Chapter 06. New Racetrack License
Regulation .01 Purpose.LinkCopy Citation
The purpose of this chapter is to set forth the procedures to be followed in the application for, and the issuance of, a new racetrack license.
Regulation .02 Application Fee.LinkCopy Citation
A.
An applicant for a new racetrack license shall pay an application fee of $30,000 upon the filing of the application.
B.
Except as provided in Regulation .05F(2) of this chapter, the application fee is nonrefundable.
Regulation .03 Application Period.LinkCopy Citation
A.
When the Commission intends to consider the issuance of a license for a new racetrack, the Commission shall advertise in the Maryland Register an application period, not to exceed 60 days, during which the Commission shall accept application documents.
B.
The Commission shall specify the type, and general geographic area, of the racetrack for which it will consider applications.
C.
The advertisement shall be published at least 30 days before the first day of the application period.
D.
To be timely, the application documents shall be delivered to the Commission not later than 5 p.m. on the last day of the application period.
E.
An application delivered after the deadline may not be accepted and may not be considered by the Commission.
Regulation .04 Document Submission.LinkCopy Citation
Documents required to be submitted to the Commission under this chapter shall consist of an original and ten copies.
Regulation .05 Application Procedure.LinkCopy Citation
A.
The application procedure consists of the following two phases:
(1)
Phase I, which requires the submittal of the items specified in Regulation .06 of this chapter; and
(2)
Phase II, which requires the submittal of all of the other information required by this chapter.
B.
Upon the certification of one or more applications as required under Regulation .08 of this chapter, the Commission shall conduct a hearing in accordance with State Government Article, Title 10, Annotated Code of Maryland, to determine which, if any, applicant should be approved to proceed to Phase II.
C.
Opportunity for Local Comment. Before approving an applicant to proceed to Phase II, the Commission shall:
(1)
Conduct a hearing in the county seat of the county in which the proposed racetrack is to be located to receive and consider comments from local government officials, residents, and businesses; and
(2)
At least 15 days before the hearing:
(a)
Advertise the date, time, and location of the hearing in a publication serving the area in which the proposed racetrack facility is to be located, and
(b)
Notify the executive and legislative branches of the county and local governments for the jurisdiction within which the proposed racetrack facility is to be located of the date, time, and location of the hearing.
D.
Prepared Testimony.
(1)
An applicant who wishes to present written testimony at a hearing on the application shall file with the Commission an original and nine copies of the written testimony and all attachments not later than 21 days before the date set for the hearing or on a date ordered by the Commission.
(2)
The applicant's written testimony is required to be submitted in printed or typewritten form on 8 1/2 by 11 inch paper.
(3)
If an expert witness is to appear and testify on behalf of the applicant, the applicant shall, not later than 21 days before the date set for the hearing or on a date ordered by the Commission:
(a)
Supply the written testimony of the witness; and
(b)
Attach to the written testimony of the expert witness:
(i)
A brief description of the witness, and
(ii)
The portions of the application that the witness is identifying or sponsoring.
E.
Commission. In determining whether to grant or deny approval to proceed to Phase II, the Commission shall consider the following factors:
(1)
The applicant's financial stability;
(2)
The financial viability of the proposed racetrack;
(3)
The location of the proposed racetrack;
(4)
Facilities for patrons and individual licensees;
(5)
Facilities for horses;
(6)
The potentials for conflict with other licensed race meetings;
(7)
The anticipated effect of the race meeting on the breeding industry in the State;
(8)
The anticipated effect of the race meeting on the State and local economy from tourism, increased employment, and other sources; and
(9)
If the granting of a license is in the best interests of racing in the State.
F.
If the Commission:
(1)
Approves an applicant to proceed to Phase II, the approved applicant shall submit the remaining information required by this chapter within 6 months of the approval; or
(2)
Does not approve an applicant to proceed to Phase II, the Commission may refund that portion of the application fee it determines was not expended on administrative, investigative, and hearing costs.
G.
Upon the submittal of all the information required in Phase II, the Commission shall:
(1)
Review the materials submitted; and
(2)
Conduct a hearing to determine if a new racetrack license should be granted to the applicant.
Regulation .06 Phase I Documents and Information.LinkCopy Citation
The following documents and information, sworn before a notary public as to the truth and validity by the applicant or, if the applicant is not an individual, by the chief executive officer of the applicant, shall be submitted to the Commission in Phase I:
A.
A completed application form obtained from the Commission which shall provide for:
(1)
The name of the applicant;
(2)
The address of the principal office of the applicant in Maryland;
(3)
The exact location of the proposed racetrack;
(4)
A detailed description of the proposed racetrack and racetrack facilities;
(5)
Operational plans, including the:
(a)
Type of racing,
(b)
Number of days of live racing,
(c)
Number of races per day, and
(d)
Number of days of simulcast racing; and
(6)
A projected satellite simulcast betting network;
B.
