PROPOSED RULEMAKING
PENNSYLVANIA GAMING
CONTROL BOARD
[58 PA. CODE CHS. 1401a—1411a]
Sports Wagering
[50 Pa.B. 7277]
[Saturday, December 26, 2020]The Pennsylvania Gaming Control Board (Board), under the general authority in 4 Pa.C.S. § 1202(b)(30) (relating to general and specific powers) and the specific authority in 4 Pa.C.S. § 13C02 (relating to regulatory authority), promulgates proposed regulations governing sports wagering to read as set forth in Annex A.
Purpose of the Proposed Rulemaking
This proposed rulemaking establishes the regulatory oversight structure for the conduct of retail and interactive or mobile sports wagering in this Commonwealth.
Explanation
Subpart Q (relating to sports wagering) proposes to establish the regulations necessary for the Board to issue sports wagering certificates to slot machine licensees who wish to offer sports wagering, as well as the licensing of the principals and key employees of the certificate holders and other entities involved such as sports wagering operators, manufacturers, suppliers and gaming service providers. In addition, Subpart Q provides rules for player accounts, licensed operator duties and restrictions, and accounting and internal controls governing the conduct of sports wagering. Finally, Subpart Q addresses advertising, compulsive and problem gambling, and self-exclusion of players from sports wagering in this Commonwealth.
Chapter 1401a. General sports wagering provisions
Proposed § 1401a.1 (relating to scope) provides the scope of the subpart and its applicability to retail and interactive or mobile sports wagering. This section also proposes to clarify that any sports wagering certificate holder that offers interactive or mobile sports wagering must also comply with the provisions contained in Subpart L (relating to interactive gaming), as interactive or mobile sports wagering operations are considered a form of interactive gaming.
Proposed § 1401a.2 (relating to definitions) provides the general definitions of terms used throughout Subpart Q for the conduct of retail and interactive or mobile sports wagering. Proposed § 1401a.3 (relating to initial and renewal authorization and license fees) addresses the initial granting of sports wagering certificates to slot machine licensees in the Commonwealth, and proposed § 1401a.4 (relating to sports wagering certificate petition and standards) outlines the information required in a petition from a slot machine licensee to be considered for a sports wagering certificate. This information is what will be reviewed by the Board to determine if a slot machine licensee has established the necessary organizational framework to operate a successful sports wagering operation.
Proposed § 1401a.5 (relating to conduct of sports wagering generally) outlines the general provisions relating to sports wagering operations. It addresses who may conduct sports wagering operations, where sports wagering may be offered, the offering of sports wagering through a sports wagering operator, prohibitions on minors and involuntary excluded or self-excluded individuals from engaging in sports wagering, requirements to ensure sports wagering is only conducted by individuals within the boundaries of the Commonwealth and requirements to ensure the integrity of sports wagering operations before they can commence offering sports wagering. Under the act, sports wagering may be conducted in a sports wagering area at the sports wagering certificate holder's licensed facility, a temporary facility adjacent to the licensed facility or a nonprimary location of a Category 1 slot machine licensee. An amendment to the Fiscal Code in Act 23 of 2020 also permits a certificate holder to operate a sports wagering area in a Category 4 licensed facility owned by a Category 1, 2 or 3 slot machine licensee. Unlike interactive gaming, a sports wagering certificate holder may only partner with one sports wagering operator to offer sports wagering in the Commonwealth and thus may only have one sports wagering web site and mobile application. The web sites and mobile applications created by a sports wagering operator must clearly identify the sports wagering certificate holder with whom the operator has partnered with.
Proposed § 1401a.6 (relating to permitted sports wagering activities) describes the permitted sports wagering activities that may be offered within this Commonwealth. This includes the types of sporting events that may be wagered upon and the types of wagers that an individual can place. The Board permits sports wagers to be placed on professional sporting events, collegiate sporting events and certain amateur events approved by the Board. Amateur events may be wagered upon when the participants involved are not minors and there is satisfactory oversight of the event to ensure the integrity of sports wagers placed on the event. This is consistent with industry standards. This section also addresses the concept of layoff wagers, which occur in one of two ways: (1) a sports wagering certificate holder or operator places a wager with another sports wagering certificate holder or operator directly, to mitigate potential large liability losses on an event; or (2) a sports wagering certificate holder or operator solicits a layoff wager from an authorized trader who then places a wager with the certificate holder or operator in an effort to mitigate potential large liability losses on an event.
