or controls directly or indirectly ten (10%) percent or more ownership or economic interest in an applicant for, or holder of a License or Permit, or (B) receives ten (10%) percent or more revenue interest in the form of a commission, finder's fee, loan fee or interest, or any other compensation arising out of or relating to Limited Gaming Operations; provided, however, that no bank, regulated mutual fund, insurance company, or other regulated financial institution ("Financial Institution") shall be deemed a Principal under the "Limited Gaming Initiative Act of 2016" so long as (A) the Financial Institution holds its interests in an applicant for, or holder of, a License or Permit for investment purposes only, and (B) the Financial Institution does not own a majority of the equity of the applicant for, or holder of, a License or Permit.

(17) "Temporary Initial License" shall mean a License issued pursuant to section 4 of this Title.

(18) "Limited Gaming" means poker or “21” or any other game, including any game of chance, that is not made illegal by the Johnson Act, 15 U.S.C. § 1171 et seq., to be operated for profit in the District of Columbia.

(19) "Limited Gaming Operations" means the use, operation, offering, or conduct of Limited Gaming by a Licensee in accordance with the provisions of the "Limited Gaming Initiative Act of 2016."

§ 22-1720 LEGALIZATION OF LIMITED GAMING

Nothing in Subchapter I of this Chapter shall be construed to prohibit the operation of or participation in Limited Gaming Operations as defined by this Chapter.

§ 22-1721 MANAGEMENT OF LIMITED GAMING FEE REVENUE.

All funds, fees, fines, or other revenues collected by the Board with respect to the licensing, operation, administration, or regulation of Limited Gaming, including but not limited to any Limited Gaming usage fees (the "Limited Gaming Fee Revenue") shall be accounted for and managed in accordance with the applicable laws and regulations of the District of Columbia.

§ 22-1722 PROHIBITION ON UNAUTHORIZED ACTIVITIES WITH RESPECT TO LIMITED GAMING

(a) No Person shall conduct Limited Gaming Operations unless and until such Person shall be issued a License or Permit by the Board, including a Temporary Initial License or Initial License, to engage in such activity, under the provisions of the "Limited Gaming Initiative Act of 2016," or be exempt from the requirement to obtain a License or Permit as provided in the "Limited Gaming Initiative Act of 2016."

(b) Notwithstanding subsection (a) of this section, any natural person who is an employee or agent of an entity that has obtained a License or Permit may, so long as he or she is acting within the scope of his or her employment or agency, conduct Limited Gaming Operations to the extent authorized in any License or Permit issued to said entity.

§ 22-1723 LICENSING FOR OPERATION OF LIMITED GAMING AND CONDUCT OF LIMITED GAMING OPERATIONS; TEMPORARY INITIAL LICENSE

(a) Beginning forty-five (45) days following the effective date of this section, and no earlier, the Board shall begin accepting applications for the Temporary Initial License to conduct Limited Gaming Operations.

(b) Any Person applying for the Temporary Initial License under subsection (a) of this section shall complete and submit the form application, which is, as of the effective date of this section, promulgated by the Board as the application for obtaining a license to become a lottery sales agent pursuant to D.C. Official Code § 3-1315. In addition, any Person applying for the Temporary Initial License under subsection (a) of this section shall submit the following:

(1) A sworn affidavit that the Person and all of its Principals are, at the time of application, not disqualified from being a Licensee (or Principal of a Licensee) pursuant to the provisions of Sections 1728 and 1729 of this Title; and

(2) Documentation demonstrating that the Person either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site.

An application for the Temporary Initial License shall be deemed complete if it includes all of the documents required under this section. The Board is required to accept any application that is deemed complete under this subsection.

(c) The Board shall grant the Temporary Initial License to the Person who, on the earliest date following the effective date of the "Limited Gaming Initiative Act of 2016," meets the following criteria: (1) the Person submits an application that is deemed complete pursuant to subsection (b) of this section, and (2) the Person has demonstrated that the Person either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site.. The Board shall issue a decision granting or denying a Person's application for the Temporary Initial License within fourteen (14) days of the Board's receipt of the application.

(d) Any Person whose application has been denied pursuant to subsection (c) of this section may, within thirty (30) days of the denial of that application, appeal the Board's decision to deny the application to the Superior Court of the District of Columbia.