The information required under:
(1)
Regulations .10—.12 of this chapter regarding personal and financial background;
(2)
Regulations .13—.18 0f this chapter regarding ownership; and
(3)
Regulations .29—.34 of this chapter regarding financial matters, including audited financial statements;
C.
A time schedule estimating when each of the following tasks will begin and end following an approval by the Commission to proceed to Phase II:
(1)
Acquiring land;
(2)
Soliciting bids;
(3)
Awarding construction contracts;
(4)
Construction;
(5)
Hiring management personnel;
(6)
Staffing and implementing a marketing plan;
(7)
Training staff; and
(8)
Obtaining all necessary local use permits from governmental authorities including zoning and liquor sales;
D.
The applicant's business structure, including an organizational chart;
E.
A statement that the applicant accepts the risk of adverse publicity, embarrassment, criticism, or other circumstance, including financial loss, that may result from action by the Commission regarding the application;
F.
An express and irrevocable waiver of claims against the Commission, its members and employees, and the State of Maryland from each individual who provides information under Regulation .10 of this chapter for any damages that may result from actions, errors, or omissions by the Commission regarding the application;
G.
A list containing the name, type of service rendered or expected to be rendered, and costs incurred to date and any additional projected costs of all paid consultants, including, but not limited to, veterinary, racetrack design or maintenance, management, marketing, legal, or legislative services:
(1)
Used by the applicant during the 3-year period preceding the date the application was filed; and
(2)
Expected to be used by the applicant to prepare for a hearing on the application and to prepare the racetrack for racing; and
H.
The name, address, and telephone number of the individual designated by the applicant as the primary contact person for the Commission during the application process.
Regulation .07 Format.LinkCopy Citation
A.
The application documents shall be in printed or typewritten form on 81/2 by 11 inch paper.
B.
Architectural drawings shall be submitted on 11 by 17 inch paper, folded to 81/2 by 11 inches.
C.
The regulation and section of the regulation that requires the submission of a document shall be noted at the top of each page of the document.
D.
Photographs shall be supplied of any three-dimensional exhibits.
E.
The documents shall be submitted in three-ring binders, consisting of:
(1)
Three volumes for Phase I as follows:
(a)
Volume 1: Personal and Background Information,
(b)
Volume 2: Ownership, and
(c)
Volume 3: Financial Matters; and
(2)
Four volumes for Phase II as follows:
(a)
Volume 4: Executive Summary,
(b)
Volume 5: Site and Facilities,
(c)
Volume 6: Operations,
(d)
Volume 7: Safety and Security.
F.
Each volume listed under §E of this regulation shall be titled and contain a table of contents and dividers to clearly designate the various regulations covered in the volume.
G.
The documents within each volume shall be consecutively paginated.
H.
The Executive Summary shall reference the information submitted in Phases I and II, and shall contain:
(1)
An index of the entire application;
(2)
A table submitted on a form supplied by the Commission which contains information regarding the ownership and contributions of each officer, director, partner, or owner with an interest of 2 percent or more in the applicant; and
(3)
A table submitted on a form supplied by the Commission containing an attendance and wagering summary of information broken down by breed of racing and coordinated with the information submitted in the financial forecasts as required under Regulation .34 of this chapter.
Regulation .08 Review of Application for Completeness.LinkCopy Citation
A.
Not later than the 30th day after the last day of an application period, the Executive Director of the Commission shall review each application submitted to determine whether the application contains all the information required under Regulation .06 of this chapter.
B.
If the Executive Director determines that the required information has not been submitted, the Executive Director shall notify the applicant in writing and state the nature of the deficiency.
C.
An applicant notified in accordance with §B of this regulation may submit the documents necessary to complete the application not later than 15 days after notification.
D.
An applicant who is notified in accordance with §B of this regulation and who fails to submit the requested documents in a timely manner may not be certified by the Executive Director, and the Commission may not consider the application.
E.
When the Executive Director determines that an application contains all of the required information, the Executive Director shall:
(1)
Certify in writing that the application is received by the Commission; and
(2)
Deliver a copy of the certification to the applicant.
Regulation .09 Changes in Application.LinkCopy Citation
A.
If information submitted by an applicant as part of a racetrack application changes or becomes inaccurate before the Commission acts on the application, the applicant shall immediately notify the Executive Director in writing of the change or inaccuracy.
B.
After a racetrack application has been filed by an applicant, the applicant may not amend the application except:
(1)
To address a deficiency in accordance with a notice sent under Regulation .08 of this chapter;
(2)
As required by the Commission or the Commission staff for clarification of information contained in the application; or
(3)
To address a change in the circumstances surrounding the application that was outside the control of the applicant and that affects the ability of the applicant to comply with the law or the regulations of the Commission.
C.
To amend an application under §B(3) of this regulation, an applicant shall file with the Executive Director a written request to amend the application, stating:
(1)
The change in the circumstances surrounding the application that necessitates the amendment;
(2)
The nature of the amendment; and
(3)
The reason why the amendment is necessary to bring the application into compliance with the law or the regulations of the Commission.
