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August 23, 2016 Filing: Five-Year Review

Created by Executive Order 2011-01K, the Common Sense Initiative (CSI), and Senate Bill 2 of the 129th General Assembly, require state agencies, including the Casino Control Commission, to draft rules in collaboration with stakeholders, assess and justify any adverse impact on the business community (as defined by Senate Bill 2), and provide opportunity for the affected public to provide input on the rules. 

The Ohio Casino Control Commission submitted the following proposed rules to the CSI office for review on August 23, 2016: 

 

Brief Explanation of the Rules 

This package is the third containing rules subject to the five-year review for 2016. Ohio law mandates that agencies review all existing rules to determine if the rules would benefit from modification or repeal. The review must occur within five years of the rule’s effective date. This batch includes rules relating to records retention; qualification of institutional investors; and licensure of key employees, gaming-related vendors, and casino gaming employees. Many of these amendments are small housekeeping changes to tighten up and clarify rule language.

In addition to the items specifically listed below, many of the amendments remove the terms “applicant or licensee” and instead use the name of the entity in an effort to streamline and clarify Ohio Adm. Code 3772 in its entirety. Another consistent change made to streamline these rules is the removal of the term “management company,” where appropriate. In Ohio Adm. Code 3772-1-01(B)(2), the term “casino operator” is defined to include “management company,” unless the context clearly indicates otherwise, allowing for this change. Further, several amendments are made to Ohio Adm. Code Chapters -3, -5, -6, and -8 for consistency with previous amendments.

3772-1 General Provisions (1 rule)

3772-1-07 (new), titled “Records retention requirements.” Although this is a new rule, the language is largely adopted from Ohio Adm. Code 3772-3-05, which will be rescinded. Some further portions of current Ohio Adm. Code 3772-3-05 will also be moved into Ohio Adm. Code 3772-10-05 to accomplish the rescission. The substance of the rule requires casino operators, holding companies, and gaming-related vendors to retain and maintain certain records relating to the conduct of casino gaming and has been in place since casino gaming commenced in Ohio. The purpose of the amendment is to streamline the existing rule and to move the rule into Ohio Adm. Code Chapter 1 “General Provisions” from Chapter 3 “Institutional Investors and Records Retention.” This enables Chapter 3 to contain rules solely pertaining to institutional investors.

3772-3 Institutional Investors (6 rules)

  • 3772-3-01 (amendment), titled “Institutional investor.” This rule clarifies that the statutory definition of institutional investor applies for rules adopted thereunder. The amendment deletes unnecessary language, streamlining the rule.
  • 3772-3-02 (amendment), titled “Institutional investor suitability or qualification.” This rule provides the process by which an entity can be presumed to be suitable or qualified as an institutional investor pursuant to R.C. Chapter 3772 and the rules adopted thereunder. The process consists of submitting documentation sufficient to establish qualifications as an institutional investor, a completed certification form, and submission of any other records required by the Commission. The amendment to this rule removes a notification process the Commission is required to follow when a request is made for information marked by an applicant as protected from disclosure. This same amendment was previously made to Ohio Adm. Code 3772-4-01. The purpose of deleting this provision is to remove a superfluous step in the public records process. The certification form, which is attached as an appendix to this rule is also being amended. The purpose of this amendment is to add a line in which the investor states which entity they are an investor in, allowing for a more efficient review process.
  • 3772-3-03 (amendment), titled “Duty to update information.” This rule specifies the circumstances under which an investor must notify the Commission of a change in certain information, including changes in percentage of ownership, name changes, non-routine gaming agency investigations, and administrative actions taken by gaming agencies against the investor. The amendment to this rule streamlines rule language and clarifies that the duty extends to institutional investors of gaming-related vendors, as well as casino operators and management companies.
  • 3772-3-04 (amendment), titled “Rescission of designation as an institutional investor.” This rule specifies under which circumstances the Commission’s designation as an institutional investor may be rescinded. These circumstances are if the investor notifies the Commission or the Commission discovers that the investor intends to exercise influence over the affairs of the entity. The purpose of this rule is to ensure that institutional investors are not actually engaged in or participating in the conduct of casino gaming without the appropriate license issued under R.C. Chapter 3772. The amendment to this rule streamlines rule language and clarifies that the duty extends to institutional investors of gaming-related vendors, as well as casino operators and management companies.
  • 3772-3-05 (rescind), titled “Records retention requirements for a casino operator, management company, holding company, and gaming-related vendor licensee.” This rule is being rescinded. The language of the rule is being moved to Ohio Adm. Code 3772-1-07 and 3772-10-05. The purpose of the amendment is to streamline the Administrative Code and to move the rule’s language into Ohio Adm. Code Chapter 1 “General Provisions” from Chapter 3 “Institutional Investors and Records Retention.” The rule itself will be reserved for future use.
  • 3772-3-06 (amendment), titled “Passive investor.” This rule specifies that investors who do not meet the institutional investor threshold shall not exercise influence over the affairs of an entity. Investors who do so will no longer be considered passive investors. The purpose of this rule is to ensure that passive investors are not actually engaged in or participating in the conduct of casino gaming without a license issued under R.C. Chapter 3772. The amendment solely streamlines rule language. 