(f) The Person awarded a Temporary Initial License (the "Temporary Initial Licensee") shall have all the rights of any Licensee under this chapter; provided, however, that the Temporary Initial License shall expire on the earliest of (1) the granting by the Board of an Initial License to the Temporary Initial Licensee pursuant to section 5(c) of this Title, or (2) the denial by the Board of an application by the Temporary Initial Licensee for the Initial License pursuant to section 5(d) or 5(e) and the expiration of all appeals of that denial pursuant to section 5(g) of this Title.

§ 22-1724 LICENSING FOR OPERATION OF LIMITED GAMING AND CONDUCT OF LIMITED GAMING OPERATIONS; INITIAL LICENSE

(a) Within 180 days of the Board's granting of a Temporary Initial License, the Board shall create and publish regulations setting forth a procedure by which Persons may apply for the Initial License (the "Initial Application Regulations"). The content of the Initial Application Regulations are within the discretion of the Board, except that Initial Application Regulations must require the Person applying for the License ("Initial License Applicant") to provide the following information:

(1) Information demonstrating that the Initial License Applicant either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site.;

(2) Information sufficient to allow the Board to determine whether the Initial License Applicant is "suitable" pursuant to Sections 1728 and 1729 of this Title; and

(3) If the Initial License Applicant is an entity, a list of all employees, officers, agents and Principals of the Initial License Applicant.

(b) Within (90) days following the Board's publication of the Initial Application Regulations, the Temporary Initial Licensee may submit an application for the Initial License in accordance with the Initial Application Regulations.

(c) If the Temporary Initial Licensee submits an application for the Initial License pursuant to subsection (b) of this section, the Board shall determine within ninety (90) days of the date of said application whether to immediately grant the Initial License to the Temporary Initial Licensee. The Board shall award the Initial License to the Temporary Initial Licensee if it determines that: (1) the Temporary Initial Licensee is an Eligible Applicant, (2) the Temporary Initial Licensee either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site,, and (3) the Board has found, after investigation, that (A) the License Application is complete, and (B) the Temporary Initial Licensee is suitable, according to the provisions of Sections 1728 and 1729 of this Title.

(d) If, after the expiration of this ninety (90) day period, the Board determines that the Temporary Initial Licensee does not meet the criteria of subsection (c) of this section, but that such criteria could be satisfied by the Temporary Initial Licensee by taking feasible and reasonable corrective measures, including but not limited to a transfer of interests held by one or more Principals of the Temporary Initial Licensee, the Board shall postpone its decision on the application of the Temporary Initial Licensee and issue a written statement to the Temporary Initial Licensee setting forth the corrective measures that need to be taken by the Temporary Initial Licensee in order for the Board to grant the Initial License. Otherwise, if, after the expiration of the ninety (90) day period, the Board determines that the Temporary Initial Licensee does not meet the criteria of subsection (c) of this section, the Board shall issue a decision denying the application of the Temporary Initial Licensee.

(e) If the Board postpones its decision and requests corrective measures pursuant to subsection (d) above, the Board shall allow the Temporary Initial Licensee 180 days to take the corrective measures set forth by the Board. After the expiration of this period, the Board shall grant the Initial License to the Temporary Initial Licensee if it determines (1) the corrective measures required by the Board have been taken, and (2) after completion of the corrective measures, the Temporary Initial Licensee has met the criteria for the Initial License under subsection (c) of this section. Otherwise, the Board shall issue a decision denying the Temporary Initial License.

(f) If the Board denies the application of the Temporary Initial Licensee pursuant to subsection (d) or subsection (e) of this section and all appeals of that denial pursuant to subsection (g) of this section have been exhausted, or if the Temporary Initial Licensee does not apply for the Initial License within the time period set forth is subsection (c) of this section, the Board shall then accept further applications for the Initial License. The Board shall, on a rolling basis, evaluate each application for the Initial License made under this subsection and award the Initial License to the first Person who has submitted a complete application for the Initial License and whom the Board determines meets the criteria set forth in subsection (c) of this section.

(g) Any Person whose application has been denied pursuant to this section may, within thirty (30) days of the denial of that application, appeal the Board's decision to deny the application to the Superior Court of the District of Columbia.