D.
An applicant filing a request under §C of this regulation shall serve a copy of the request on any other applicant.
E.
The Commission shall grant or deny each request filed under §C of this regulation.
F.
A request shall be granted if the applicant demonstrates that:
(1)
The circumstances requiring the amendment were outside the control of the applicant;
(2)
Before the change in the circumstances surrounding the application, the application complied with the pertinent provisions of the law or the regulations of the Commission;
(3)
The amendment is necessary to bring the application into compliance with the pertinent provisions of the law or the regulations of the Commission; and
(4)
The amendment does not unfairly surprise another applicant.
Regulation .10 Personal and Background Information.LinkCopy Citation
A.
Except as otherwise provided by this regulation, the application documents shall include the information under §B of this regulation, for an individual who is:
(1)
The applicant;
(2)
A director, officer, or key management individual with the applicant;
(3)
A partner of the applicant; or
(4)
An owner of an interest in the applicant of 2 percent or more.
B.
An individual listed under §A of this regulation shall furnish the following:
(1)
Full name and any previous names or aliases;
(2)
Date of birth;
(3)
Physical description;
(4)
Home and business addresses and telephone numbers;
(5)
Driver's license number and state of issuance;
(6)
Social Security number; and
(7)
Passport or I.D. photo.
C.
If the applicant is a corporation, the application documents shall state the:
(1)
State in which the applicant is incorporated; and
(2)
Name and address of the applicant's agent for service of process in Maryland.
D.
If an applicant is a nonprofit corporation, only an individual who is a director or officer of the applicant shall provide the information required under §B of this regulation.
E.
Inadvertent, nonsubstantive errors that might be made in furnishing the information required by this regulation may not be used as a reason by the Commission for disqualifying the applicant.
Regulation .11 Information for Background Investigation.LinkCopy Citation
A.
An individual required to provide information under Regulation .10 of this chapter shall also submit a set of the individual's fingerprints and complete a background form supplied by the Commission which includes a statement disclosing whether the individual has ever been:
(1)
Arrested;
(2)
Convicted of, pled nolo contendere to, or received probation before judgement for, a felony or misdemeanor, other than a misdemeanor traffic offense;
(3)
Sanctioned by a government agency related to horse racing;
(4)
Found liable in connection with a civil action related to horse racing;
(5)
A debtor in a bankruptcy proceeding; or
(6)
Denied a bond.
B.
The forms submitted in compliance with this regulation shall be submitted under separate cover labeled “Background Investigation Forms—Confidential” and include the fingerprint cards required by this regulation.
Regulation .12 Consent for Investigation.LinkCopy Citation
An individual required to provide personal and background information under Regulation .10 of this chapter shall provide a statement that irrevocably gives consent to the Commission and persons authorized by the Commission to:
A.
Verify all information provided in the application documents; and
B.
Conduct a background investigation of the individual.
Regulation .13 Organizational Documents.LinkCopy Citation
A.
If the applicant is a corporation, the application documents shall include a:
(1)
Statement of when the corporation was organized;
(2)
Copy of the articles of incorporation and bylaws of the corporation;
(3)
Statement and documentation of whether the corporation has been reorganized or reincorporated during the 5-year period preceding the date on which the application documents are submitted to the Commission; and
(4)
Statement and documentation of whether the corporation has filed restated articles of incorporation.
B.
If the applicant is an unincorporated business association, the application documents shall include a:
(1)
Copy of each organizational document of the applicant, including any partnership agreement; and
(2)
Description of any oral agreements involving the organization of the applicant.
Regulation .14 Owners.LinkCopy Citation
A.
If the applicant is an unincorporated business association, the application documents shall identify:
(1)
Each person who exercises voting rights in the applicant; and
(2)
Each person who directly or indirectly owns 2 percent or more of the business association.
B.
If the applicant is authorized to issue capital stock, the applicant shall state, for each class of stock authorized, the:
(1)
Total number of shares;
(2)
Par value, if any;
(3)
Voting rights;
(4)
Current rate of dividend; and
(5)
Number of shares outstanding and the market value of each share.
C.
If the applicant is a corporation, the application documents shall identify each person who:
(1)
Exercises voting rights in the corporation; and
(2)
Directly or indirectly owns 2 percent or more of the corporation.
D.
The application documents shall include a certified copy of each voting trust or voting agreement in which capital stock of the applicant is held and shall state the:
(1)
Name and address of each stockholder participating in the trust or agreement;
(2)
Class of stock involved; and
(3)
Total number of shares held by the trust or agreement.
E.
The application documents shall describe the terms of any proxy by which any capital stock may be voted and shall state the:
(1)
Name and address of the person holding the proxy;
(2)
Name and address of the stockholder who granted the proxy;
(3)
Class of stock for which the proxy may vote; and
(4)
Total number of shares voted by the proxy.