Proposed § 1401a.7 (relating to prohibited and restricted sports wagering activities) outlines sports wagering activities that are prohibited in this Commonwealth. This includes wagering on unapproved amateur events, high school athletics and proxy wagering. This section also places prohibitions on wagers that sports wagering certificate holders and operators may accept. For example, a sports wagering certificate holder or operator may not knowingly accept a sports wager from an athlete if the event the athlete is wagering on is in the same league or under the same governing body in which the athlete competes. For clarity, a sports wagering certificate holder or operator is prohibited from knowingly allowing a professional baseball player from wagering on baseball games in the same league. This is just one example of prohibited wagering activity; the section contains several others that are designed to protect the integrity of sports wagering operations.
Proposed § 1401a.8 (relating to persons prohibited from engaging in sports wagering activities) enumerates the individuals who are prohibited from engaging in sports wagering in this Commonwealth, or who are limited in the manner in which they may place sports wagers. This includes minors and athletes or other individuals who have exclusive information about the team. It also provides a procedure for teams or leagues to provide to the Board the biographical information of individuals who should be prohibited from certain wagering activities due to their role with a sports team or league. This list of individuals will be provided to sports wagering certificate holders and operators.
Proposed § 1401a.9 (relating to physical characteristics of sports wagering areas; security and surveillance of sports wagering area; other requirements) provides the requirements for the physical characteristics of the sports wagering areas, both in a licensed facility and any non-primary location where sports wagering has been authorized by the Board. These requirements are designed to ensure that sports wagering areas will contain adequate measures to ensure the security of the sports wagering operations, including proper surveillance coverage and physical security of ticket writing stations.
Chapters 1402a—1406a. Sports wagering operators; sports wagering manufacturer; sports wagering supplier; sports wagering gaming service providers; and sports wagering principals and key, gaming and nongaming employees
These chapters of this proposed rulemaking would establish the categories of licensure required for certain entities to participate in various areas of the offering of sports wagering in the Commonwealth, based upon the statutory criteria in 4 Pa.C.S. Chapter 13C (relating to sports wagering).
A sports wagering operator, as described in proposed Chapter 1402a (relating to sports wagering operators), is an entity that is licensed by the Board to operate a sports wagering system or platform to provide sports wagering to individuals in this Commonwealth on behalf of a sports wagering certificate holder. This entity must apply for and be issued a sports wagering operator license and pay all applicable license fees. No sports wagering operator may offer sports wagering in this Commonwealth on its own independence from a sports wagering certificate holder; it must be done in partnership with or on behalf of a sports wagering certificate holder. Each sports wagering certificate holder may partner with one sports wagering operator to offer retail and interactive or mobile sports wagering, or may also choose to enlist the services of one operator to handle retail sports wagering and a different operator to handle interactive or mobile sports wagering. A sports wagering certificate holder is limited to only having one sports wagering web site and one mobile application.
Sports wagering manufacturers, as described in proposed Chapter 1403a (relating to sports wagering manufacturer), are entities who manufacture, build, rebuild, fabricate, assemble, produce, program, design, sell, lease, offer or otherwise make modifications to any authorized sports wagering device or associated equipment for use or operation in this Commonwealth for sports wagering purposes. The entity must apply for licensure as a sports wagering manufacturer and pay all applicable license fees, a process which may be abbreviated if the entity is currently licensed to manufacture devices or associated equipment for other forms of gaming in this Commonwealth.
Sports wagering suppliers, as described in proposed Chapter 1404a (relating to sports wagering supplier), are entities who sell, lease, offer or otherwise provide, distribute or service sports wagering devices or associated equipment to a sports wagering certificate holder or sports wagering operator. The entity must apply for licensure as a sports wagering supplier and pay all applicable license fees, a process which may be abbreviated if the entity is currently licensed to supply devices or associated equipment for other forms of gaming in this Commonwealth.