§ 22-1725 LICENSING FOR OPERATION OF LIMITED GAMING AND CONDUCT OF LIMITED GAMING OPERATIONS; SUBSEQUENT LICENSES

(a) The Board may at any time adopt and approve a proposal (“Expansion Proposal”) submitted by the Initial Licensee (the “Expansion License Applicant”) to expand the Maximum Permissible Designated Limited Gaming Sites, and may at any time approve an application from the Initial Licensee for additional License(s) to conduct Limited Gaming Operations for each newly permitted Designated Limited Gaming Area. The Board shall include in any Expansion Proposal a specific description of the property in which the Designated Limited Gaming Site(s) for the additional License(s) granted under the Expansion Proposal shall be located in the event that the Expansion Proposal becomes effective under this section.

(b) Immediately after the adoption and approval of an Expansion Proposal by the Board under subsection (a) of this section, the Expansion Proposal shall be submitted to the Council of the District of Columbia ("Council") for approval. If approved by the Council, the Expansion Proposal shall take effect and the Maximum Permissible Designated Limited Gaming Sites shall be expanded as set forth in the Expansion Proposal.

(c) Within ninety (90) days of the approval of an Expansion Proposal by the Council, the Board shall create and publish regulations setting forth a procedure by which Expansion License Applicant may apply for a License to conduct Limited Gaming Operations at one or more of the newly permitted Designated Limited Gaming Sites (the "Expansion License Application Regulations"). The content of the Expansion License Application Regulations are within the discretion of the Board, except that the Expansion License Application Regulations must require each Expansion License Applicant to provide the following information:

(1) Information demonstrating that the Expansion License Applicant either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site under the Expansion Proposal;

(2) Information sufficient to allow the Board to determine whether the Expansion License Applicant is "suitable" pursuant to Sections 1728 and 1729 of this Title; and

(3) If the Expansion License Applicant is an entity, a list of all employees, officers, agents and Principals of the Expansion License Applicant.

(d) Immediately following the Board's publication of the Expansion License Application Regulations (the "Expansion Application Period"), the Board shall accept applications for Licenses in accordance with the Expansion License Application Regulations.

(e) The Board shall award the Licenses permitted under the Expansion Proposal to the Person(s) who have submitted a complete application for the Expansion License Application on the earliest date and who have met the following criteria: (1) the Person is an Eligible Applicant, (2) the Person either owns, leases or has the contractual right to own or lease, and has the right to possess and occupy, more than 50% of any real property that is eligible to become the Initial Designated Limited Gaming Site under the Expansion Proposal, and (3) the Board has found, after investigation, that (i) the License Application is complete and (ii) the Eligible Applicant is suitable, according to the provisions of Sections 1728 and 1729 of this Title.

(f) Any Person whose application has been denied pursuant to this section may, within thirty (30) days of the denial of that application, appeal the Board's decision to deny the application to the Superior Court of the District of Columbia.

§ 22-1726 AUTHORITY GRANTED LICENSEE; CONDITIONS

Any License (including the Temporary Initial License and the Initial License) shall entitle the Licensee to conduct Limited Gaming and to conduct Limited Gaming Operations, subject to the requirements of this chapter and Rules and Regulations adopted, from time to time, by the Board pursuant to the authority granted herein, and specifically subject to the following requirements and restrictions:

(1) The Licensee may only conduct Limited Gaming Operations at a Designated Limited Gaming Site; provided, however, that the Licensee may conduct auxiliary services, including but not limited to the provision of parking facilities, food service, or lodging service, on land adjacent to or within reasonable distance of the Designated Limited Gaming Site;

(2) The Licensee operating such Designated Limited Gaming Site shall provide, at no cost or expense to the Board, sufficient space and facilities at the Designated Limited Gaming Site for the installation and operation of any equipment required pursuant to this Title and the staff of the Board engaged to operate such equipment;

(3) The Licensee shall maintain continuous suitability for the operation of Limited Gaming Operations, under the provisions of Sections 1728 and 1729 of this Title;

(4) The Licensee shall grant the Board the right of inspection of all Limited Gaming, all Limited Gaming related Equipment, and all of the Licensee's books and records, and shall permit the Board (including the Director and/or any agent thereof) unrestricted access to the Designated Limited Gaming Site; and

(5) Any facility at which Limited Gaming Operations are conducted pursuant to the License shall be in compliance with all laws, rules, and regulations of the District of Columbia, including, but not limited to, zoning requirements.