F.
The application documents shall state any provisions, and the procedures by which these provisions may be modified, for the redemption, repurchase, retirement, conversion, or exchange of an ownership interest.
G.
The application documents shall state whether the applicant's stock may be traded through options and whether the corporation or a stockholder has executed an agreement or contract to convey any of the corporation's or the stockholder's stock at a future date.
H.
The application documents shall include a copy or a description of each agreement or contract disclosed under §G of this regulation.
I.
The application documents shall include a copy of each prospectus, pro forma, or other promotional material given to potential investors about the proposed racetrack.
J.
The application documents shall provide full disclosure for any stock options that may exist or have been granted.
Regulation .15 Directors, Officers, and Partners.LinkCopy Citation
A.
If the applicant is not an individual, the application documents shall include a list of the individuals who are serving, or who are designated to serve, during the first year after the date the application documents are submitted to the Commission, either as a director, officer, partner, or an individual having key management responsibility.
B.
For each individual listed under §A of this regulation, the applicant shall provide:
(1)
The individual's name and address;
(2)
Each position or office of the applicant held by the individual;
(3)
The individual's principal occupation during the 5-year period preceding the date on which the application documents are submitted to the Commission; and
(4)
The nature and extent of any ownership interest that the individual has in the applicant.
Regulation .16 Controlling Entity.LinkCopy Citation
The application documents shall:
A.
State whether another entity has a beneficial ownership in the applicant, as defined in Business Regulation Article, §11-301, Annotated Code of Maryland;
B.
Describe the:
(1)
Nature of the beneficial ownership, and
(2)
Extent of control exercised by the beneficial owner; and
C.
Include information and documents required under Regulations .10 —.15 of this chapter as to each beneficial owner.
Regulation .17 Lease of Racetrack by Applicant.LinkCopy Citation
A.
If an applicant for a license to operate a new racetrack intends to lease the racetrack facility from another person, the application documents shall include the information required by Regulation .10 of this chapter as it pertains to the lessor.
B.
The application documents shall include a copy of the lease agreement and every other agreement or contract between the lessor and lessee.
C.
The Commission may not grant a license to a person applying under this chapter if the Commission determines that the:
(1)
Lessor would not be qualified to be issued a license; or
(2)
Lease is a subterfuge to avoid compliance with one or more provisions of this chapter.
Regulation .18 Outside Interests.LinkCopy Citation
A.
The application documents shall state whether the applicant, a director, officer, or partner of the applicant, or an owner of an interest in the applicant of 2 percent or more:
(1)
Has ever held an ownership interest in a licensee of the Commission; or
(2)
Is currently engaged in the business of racing in another state and the nature and extent of that involvement.
B.
The applicant shall describe the nature of participation stated under §A of this regulation.
Regulation .19 Location of Racetrack.LinkCopy Citation
The application documents shall include:
A.
The name of the county and, if applicable, the municipality in which the racetrack is to be located;
B.
The legal description of the racetrack site;
C.
The name and address of each person who has held title to the real property during the 5-year period preceding the date on which the application documents are filed;
D.
The name and address of each person who holds a mortgage or other security interest in the real property;
E.
An unconditional commitment by the owner of the real property for a title insurance policy;
F.
An aerial photograph of the racetrack site;
G.
A photograph of the site from each roadway adjacent to the site; and
H.
A description of the current commercial and industrial uses for all property within a 1-mile area around the racetrack site.
Regulation .20 Zoning and Government Improvements.LinkCopy Citation
A.
The application documents shall:
(1)
Describe the applicable zoning designation for the racetrack site;
(2)
List any local zoning or special use permits, including liquor sales permits, that the applicant must obtain for the racetrack site;
(3)
Describe, for the permits listed under §A(2) of this regulation:
(a)
The procedure by which the applicant shall obtain the permits,
(b)
Conditions, if any, likely to be placed on the permits, and
(c)
The estimated dates on which the applicant will obtain the permits; and
(4)
State whether a variance is required for the height of the facilities.
B.
The application documents shall describe the sewer, water, and other utility improvements needed to adequately serve the racetrack site, and shall include:
(1)
The estimated cost of the improvements;
(2)
The estimated date of completion;
(3)
The names of the parties, whether public or private, initiating the improvements;
(4)
The names of the parties responsible for the costs of the improvements; and
(5)
If more than one party is responsible for the costs, the proportionate distribution of the costs among the parties.
C.
The application documents shall state the status of roadway improvements needed to ensure adequate access to the racetrack site and shall include:
(1)
The estimated cost of the improvements;
(2)
The estimated date of completion;
(3)
The names of the parties, whether public or private, initiating the improvements;
(4)
The names of the parties responsible for the costs of the improvements; and
(5)
If more than one party is responsible for the costs, the proportionate distribution of the costs among the parties.
D.