3772-5 Key Employee Licenses (6 rules)

  • 3772-5-01 (amendment), titled “Key employee license required.” This rule lists the positions for which a key employee license is required. The amendment to this rule largely consists of the streamlining changes noted above, allowing for the deletion of “applicant or licensee” and “management company.” Additionally, there are some minor changes to the list of employees required to obtain a key employee license. For example, the list is amended to clarify the already-ongoing practice of requiring marketing directors to obtain a key employee license. The purpose of this rule is to ensure that those people who have the power to exercise significant influence over entities engaged in casino gaming are suitable to do so, through the Commission’s key employee licensure process.
  • 3772-5-02 (amendment), titled “Key employee license application, license period and provisional license.” This rule describes the key employee licensure process and states that key employees can apply by submitting the application, paying the application fee, and providing the Commission with any other requested information. The rule also provides specifics as to when an entity engaged in casino gaming in Ohio may pay the application fee on behalf of the employee and specifies that the license expires after three years. The amendment to this rule largely consists of the streamlining and consistency changes noted above, including removing a notification process in dealing with public records requests, which was previously made to Ohio Adm. Code 3772-4-01 and to other rules in this batch. The rule also extends the time period in which a licensee must apply for a renewal to one-hundred-and-twenty days before expiration from ninety to allow the Commission enough time to obtain statutorily-required criminal record checks and appropriately review the application. The purpose of this rule is to ensure that those people who have the power to exercise significant influence over entities engaged in casino gaming are suitable to do so, through the Commission’s key employee licensure process.
  • 3772-5-03 (amendment), titled “Key employee fees.” This rule sets the key employee application fee at $2,000.00 and the license fee at $500.00. The rule further clarifies under what circumstances entities engaged in casino gaming may pay the fee on behalf of the employee. The amendment to this rule largely consists of the streamlining changes noted above, in addition to other small grammatical changes. The purpose of this rule is to set fees commensurate with the investigation and licensure costs that the Commission incurs during the licensing investigation.
  • 3772-5-04 (amendment), titled “Duty to update information.” This rule sets out the information that a key employee must update the Commission about should that information change, including changes of contact information, bankruptcies, and criminal charges or convictions, among others. The amendment to this rule largely consists of the streamlining and consistency changes noted above. The amendment also clarifies that the licensee must update the Commission on criminal convictions and not just charges. This clarifies a current practice. The purpose of this rule is to ensure that the Commission’s information remains current with respect to each licensee’s suitability.
  • 3772-5-05 (amendment), titled “Affirmative license standards.” This rule echoes many of the statutory requirements for licensure found in R.C. 3772.10, including the factors the Commission shall consider in making a licensure determination and the requirement that the applicant establish suitability by clear and convincing evidence. The amendment to this rule largely involves small housekeeping changes, in addition to extending the period over which the Commission must consider whether the individual has been a defendant in litigation from ten years to fifteen. The purpose of this rule is to ensure that those people who have the power to exercise significant influence over entities engaged in casino gaming are suitable to do so, through the Commission’s key employee licensure process.
  • 3772-5-06 (amendment), titled “Key employee temporary credential.” This rule specifies that key employees must always display their credential issued by the Commission. The rule further provides for how a key employee may obtain a temporary credential. The amendment removes a prohibition on back-of-house entry for unlicensed employees, as a recognition that not all employees with access to the back of house may be licensed. Further, the amendment requires that employees using temporary credentials must apply for a duplicate credential within three days of using the temporary credential. This amendment is in response to a practice the Commission noted, where certain employees would be issued a temporary credential and never reapply for a duplicate permanent credential. The purpose of this rule is to ensure that key employees are easily identifiable.