§ 22-1727 TERM OF LICENSES AND PERMITS; RENEWAL; TRANSFER

(a) All Licenses and Permits shall be issued for a period of five years and shall be renewed for succeeding five-year periods upon the submission by the Licensee or Permittee of a completed, sworn application ("Renewal Application"). Provided that the Licensee or Permittee shall file a completed Renewal Application prior to expiration of its current License or Permit, the term of its current License or Permit shall be deemed extended until the later of the disposition by the Board of such Renewal Application and any judicial review of such disposition.

(b) Licenses and Permits shall not be transferable without the prior approval of the Board upon joint application of the transferor and transferee.

(c) Prior to the consummation of a transfer of a License or Permit pursuant to subsection (b) of this section, the following must occur: (1) the proposed transferee ("Proposed Transferee") shall file a completed and sworn License Application or Permit Application, as the case may be, and (2) the Board shall promptly conduct a suitability investigation of the Proposed Transferee and, within thirty (30) days, advise the Proposed Transferee and the proposed transferor of the results thereof. If the Board finds that the Proposed Transferee is suitable, the Board shall promptly issue its written approval of the proposed transfer as provided for in subsection (b) of this section. A determination by the Board that a Proposed Transferee is not suitable shall have no effect on the status or continuity of a License or Permit to the suitability of a Licensee or Permittee provided the proposed transfer is not consummated. The Proposed Transferee shall reimburse the Board for all costs and expenses incurred by the Board in connection with any such suitability investigation.

(d) A decision by the Board that a Proposed Transferee is not suitable, or a failure by the Board to render a timely decision on this subject, shall be appealable to the Superior Court of the District of Columbia.

§ 22-1728 SUITABILITY GENERALLY.

(a) Other than applicants for the Temporary Initial License, no applicant shall be granted a License or Permit under the provisions of the "Limited Gaming Initiative Act of 2016" unless the applicant has demonstrated to the Board that the applicant is a "suitable" recipient of the License or Permit for which the applicant has applied.

(b) For purposes of the "Limited Gaming Initiative Act of 2016," an applicant for a License or Permit is "suitable" and/or has met "suitability" standards if the applicant has satisfied the requirements established by the "Limited Gaming Initiative Act of 2016," including the requirement that the applicant:

(1) Has satisfied the suitability standards provided in Section 1729 of this Title;

(2) Is capable, by virtue of training, education, business experience or a combination of the same, of conducting the activity for which the license or Permit is sought;

(3) If a Licensee, has demonstrated that the applicant has, or can acquire from others, sufficient funds to renovate or construct a Limited Gaming facility on a Designated Limited Gaming Site, acquire and commence and continue Limited Gaming Operations; and

(4) If the applicant is an entity, has demonstrated that the applicant's Principals are suitable.

(c) Except as otherwise provided herein, a Person (1) whose application for a License or Permit has been denied, (2) whose License or Permit has been issued subject to a condition, (3) whose License or Permit has been suspended or revoked, (4) against whom a fine has been levied by the Board, or (5) who has been determined by the Board (prior to a hearing) to be "unsuitable," shall have the right to a hearing before the Board with respect to any such denial, condition, suspension, revocation, levy or determination; and such findings, decision and hearing shall be conducted in accordance with the D.C. Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1204; D.C. Official Code § 2-501 et seq.), including any right to judicial review following such hearing.

§ 22-1729 SUITABILITY STANDARDS, DISQUALIFICATION AND DIVESTITURE.