For the improvements described under §B or C of this regulation, the application documents shall:
(1)
State whether local government approval is necessary for making the improvements;
(2)
Include a description of the procedure by which the local government approval is obtained;
(3)
Indicate all conditions likely to be placed on the local government approval; and
(4)
Indicate the estimated date on which local government approval will be granted.
Regulation .21 Defects.LinkCopy Citation
The application documents shall state whether the racetrack site:
A.
Has any geological or structural defects and include a description of the engineering, design, and construction plans to remedy the defect; and
B.
Is located in a floodplain and include a description of the flood history of the site.
Regulation .22 Access and Transportation.LinkCopy Citation
A.
The application documents shall include a traffic flow study prepared by a traffic engineer containing a:
(1)
Statement, in miles, of the distance of the racetrack site from the center of the nearest population center;
(2)
Description and map of the roadway access to the racetrack site;
(3)
Photograph of each roadway that will be used to access the site;
(4)
Description of the transportation facilities that serve the population center; and
(5)
Description of the transportation facilities that will serve the racetrack site.
B.
The application documents shall state the experience and qualifications of the engineer who prepared the study submitted under this regulation.
Regulation .23 Architect's Plan.LinkCopy Citation
A.
The application documents shall include:
(1)
Layout drawings of the proposed:
(a)
Racing strip,
(b)
Facilities and equipment,
(c)
Facilities for horses and personnel, and
(d)
Customer facilities; and
(2)
A description of the experience of the architect who designed the proposed facility including a statement of the number of racetracks the architect has visited and designed.
B.
The drawings required under §A(1) of this regulation shall be:
(1)
To scale; and
(2)
In sufficient detail to:
(a)
Illustrate the facilities and equipment specified, and
(b)
Show the measurements of all areas including the barns and stalls.
Regulation .24 Racetrack Dimensions.LinkCopy Citation
A.
The application documents shall state the dimensions and specifications of each racetrack to be provided on association grounds, including the:
(1)
Total length;
(2)
Width;
(3)
Banking, with a description of the method of transition into and out of turns;
(4)
Radius of each turn and the length of each stretch and chute;
(5)
Type of inside and outside rail;
(6)
Composition and depth of the base, subsurface, and cushion of the racetrack with a schematic drawing of the racing surface;
(7)
Drainage system for the racing surface;
(8)
Location and design of the video towers;
(9)
Location and method of closing gaps in the rail;
(10)
Location of lighting for the racetrack;
(11)
Type of turf for a turf racetrack; and
(12)
Method by which the track will be winterized.
B.
The application documents shall describe the racing surface maintenance plan and the maintenance equipment, including equipment to water the racetrack.
Regulation .25 Public Areas.LinkCopy Citation
A.
The application documents shall state the specifications for areas of the racetrack facility to which the public will have access and include a description of the configuration and location of the:
(1)
Grandstand;
(2)
Total number of seats, designating the indoor and outdoor seats and the reserved and nonreserved seats;
(3)
Television monitors available for viewing by patrons;
(4)
Pari-mutuel facility;
(5)
Concession areas;
(6)
Restrooms;
(7)
Drinking fountains;
(8)
Special clubs or other facilities for certain patrons;
(9)
Turnstiles or the method for counting patrons; and
(10)
Fencing around the grandstand.
B.
The application documents shall describe the applicant's plans for maintaining and cleaning the public areas of the racetrack facility.
C.
The application documents shall describe the patterns for pedestrian traffic in and around the racetrack facility and the provisions for disabled patrons.
D.
The application documents shall state the maximum capacity of the facilities, and include the area in square feet of the grandstand.
Regulation .26 Parking Facilities.LinkCopy Citation
The application documents shall state the specifications for parking facilities for the racetrack, including a description of the:
A.
Access to the parking facilities from each roadway adjacent to the racetrack site;
B.
Location and number of spaces for each type of parking available, including public, Commission employee, individual licensee, and handicapped parking;
C.
Road surface to be used in the parking facilities; and
D.
Distance between the parking facilities and the grandstand.
Regulation .27 Facilities for Horses and Personnel.LinkCopy Citation
A.
The application documents shall describe the:
(1)
Facilities for stabling horses;
(2)
Facilities for obtaining specimens for testing horses and humans for drugs;
(3)
Prerace holding area and paddock;
(4)
Facilities for owners, trainers, and other racetrack personnel;
(5)
Facilities for a racetrack chaplain;
(6)
Lounge area, educational facilities, and other recreational facilities for racetrack personnel;
(7)
Facilities for jockeys and drivers;
(8)
Stand for the racing judges or stewards and the work areas for representatives of the Commission;
(9)
Size and composition of the planned path for horses from the stable area to the prerace holding area, paddock, racetrack, and test barn;
(10)
Areas and equipment in and around the stable area where horses may be cooled out or leisurely exercised, such as gallops, grass paddocks, pastures, wood chip trails, or electric walkers;
(11)
Equine and human ambulances and the location of a covered area for the equine and human ambulances; and
(12)
Child care facilities for the patrons or the licensees, if provided.