Sports wagering gaming service providers, as described in proposed Chapter 1405a (relating to sports wagering gaming service providers), are individuals or entities who provide certain services to sports wagering certificate holders or operators. Sports wagering gaming services providers must either be certified with the Board or registered with the Board, a determination made based upon the nature of the services being provided. Sports wagering gaming service providers shall apply for certification or registration and pay all applicable fees associated with the application. If the entity is already certified or registered with the Board and will be providing similar services to sports wagering certificate holders or operators, no additional applications or fees are required. Also included in this chapter are provisions related to how a sports wagering gaming service provider may be placed on the Prohibited Gaming Service Provider List (List) maintained by the Board, and conversely, how an entity can apply for removal from the List.
Proposed Chapter 1406a (relating to sports wagering principals and key, gaming and nongaming employees) details the licensure procedures for individuals who are deemed to be sports wagering principals, sports wagering key employees, sports wagering gaming employees and sports wagering nongaming employees. Restrictions on the ability to place sports wagers are placed on licensed or registered employees of entities involved in sports wagering in this Commonwealth. For example, an individual who is employed by a sports wagering operator may not place a sports wager at a retail sportsbook where the operator offers sports wagering or on any interactive sports wagering web site or mobile application offered by the sports wagering operator. These provisions are designed to prevent an employee of an entity from taking gaining any unfair or inside advantage based upon his or her knowledge of the sports wagering system.
Chapter 1407a. Sports wagering testing and controls
This chapter establishes all procedures for the testing and control aspects of the sports wagering system or platform used by the sports wagering certificate holder or sports wagering operator acting on behalf of a certificate holder and all associated devices and equipment. This includes self-service sports wagering kiosks, which allow a patron to make a wager on a stand-alone wagering terminal, and redemption terminals which allow a patron to redeem winning sports wagers. Proposed § 1407a.1 (relating to scope) contains the scope of the chapter and how the testing and controls supplement those contained in other subparts. Proposed § 1407a.2 (relating to definitions) contains the applicable definitions for the chapter. Proposed § 1407a.3 (relating to testing and approval generally) contains the general provisions for testing and controls, such as the types of sports wagering devices that are required to be tested and approved, prior to implementation.
Proposed § 1407a.4 (relating to wagering device requirements generally) outlines the requirements for a sports wagering device. It sets forth all of the necessary functions that a wagering device must be able to perform, and all of the data that must be recorded for each transaction. Proposed § 1407a.5 (relating to self-service kiosks and point of sale system requirements) contains the provisions for self-service kiosks and point of sale system requirements. A self-service kiosk allows a patron to place a sports wagering or redeem a winning sports wagering ticket without the assistance of a sports wagering employee. These kiosks allow a patron to insert funds, and the screen provides all of the available sports wagering available to the patron, including the odds for each wager. The point of sale systems are used by the ticket writers at the windows to process a sports wager for a patron. This section contains the procedures that a sports wagering certificate holder or sports wagering operator must follow when doing a ''drop,'' which is the removal of all accumulated funds in the self-service kiosks.
Proposed §§ 1407a.6 and 1407a.7 (relating to ticket/voucher requirements; and ticket/voucher redemption requirements) set forth the requirements for a sports wagering ticket and sports wagering voucher and the requirements for redeeming the same. A sports wagering ticket is the physical slip of paper that evidences the wager placed by the patron, including the event wagered on, the amount wagered, the potential winnings and information required to uniquely identify the ticket. A sports wagering voucher acts in the same manner as a slot machine or other gaming voucher; it is a cash equivalent that a patron may use to place a sports wager with a ticket writer or at a self-service sports wagering kiosk. In accordance with prior Board policy, a sports wagering voucher shall not expire. However, a sports wagering ticket may expire 1 year from the conclusion date of the event wagered on, or the last event to conclude in a multi-wager ticket such as a parlay.