(a) For the purposes of the "Limited Gaming Initiative Act of 2016," an applicant for a License, Permit or approval is "suitable" if the applicant:

(1) Is a Person of good character, honesty, and integrity;

(2) Has not been convicted of, or entered a plea resulting in conviction for: (A) Any offense punishable by imprisonment of more than one year; (B) Theft or attempted theft, or illegal possession of stolen property; (D) Any offense involving fraud or attempted fraud; or (D) Illegal gambling as defined by the laws or ordinances of any municipality, any parish or county, any state, or of the United States;

(3) Is a person whose prior activities, criminal record, if any, reputation, habits, and associations do not pose a threat to the public interest of the District of Columbia or to the effective regulation and control of Limited Gaming Operations or create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in connection with Limited Gaming Operations and the business and financial affairs of the applicant incident thereto;

(4) Is capable of conducting and likely to conduct the activities for which the applicant has requested licensing, permitting or approval in accordance with the provisions of this chapter and the Rules and Regulations adopted, from time to time, by the Board; and

(5) Is not disqualified pursuant to the provisions of subsection (b) of this section and, if the applicant is an entity, has demonstrated to the Board that it has adopted and employs adequate hiring and screening procedures to ensure that no current of future employee of the applicant would be disqualified under subsections (b)(1) or (b)(2) of this section.

(b) The Board shall have the right to deny, suspend, condition, or revoke a License or Permit of any applicant for a License or Permit upon a specific finding by the Board that the applicant is 'unsuitable' on the basis of the following criteria:

(1) The applicant has been convicted of, or entered a plea resulting in conviction for: (a) Any offense punishable by imprisonment of more than one year; (b) Theft or attempted theft, or illegal possession of stolen property; (c) Any offense involving fraud or attempted fraud; or (d) Illegal gambling as defined by the laws or ordinances of any municipality, any parish or county, any State, or of the United States;

(2) There is a current prosecution or pending criminal charge against the applicant in any federal or state jurisdiction for an offense described in subsection (b)(1) of this section;

(3) The applicant is not current in filing all applicable personal income tax returns and in the payment of all income taxes, penalties and interest owed to the District of Columbia or the federal government, excluding items currently being disputed by the applicant; or

(4) There has been a repeated failure by the applicant to provide information and documentation reasonably requested by the Board in order to determine suitability as defined in this chapter; provided however that such failure shall not be considered by the Board during the period of any judicial challenge by the applicant with respect to the information requested by the Board or the confidentiality to be afforded to the same by the Board.

(c) Any Person whose License or Permit has been revoked or who has been found "unsuitable" in the District of Columbia is not eligible to obtain any License or Permit pursuant to the provisions of the "Limited Gaming Initiative Act of 2016" for a period of one (1) year from the date the revocation or finding of unsuitability becomes final beyond right of judicial review.

(d) In the event of a current criminal prosecution for an offense as provided in subsection (b)(2) of this section, the Board, where applicable, shall have the discretion to defer a determination on an applicant's suitability pending the outcome of the criminal proceedings, provided that if a decision is deferred pending such outcome the Board, where applicable, may take such action as is necessary to protect the public interest.

(e) If the Board finds that a Principal of a Licensee or Permittee or its parent entity is not suitable, and if as a result, the Licensee or Permittee is no longer entitled to engage in the activity licensed or permitted, then and in that event the Board shall, subject to the exercise of the Principal's hearing and review rights under this chapter, propose action necessary to protect the public interest. Where possible, in lieu of an order of revocation or suspension of a License or Permit, the Board shall issue an order of disqualification naming the unsuitable Principal and declaring that such Principal may not, except as provided in subsection (f) of this section, (1) directly or indirectly exercise significant influence over the Licensee or Permittee; (2) directly or indirectly receive dividends or interest on securities of the Licensee or Permittee; (3) directly or indirectly receive remuneration or other economic benefit from the Licensee or Permittee; or (4) continue owning or holding, directly or indirectly, any ownership interest in the Licensee or Permittee or remain as a manager, officer, director, or partner of the Licensee or Permittee.

(f) Commensurate with the issuance of an order of disqualification under subsection (e) of this section, the Board shall issue an order declaring that such disqualified Principal shall, within thirty (30) days of the disqualifying order, transfer all of their ownership interest in the Licensee or Permittee owned to the trustee of a blind trust whose trustee shall be appointed or approved by the Board, which approval shall not be withheld or delayed beyond thirty (30) days. The trustee of the blind trust shall have the sole and exclusive rights to exercise any right conferred by or incidental to the ownership interest so transferred to and held in the blind trust, except that upon receipt of instruction from the beneficiary of the trust, the trustee shall sell so much of the ownership interestof the Licensee or Permittee held in the blind trust as instructed and remit the net proceeds of the sale to the Principal beneficiary together with any dividends, interest, remuneration or other economic benefit associated therewith.