B.
The application documents shall describe the applicant's plans for maintaining and cleaning the facilities for horses and employees.
Regulation .28 Utilities and Easements.LinkCopy Citation
A.
The application documents shall describe the location of utilities throughout the racetrack site, including:
(1)
Whether electrical service is overhead or underground;
(2)
The location, depth, and size of water and sewer lines; and
(3)
Availability of a backup generator or other source of energy.
B.
The application documents shall state the name of each owner of an easement across the racetrack site and describe the nature of the easement.
Regulation .29 Fiscal Information.LinkCopy Citation
A.
The application documents shall include audited financial statements of the applicant for each of the 3 fiscal years preceding the date the application documents are submitted, including a:
(1)
Balance sheet; and
(2)
Profit and loss statement.
B.
If the applicant has been organized for less than 3 years, the application documents shall include audited financial statements for each fiscal year that the applicant has been organized.
C.
Information submitted under this regulation shall be prepared by an independent certified public accountant in accordance with generally accepted accounting principles.
Regulation .30 Loans.LinkCopy Citation
A.
The application documents shall state each loan made by the applicant in an amount that exceeds 1 percent of the applicant's net income for the year in which the loan was made.
B.
The disclosure for each loan listed under §A of this regulation shall include:
(1)
The name and address of the borrower;
(2)
The amount of the loan;
(3)
The terms of the loan; and
(4)
A copy of each document executed with respect to the loan.
Regulation .31 Debt.LinkCopy Citation
A.
The application documents shall describe any lien that encumbers 1 percent or more of the applicant's assets or 1 percent or more of the assets of a person with an ownership interest in the applicant of 25 percent or more.
B.
The disclosure for each lien listed under §A of this document shall include:
(1)
The name and address of the lender or secured party;
(2)
The amount of the indebtedness;
(3)
The terms of the lien; and
(4)
A copy of each document executed with respect to the lien.
Regulation .32 Budgets.LinkCopy Citation
A.
The application documents shall describe the costs of construction or improvement of the racetrack facilities.
B.
The disclosure required under §A of this regulation shall state whether each item is a fixed cost or a projection, and shall include the costs of:
(1)
Architectural and engineering services;
(2)
Land acquisition;
(3)
Site development;
(4)
Facility construction;
(5)
Equipment acquisition;
(6)
Capitalized interest;
(7)
Loan placement fees and other guarantee fees;
(8)
Any other financing costs relating to construction;
(9)
Administrative services relating to construction;
(10)
Legal services relating to construction; and
(11)
Other areas relating to construction, providing details of any costs exceeding 5 percent of the total cost of construction.
C.
The application documents shall describe the costs of operating the facility and the association before the first day of racing, including the costs of:
(1)
Promotion and advertising;
(2)
Application development;
(3)
Application fees;
(4)
Licensing fees;
(5)
Management, administrative, and other salaries;
(6)
Interest and other financing costs not related to construction; and
(7)
Other areas relating to operations, providing details of any costs exceeding 5 percent of the total costs.
Regulation .33 Funding.LinkCopy Citation
A.
The application documents shall state the source of funds for the construction or operation of the racetrack.
B.
If a source of funds listed under §A of this regulation is an equity contribution, the applicant shall disclose the:
(1)
Amount of contribution;
(2)
Terms of any commitment from that source; and
(3)
If the contribution is other than cash or cash equivalent, the basis for valuing the noncash contribution.
C.
If a source of funds listed under §A of this regulation is a debt contribution, the applicant shall disclose the:
(1)
Amount of contribution;
(2)
Terms of any commitment from that source; and
(3)
If the contribution is other than cash or cash equivalent, the basis for valuing the noncash contribution.
D.
The application documents shall include documents from which the Commission can conclude that financing for the racetrack is reasonably assured, such as a letter of commitment, and that the financing is conditioned only on conditions normal and customary to a sophisticated financing, such as acquisition of zoning variances, building permits, and other government approval.
E.
The application documents shall describe alternate sources of funds for unexpected occurrences, such as cost overruns, nonreceipt of equity or debt funds, or overestimated revenues.
F.
The application documents shall state the amount of working capital the applicant intends to have available for the first 6 weeks of racetrack operations, including funds for the payment of expenses for officials, drug testing, and purses.
G.
Together with the funding disclosures under this regulation, the application documents shall show proof of the financial ability of the applicant to complete the project.
Regulation .34 Financial Forecasts.LinkCopy Citation
A.
Based upon the experiences of one or more operating racetracks, the application documents shall include a financial forecast regarding the operation of the proposed racetrack and pari-mutuel wagering for each of the first 5 years after a license is granted and operations are started.
B.