As it pertains to interactive or mobile sports wagering and the systems implemented to offer them in this Commonwealth, these systems must comply with the provisions in Subpart L, specifically proposed Chapters 809a and 810a (relating to interactive gaming platform requirements; and interactive gaming testing and controls), and will be tested in accordance with those chapters.
Chapter 1408a. Sports wagering accounting and internal controls
This chapter proposes to establish the requirements and procedures for the revenue accounting and reporting of sports wagering as well as other necessary reporting requirements. The internal controls are the systems and procedures that a sports wagering certificate holder or sports wagering operator will operate under when conducting sports wagering operations. The list of items that must be contained in a set of internal controls that is filed with the Board can be found in proposed § 1408a.3 (relating to internal controls). Proposed § 1408a.4 (relating to terms and conditions) sets forth requirements for the adoption, approval and posting of the terms and conditions a sports wagering certificate holder or sports wagering operator will implement at the retail sports book or in its interactive or mobile sports wagering. Proposed § 1408a.5 (relating to information to be displayed/provided) provides all of the necessary information that must be on display in a retail sportsbook and on an interactive or mobile sportsbook. This includes the identity of the certificate holder or operator, the house rules for sports wagering and all problem gambling information.
Proposed §§ 1408a.6 and 1408a.7 (relating to segregation of bank accounts; and sports wagering certificate holder's or sports wagering operator's organization) set forth requirements when it comes to the bank accounts utilized for sports wagering funds and the organizational structure for certificate holders and operators. This includes the requirement of having employees who are dedicated for information technology security and protection of the integrity of interactive or mobile sports wagering.
Proposed §§ 1408a.8 and 1408a.9 (relating to risk management; and integrity monitoring) address risk management and integrity monitoring. The concepts, while similar, vary in intent and necessity in sports wagering operations. Risk management is the system and procedures put in place by sports wagering operators to determine which sporting events they want to offer, monitoring of data including scores and player statistics, setting of appropriate odds and lines on sporting events, and setting of maximum wagering limits all of which are implemented to manage risk and maximize revenue. These procedures are designed to minimize risk, errors or other omissions to ensure there is not an adverse effect on gaming. Integrity monitoring is the process by which a certificate holder or operator observes the wagering going on, either at the retail sports book or on an interactive or mobile sportsbook, with the intent on preventing any unusual or suspicious wagering activity which could indicate that the integrity of the game or match has been compromised.
Proposed §§ 1408a.10, 1408a.11 and 1408a.12 (relating to mandatory logging; records/data retention requirements; and required reports), detail the logging and reporting requirements for the sports wagering certificate holder or operator and the sports wagering system used. The reports, while numerous, provide the Board with a complete and detailed picture of the entire sports wagering operation. These reports are often built into the sports wagering system, and the Board has access to all of them using a back-office tool.
Proposed § 1408a.13 (relating to accounting controls for the sports wagering area) sets forth the accounting controls for sports wagering areas of retail sportsbooks. Unlike interactive or mobile sports wagering, where everything is automated, from payments to the placement of a wager, retail sportsbooks still operate largely on a cash basis. This section details the requirements for ensuring all funds are accounted at each sports wagering ticket window. And lastly, proposed § 1408a.14 (relating to sports wagering accounts) cross-references to Subpart L, indicating that interactive or mobile sports wagering accounts must comply with the provisions contained therein.
Chapter 1409a. Sports wagering advertisements, promotions and tournaments
This chapter proposes to establish the standards for sports wagering advertising and promotions. Proposed § 1409a.1 (relating to general requirements) states generally that advertising and promotions must comply with the provisions of Subparts C—E, I and L. This applies to all advertisements that are posted at or for the retail sportsbook or interactive and mobile sportsbook, and any and all promotions run by the certificate holder or operator. Proposed § 1409a.2 (relating to sports wagering contests, tournaments, pools or other organized events) provides the details that a certificate holder or operator must submit to run a sports wagering contest, tournament, pool or other organized event. All sports wagering contests, tournaments, pools or other organized events that a certificate holder or operator offers, with individuals paying entry fees to join, must comply with the provisions and be approved by the Board prior to their offering. Proposed Chapter 1410a (relating to sports wagering compulsive and problem gambling requirements) and proposed Chapter 1411a (relating to sports wagering self-excluded persons) address the options available for players to set responsible gaming limits or to self-exclude from sports wagering.