(g) A decision by the Board to deny approval to a trustee described in subsection (f) of this Section, or a failure by the Board to render a timely decision on the subject, shall be appealable to the Superior Court of the District of Columbia.

§ 22-1730 PERMISSION TO AWARD LICENSES TO PERSONS TO CONDUCT BUSINESS PRIMARILY AS LIMITED GAMING OPERATORS

Notwithstanding the provisions of D.C. Official Code § 3-1315, the Board may issue a License or Permit or renew a License or Permit to persons whose primary business is to conduct Limited Gaming Operations or to perform services related to Limited Gaming Operations. The fact that a Person's primary business is to conduct Limited Gaming Operations or to perform services related to Limited Gaming Operations shall not be a valid basis for the Board to deny any License or Permit or any renewal of a License or Permit.

§ 22-1731 POWERS AND DUTIES OF THE BOARD RELATIVE TO LIMITED GAMING OPERATIONS.

(a) In addition to those powers granted the Board elsewhere in the "Limited Gaming Initiative Act of 2016," with respect to Limited Gaming Operations, the Board shall adopt all rules and regulations (collectively "Rules and Regulations") necessary to implement, administer, and regulate Limited Gaming and Limited Gaming Operations as authorized in the "Limited Gaming Initiative Act of 2016."

(b) Such Rules and Regulations shall include:

(1) Procedures for the counting, collection and deposit of Net Limited Gaming Proceeds into a Licensee's restricted bank account;

(2) Procedures for (A) the accumulation and provision by Licensees and Permittees of specified records, data, information and reports, including financial and income records and reports (collectively "Financial and Operation Materials") and (B) the retention of Financial and Operational Materials by past and present Licensees and Permittees, as necessary to enable the Board to properly implement and enforce the provisions of this chapter;

(3) Requirements establishing minimum physical security standards to be observed in Designated Limited Gaming Sites;

(4) Requirements establishing standards of maintenance of Limited Gaming and related Limited Gaming Equipment;

(5) Provisions for the revocation or suspension of Licenses and Permits, upon post-issuance findings of "unsuitability," subject to the rights of Licensees, Permittees and Principals under the provisions of this Title;

(6) Establishing standards, rules and regulations to govern the conduct of Limited Gaming and the system of wagering associated with Limited Gaming, including without limitation:
(7) Establishing the method for calculating Net Limited Gaming Revenue and standards for the daily counting and recording of cash received in the conduct of Limited Gaming, and ensuring that internal controls are followed, including the maintenance of financial books and records and the conduct of annual audits at the expense of the Limited Gaming Licensee.

(8) Establishing the number and type of games authorized at a Limited Gaming facility, and all rules related thereto.

(9) Establishing any Limited Gaming rule changes, Limited Gaming minimum and maximum wager changes, and changes to the type of Limited Gaming being offered at a particular gaming table, including any notice by the Limited Gaming Facility to the public.

(10) Requiring the Limited Gaming Licensee to:

(a) Provide written information at each Limited Gaming Facility about game rules, payoffs or winning wagers and other information as the Board may require.

(b) Provide specifications approved by the Board to integrate and update the Limited Gaming Facility’s surveillance system to cover all areas where Limited Gaming is conducted and other areas as required by the Lottery Division. The specifications shall include provisions providing the Board and other persons authorized by the Division with onsite access to the system.

(c) Designate one or more locations within the Limited Gaming facility to conduct Limited Gaming.

(d) Ensure that visibility in a Limited Gaming facility is not obstructed in any way that could interfere with the ability of the Board, the Limited Gaming Licensee or other persons authorized under this section or by the Board to oversee the conduct of Limited Gaming.

(e) Ensure that the count room for Limited Gaming Facility has appropriate security for the counting and storage of cash.

(f) Furnish each Limited Gaming Facility with a sign acceptable to the Division indicating the permissible minimum and maximum wagers at the Limited Gaming Facility.