The financial forecasts required under §A of this regulation shall include:
(1)
Forecasts of revenues, expenses, changes in capital accounts, and cash flows;
(2)
A projected balance sheet incorporating the financial forecast for each year for which a financial forecast is made stating the assets, liabilities, and amount of capital of the applicant, based on certain variables including:
(a)
Average daily attendance,
(b)
Average daily handle,
(c)
Average per capita wager,
(d)
Average number of admissions, including ticket price and free admission,
(e)
The shares for the State and the association from the pari-mutuel handle,
(f)
Minimum purse schedule,
(g)
Payroll,
(h)
Taxes,
(i)
Cost of interest,
(j)
Cost of insurance, legal, and accounting services,
(k)
Cost of operating supplies and services,
(l)
Cost of maintenance and repairs,
(m)
Cost of totalisator services and pari-mutuel operations,
(n)
Advertising and promotion expenses,
(o)
Travel expenses, and
(p)
Equipment depreciation.
C.
The financial forecasts required under this regulation shall be prepared by a certified public accountant and follow a format supplied by the Commission.
D.
The financial forecasts shall include a report on the forecasts prepared by an independent certified public accountant and both shall be in accordance with the Guide for Prospective Financial Statements, published by the Financial Forecasts and Projections Task Force of the American Institute of Certified Public Accountants.
E.
The application documents shall state the qualifications and background of the accountant who prepared the report submitted under this regulation.
F.
The application documents shall describe the criteria that were used to select the comparable racetracks for purposes of determining the information supplied under §B(2) of this regulation.
G.
The application documents shall include a projection of break-even operations prepared on the basis of cash flow from operations after debt service.
H.
The projections required under §G of this regulation shall be prepared using the same number of race days, simulcast only days, per capita handle, and other assumptions used in the financial forecasts and shall express the break-even point in terms of attendance per race day and simulcast only day.
Regulation .35 Race Meetings.LinkCopy Citation
A.
The application documents shall describe the type of race meetings the applicant plans to conduct each year, including the number of:
(1)
Live race meetings and the number of live race days per week; and
(2)
Simulcast race meetings and the number of simulcast race days per week.
B.
For each race meeting described under §A of this regulation, the documents shall indicate the time of day the races will be conducted, and the approximate number of races per breed to be offered.
Regulation .36 Management.LinkCopy Citation
A.
The application documents shall include a list of the individuals who will be responsible for the operation of the racetrack.
B.
For each individual listed under §A of this regulation, the documents shall:
(1)
Include a set of the individual's fingerprints;
(2)
Include the information required of an individual under Regulations .10—.12 of this chapter; and
(3)
State the individual's experience and qualifications in:
(a)
The racing industry, including pari-mutuel operations,
(b)
General business,
(c)
Finance and accounting, and
(d)
Security.
C.
The application documents shall include a copy of any written employment contract or state the terms of any oral employment agreement regarding employees of the racetrack.
D.
The documents required under §C of this regulation shall fully describe all benefit packages and incentives paid to an employee of the racetrack.
E.
The application documents shall include an organizational chart of the management personnel and the job description, compensation, proposed percentage ownership, and qualifications for each position.
F.
For each individual who has been hired to fill a key management position, the documents shall include a resume and state the total number of years experience the individual has in:
(1)
Pari-mutuel racing;
(2)
Non-pari-mutuel racing; and
(3)
Other businesses relevant to the management position.
G.
The application documents shall describe any training program for management personnel required or provided by the applicant.
H.
If the applicant intends to contract with a person or management company to manage the racetrack, the application documents shall include:
(1)
A copy of the written contract;
(2)
A description of the person or company's previous experience operating a pari-mutuel racetrack; and
(3)
All the information required by this regulation as it pertains to the person or company and its employees.
I.
The application documents shall describe the applicant's plans to include small businesses and minority-owned businesses in its construction and operations.
J.
The documents shall include a statement of the applicant's affirmative action plan.
Regulation .37 Concessions.LinkCopy Citation
A.
The application documents shall describe the applicant's plan for concessions, including food, beverages, and promotional products.
B.
If the applicant intends to contract with a person or a concessions company to provide the concessions, the application documents shall include:
(1)
A copy of the written contract; and
(2)
All the information required by Regulation .36 of this chapter as it pertains to the concessions company and its management personnel.
Regulation .38 Pari-Mutuel Operations.LinkCopy Citation
The application documents shall describe the applicant's pari-mutuel facilities and operations, including a description of the totalisator equipment proposed to be used.
Regulation .39 Operations Contracts.LinkCopy Citation
A.
If an association submits a written contract under Regulation .36, .37 or .38 of this chapter, the application documents shall include, for each party to the contract:
(1)
Audited financial statements and an auditor's report; or
(2)
Unaudited financial statements and a report by an independent certified public accountant.
B.
The application documents shall include a financial statement required by this regulation for each of the 3 years preceding the date the application documents are submitted.
C.
The application documents shall state the qualifications and background of the auditor or accountant who prepared the report submitted under this regulation.
D.
The Commission shall review each contract submitted under this regulation in executive session, with these documents deemed to be “Confidential Financial Information”.