3772-6 Gaming- Related Vendor Licenses (5 rules)

3772-8 Casino Gaming Employee Licenses (6 rules)

  • 3772-8-01 (amendment), titled “Casino gaming employee license required.” This rule specifies those employees who must obtain a license to engage in the conduct of casino gaming. The amendment to this rule largely eliminates redundancies in positions and matches language used elsewhere in the Administrative Code. The purpose of this rule is to ensure that those persons who are engaged in the conduct of casino gaming are suitable to do so.
  • 3772-8-02 (amendment), titled “Casino gaming employee license application, license period, and provisional license.” This rule describes the casino gaming employee licensure process and states that casino gaming employees can apply by submitting the application, paying the application fee, and providing the Commission with any other requested information. The rule also provides for specifics as to when an entity engaged in casino gaming in Ohio may pay the application fee on behalf of the employee and specifies that the license expires after three years. The rule also extends the time period in which a licensee must apply for a renewal to one-hundred-and-twenty days before expiration from ninety to allow the Commission enough time to appropriately review the application. The purpose of this rule is to ensure that those persons who are engaged in the conduct of casino gaming are suitable to do so.
  • 3772-8-03 (amendment), titled “Casino gaming employee fees.” This rule sets the initial casino gaming employee application fee at $250.00 and the license fee at $250.00. Further, the rule sets the renewal casino gaming employee application fee at $100.00 and the licensure fee at $50.00. In addition, the rule clarifies under what circumstances entities engaged in casino gaming may pay the fee on behalf of the employee. The amendment to this rule largely consists of the streamlining changes noted above, in addition to other small grammatical changes. The purpose of this rule is to set fees commensurate with the investigation and licensure costs that the Commission incurs during the licensing investigation.
  • 3772-8-04 (amendment), titled “Duty to update information.” This rule sets out the information that a casino gaming employee must update the Commission about should that information change, including changes of contact information, bankruptcies, and criminal charges or convictions, among others. The amendment to this rule largely consists of the streamlining and consistency changes noted above. The amendment also clarifies that the licensee must update the Commission on criminal convictions and not just charges. This clarifies a current practice. The purpose of this rule is to ensure that the Commission remains up to date on any information that may affect the employee’s suitability.
  • 3772-8-05 (amendment), titled “Affirmative license standards.” This rule echoes many of the statutory requirements for licensure found in R.C. 3772.10, including the factors the Commission shall consider in making a licensure determination and the requirement that the applicant establish suitability by clear and convincing evidence. The amendment to this rule largely involves small housekeeping changes, mostly changing the term “applicant” to “individual.” The purpose of this rule is to ensure that those people who engage in casino gaming are suitable to do so, through the Commission’s licensure process.
  • 3772-8-06 (amendment), titled “Casino gaming employee license temporary credential.” This rule specifies that casino gaming employees must always display their credential issued by the Commission when on duty. The rule further provides for how an employee may obtain a temporary credential. The amendment removes a prohibition on back-of-house entry for unlicensed employees, as a recognition that not all employees with access to the back of house may be licensed. Further, the amendment requires that employees using temporary credentials must apply for a duplicate credential within three days of using the temporary credential. This amendment is in response to a practice the Commission noted, where certain employees would be issued a temporary credential and never reapply for a duplicate permanent credential. The purpose of this rule is to ensure that casino gaming employees are easily identifiable.

3772-10 Internal Control Systems (1 rule)

3772-10-05 (amendment), titled “Forms, records, and documents.” This rule is being amended to help accomplish the rescission of Ohio Adm. Code 3772-3-05, from which the language is largely adopted. Portions of this rule related to records retention have been moved to new rule Ohio Adm. Code 3772-1-07.  This rule contains internal control requirements for the use and retention of the records required to be retained by Ohio Adm. Code 3772-1-07 and contains requirements related to the receipt, control, and issuance of prenumbered forms and the internal controls required for doing so.  Finally, the rule also describes the forms and procedures necessary for each casino operator to maintain with respect to accounting for gaming and financial activities.  The purpose of this rule is to ensure that all casino operators have proper internal controls in place regarding record retention, the handling of prenumbered accounting forms, and which accounting procedures and forms are required at each casino facility.  

Associated CSI Documents
Business Impact Analysis

 

Contact Information for Comments

The Commission welcomes comments regarding these proposed rules. To ensure your comments are considered as part of the Common Sense Initiative (“CSI”) review period, the Commission should receive them no later than September 7, 2016.

Any questions or comments with respect to these rules may be directed to Michelle Siba via email at Michelle.Siba@casinocontrol.ohio.gov or U.S. Mail at 10 West Broad Street, 6th Floor, Columbus, Ohio 43215. Comments may also be directed to the CSI Office at csipubliccomments@governor.ohio.gov.


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