(g) Adopt policies or procedures to prohibit any Limited Gaming equipment from being possessed, maintained or exhibited by any person on the premises of a Limited Gaming facility except in the areas of such facility where the conduct of Limited Gaming is authorized or in a restricted area designated to be used for the inspection, service, repair or storage of Limited Gaming equipment by the Limited Gaming Licensee or in an area used for employee training and instruction by the Limited Gaming Licensee.

(h) Ensure that drop boxes are brought into or removed from an area where Limited Gaming is conducted and locked or unlocked in accordance with procedures established by the Board.

(i) Designate secure locations for the inspection, service, repair or storage of Limited Gaming equipment and for employee training and instruction to be approved by the Board.

(11) Establishing the size and uniform color by denomination of Limited Gaming chips used in the conduct of Limited Gaming, including tournaments, and a policy for the use of promotional or commemorative chips used in the conduct of certain Limited Gaming.

(12) Establishing the procedure to be used by a Limited Gaming facility to determine and extract a rake for the purposes of generating Net Limited Gaming Revenue from nonbanking games.

(13) Establishing minimum standards relating to the acceptance of tips or gratuities by dealers at a Limited Gaming Facility, which shall include:

(a) The requirement that tips or gratuities accepted by dealers at a Limited Gaming facility be placed in a common pool for complete distribution pro rata among all dealers based on the daily collection of such tips or gratuities; provided, however, that the Board may establish an alternative distribution method for tips or gratuities upon submission by the Limited Gaming Licensee of an acceptable proposal to modify any existing distribution method for tips or gratuities.

(b) The requirement that tips or gratuities accepted by dealers at nonbanking Limited Gaming facilities are not required to be pooled and may be retained by the dealers; provided, however, that the Board may establish an alternative distribution method for tips or gratuities at a nonbanking Limited Gaming facility upon submission by the Limited Gaming Licensee of an acceptable proposal to modify any existing distribution method for tips or gratuities.

(14) Establishing minimal proficiency requirements for Limited Gaming personnel, including without limitation Limited Gaming dealers.

(15) Establishing the practices and procedures governing the conduct of Limited Gaming tournaments.

(16) Establishing appropriate eligibility requirements and standards for traditional Limited Gaming equipment suppliers; and

(17) Any other matters necessary for conducting Limited Gaming.

(c) The Board shall promulgate the Limited Gaming regulations authorized by this section on or before 180 days after the Effective Date of this Act.

(d) The Board may:

(1) Conduct any reasonable investigation which the Board determines necessary to fulfill its responsibilities under the provisions of the "Limited Gaming Initiative Act of 2016;"

(2) Inspect and examine all premises in which Designated Limited Gaming Sites are situated or where Limited Gaming equipment is manufactured, sold, or repaired;

(3) Inspect Limited Gaming and related Limited Gaming Equipment and supplies;

(4) Summarily seize and remove Limited Gaming Equipment and supplies from any location where such Limited Gaming equipment and supplies are not or have not been approved, operated, or maintained pursuant to the "Limited Gaming Initiative Act of 2016" or whose owners or operators do not hold valid Licenses or Permits as required by the "Limited Gaming Initiative Act of 2016";

(5) Deny, revoke, condition, or suspend the License or Permit of any Person who knowingly violates any provision of this chapter or any of the Rules or Regulations adopted pursuant to the authority granted in the "Limited Gaming Initiative Act of 2016";

(6) Take steps necessary to collect any fees that are owed to the Board or the Lottery Fund, including commencing and prosecuting appropriate legal actions; and

(7) Delegate to the Executive Director or otherwise cause the Executive Director to perform or exercise any or all of the rights and duties of the Board set forth in subsections (c)(1), (c)(2), (c)(3), (c)(4), and (c)(6).

§ 22-1731 EXECUTIVE DIRECTOR; POWERS AND DUTIES. The Executive Director shall, upon and subject to the direction of the Board:

(1) Conduct an investigation of any applicant, Licensee, or Permittee for "suitability" or violations of the Rules and Regulations and undertake any other investigation, inspection or enforcement action if such investigation, inspection, or action is reasonably necessary to the thorough and efficient implementation of this chapter;

(2) Examine Limited Gaming and related Limited Gaming Equipment and records related thereto;

(4) Report to the Board any violation of law or the Rules or Regulations discovered by the Director; and

(5) Engage, train, supervise and direct such staff as the Executive Director and the Board shall deem necessary and appropriate to enable the Executive Director to perform his duties and obligations under this chapter.