There were no specific provisions in the act for sports wagering compulsive and problem gambling requirements or self-exclusion. Given that sports wagering at retail sportsbooks takes place at licensed facilities or other Board-authorized locations (such as off-track betting locations owned and operated by slot machine licensees who hold a sports wagering certificate), the compulsive and problem gambling requirements and self-exclusion procedures shall be handled in accordance with the underlying provisions in Subpart I (relating to compulsive and problem gambling) of the Board's regulations. Under the act, interactive and mobile sports wagering is considered a form of interactive gaming. Therefore, the compulsive and problem gambling requirements and self-exclusion for this form of sports wagering shall be handled in accordance with the respective requirements in Subpart L of the Board's regulations.
Fiscal Impact
Commonwealth. The Board expects that this proposed rulemaking will have a relatively small fiscal impact on the Board and other Commonwealth agencies, which primarily is the result of the need for some additional personnel to process and review applications, as well as to monitor and regulate the conduct of sports wagering. Most of the additional duties will be absorbed by existing Board staff. The costs of the proposed regulations will be paid for by an assessment against the licensed sports wagering certificate holder's sports wagering revenue as determined by the Department of Revenue.
Political subdivisions. This proposed rulemaking will not have a fiscal impact on political subdivisions of this Commonwealth.
Private sector. This proposed rulemaking will not have a fiscal impact on the private sector other than for those who elect to participate in sports wagering. If pursued by an entity, there will be licensing costs as set forth by 4 Pa.C.S. Chapter 13C to offer sports wagering as a certificate holder or operator, or to be licensed as a manufacturer, supplier or gaming service provider.
General public. This proposed rulemaking will not have fiscal impact on the general public.
Paperwork Requirements
A slot machine licensee who wishes to offer sports wagering must file a Petition for Issuance of a Sports Wagering Certificate, as well as any necessary licensure applications for principals, key employees, gaming and nongaming employees.
An sports wagering operator, sports wagering manufacturer, sports wagering supplier, sports wagering service provider, and principals, key employees, and gaming and nongaming employees thereof involved in the provision of sports wagering in this Commonwealth will be required to file applications with the Board providing information regarding the person's proposed activity, as well as accounting and internal control protocols and background information of each individual sufficient to permit the Board to determine the individual's suitability for licensure.
If an individual wishes to join the casino self-exclusion list (to exclude from retail sports wagering) or the interactive gaming self-exclusion list (to exclude from interactive and mobile sports wagering), the person may do so online on the Board's web site by filling out a web-based form. The Board's web site address is http://gamingcontrolboard.pa.gov.
Effective Date
This proposed rulemaking will become effective upon final-form publication in the Pennsylvania Bulletin.
Public Comments
Interested persons are invited to submit written comments, suggestions or objections regarding this proposed rulemaking within 30 days after the date of publication in the Pennsylvania Bulletin. Public comments should be addressed to Chad W. Zimmermann, Assistant Chief Counsel, Attention: Regulation # 125-234 Public Comment, Pennsylvania Gaming Control Board, P.O. Box 69060, Harrisburg, PA 17106-9060.
Contact Person
The contact person for questions about this proposed rulemaking is Chad W. Zimmermann, Assistant Chief Counsel, (717) 346-8300.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P.S. § 745.5(a)), on November 12, 2020, the Board submitted a copy of this proposed rulemaking and a copy of the Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the House Gaming Oversight Committee and the Senate Community, Economic and Recreational Development Committee. A copy of this material is available to the public upon request and is available on the Board's web site at http://gamingcontrolboard.pa.gov.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria in section 5.2 of the Regulatory Review Act (71 P.S. § 745.5b) which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor.
DAVID M. BARASCH,
ChairpersonFiscal Note: 125-234. No fiscal impact; (8) recommends adoption.
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