§ 22-1732 GAMING DEVICES PROHIBITED.

Notwithstanding any other provision in this Subchapter, no gambling devices prohibited by the Johnson Act, 15 U.S.C. § 1171 et seq., shall be present or installed or operated in any Designated Limited Gaming Site. In the event it is determined by a court of competent jurisdiction that the District of Columbia is entitled to opt out of all provisions of the Johnson Act, this Subchapter shall allow all games, including those involving gaming devices, to be operated under the authority of this Subchapter.§ 22-1733 PROHIBITED RELATIONSHIPS.

(a) In addition to any other relationship prohibited by the "Limited Gaming Initiative Act of 2016", no person employed by or performing any function on behalf of the Board or the Director may:

(1) Be an officer, director, owner, or employee of any Person holding a License or Permit issued by the Board; or

(2) Have or hold any interest, direct or indirect, in, or engage in any commercial transaction or enter into any business relationship with, any Person holding a License or Permit issued by the Board.

(b) No elected public official shall engage in any business activity with a Licensee or Permittee except as a patron of a Limited Gaming facility. As used in this subsection, the term "business activity" shall specifically include, but not be limited to, contracts: (1) for the sale or purchase of goods, merchandise, and services; (2) to provide or receive legal services, advertising, public relations, or any other business or personal services; (3) for the listing, purchase, or sale of immovable property or options or other rights relating thereto; and (4) modifying ownership or possessory interests in stocks, bonds, securities, or any other financial instruments.

(c) No Person may be an owner, investor, employee, or contractor engaged in any Limited Gaming Operations if such Person has been convicted of, or entered a plea resulting in conviction for: (1) Any offense punishable by imprisonment of more than one year; (2) Theft or attempted theft, or illegal possession of stolen property; (3) Any offense involving fraud or attempted fraud; or (4) Illegal gambling as defined by the laws or ordinances of any municipality, any parish or county, any State, or of the United States; or if there is a current prosecution or pending criminal charge against such Person in any federal or state jurisdiction for an offense described in this subsection.

§ 22-1734 PROHIBITION OF MINORS

(a) No Licensee, Permittee or agent or employee of either, shall allow a person under the age of twenty-one to play games in a Limited Gaming facility.

(b) Each Licensee shall report and remit to the Director quarterly in arrears all winnings withheld from customers who are determined to be under the age of twenty-one.

(c) The Board may fine and/or revoke and/or suspend the License or Permit of any Person, who is found by the Board to have willfully committed a violation of this section; provided, however, that if the Licensee affected by a revocation or suspension made under this section, the Licensee shall be entitled to an administrative hearing before the Board pursuant to section 1728(c) of this Title, and, if the affected Licensee chooses to exercise that right, the revocation or suspension shall not take effect until the conclusion of the hearing held pursuant to that section.

§22-1735 UNAUTHORIZED LIMITED GAMING; SKIMMING OF TABLE GAME PROCEEDS; PENALTIES.

(a) Except as otherwise permitted by law, any Person who operates a Limited Gaming Facility for profit without holding a current valid License or Permit required by the "Lottery Expansion Initiative Act of 2016" or at any location other than a Designated Limited Gaming Site shall be subject to a fine of not more than ten thousand dollars ($10,000) per violation.

(b) Any Person who intentionally excludes, or takes any action in an attempt to exclude anything of value from the deposit, counting, collection, or computation of revenues derived from Limited Gaming Operations shall be subject to a fine of not more than ten thousand dollars ($10,000) per violation, in addition to any other criminal penalties which may be imposed, pursuant to any other provision of the District of Columbia Official Code.

(c) Any Limited Gaming played in violation of the provisions of the "Limited Gaming Initiative Act of 2016," except as otherwise permitted by law, shall be considered to constitute the operation of a gambling device for purposes of D.C. Official Code § 22-1704.

Sec. 4. Effective date.

This act shall take effect after a 30-day period of Congressional review as provided in section 602(c) of the Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206(c)(1)).

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5940394 Elections, Board of - Receipt and Intent to Review Initiative Measure - Limited Gaming Initiative of 2016

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