Regulation .40 Out-of-State Distributions.LinkCopy Citation
The application documents shall state the amount of money that will be paid by the association, during each of the first 5 years of operation, to entities located outside Maryland as:
A.
Payments of profit or other distributions to investors residing outside Maryland;
B.
Interest on debt with lenders located outside Maryland;
C.
Payment for supplies purchased from, or services rendered by, entities based outside Maryland other than the management company;
D.
Payments to the management company as reimbursement for expenses or as payment for services;
E.
Rent for facilities or equipment owned by entities based outside Maryland; and
F.
Any other payments to out-of-State entities.
Regulation .41 Racing Equipment.LinkCopy Citation
The application documents shall describe the equipment to be used in conducting races, including the starting gate, the timing of the races, photo finish, and videotape equipment.
Regulation .42 Purse Structure.LinkCopy Citation
The application documents shall state the percentage of the takeout from the handle that will be allocated to purses.
Regulation .43 First Aid and Safety Monitoring.LinkCopy Citation
The application documents shall:
A.
Describe the first-aid facilities and personnel to be available at the racetrack, including the level of training of the personnel;
B.
State the travel time to the hospital nearest the racetrack and the average response time at that hospital; and
C.
Describe in detail the applicant's plans for monitoring the safety of the racing animals, patrons, and racetrack personnel.
Regulation .44 Security Documents.LinkCopy Citation
The application documents shall include plans that provide for the safety and security of the patrons, the racing animals, and the racetrack personnel.
Regulation .45 Local Emergency Services.LinkCopy Citation
The safety and security plans under Regulation .44 of this chapter shall describe the:
A.
Local emergency services available to the racetrack, including fire fighting, law enforcement, and medical emergency services;
B.
Security equipment for the racetrack facilities, such as fences, locks, alarms, and monitoring equipment, including the:
(1)
Perimeter,
(2)
Stables,
(3)
Paddock,
(4)
Cash room and the vault,
(5)
Mutuel ticket windows,
(6)
Tote room,
(7)
Prerace holding area and test barn, and
(8)
Parking lot; and
C.
Security procedures to be used to:
(1)
Admit individuals to restricted areas of the racetrack,
(2)
Transfer money and mutuel tickets in each phase of pari-mutuel operations, and
(3)
Expel and exclude an individual from the racetrack.
Regulation .46 Security Personnel.LinkCopy Citation
The safety and security plans under Regulation .44 of this chapter shall:
A.
Describe the security personnel at the racetrack;
B.
State whether the personnel will be employed by the association or by an independent contractor;
C.
Describe the organization and qualifications of the contractor, if the personnel are employed by an independent contractor;
D.
State the number of individuals to be employed and the area of the racetrack at which each will serve;
E.
State how many of the security personnel are law enforcement officers;
F.
Provide an organizational chart of the security force with a job description of each level;
G.
State the training requirements for the personnel and describe any training program provided by the association; and
H.
State whether or not the security personnel are bonded and, if so, state the amount and conditions of the bond and the name and address of the surety company that issued the bond.
Regulation .47 Fire Safety and Emergency Procedures.LinkCopy Citation
The safety and security plans shall describe:
A.
The fire safety and emergency procedures for the racetrack, including procedures for:
(1)
Protecting or evacuating the patrons and controlling traffic in an emergency, such as a natural disaster,
(2)
Inspecting the facilities for fire hazards,
(3)
Restricting smoking in areas where smoking would create a fire hazard, and
(4)
Coordinating the efforts of the security personnel and the local emergency services;
B.
How the proposed racetrack is in compliance with National Fire Protection Association standards;
C.
The alternate source of power in the event of a power failure and the length of time the alternate source is capable of providing power;
D.
The facilities for storing fuel for the alternate source of power; and
E.
The locations of fire hydrants on the racetrack site.
Regulation .48 Minority Participation.LinkCopy Citation
Any contract between the applicant and another party shall contain a provision for minority participation.
Regulation .49 Reasonable Diligence Required.LinkCopy Citation
A.
If the Commission determines that an association is failing to exercise reasonable diligence in preparing a new racetrack to begin racing on the date approved by the Commission, the Commission may revoke its approval of the applicant and reopen the application process.
B.
If the Commission takes action against an association under §A of this regulation, that association may not participate in the application process that is reopened.
Regulation .50 Hearing.LinkCopy Citation
A.
Before approving or denying a license, the Commission shall conduct a hearing on the application in accordance with State Government Article, Title 10, Annotated Code of Maryland.
B.
The burden of proof shall be on the applicant to show that the applicant complies with the regulations of the Commission regarding eligibility and qualifications for a license to operate a racetrack.
Regulation .51 Denial of License.LinkCopy Citation
A.
The Commission may deny a license if the Commission:
(1)
Does not approve of the information submitted in Phase I or II of the application procedure;
(2)
Determines that:
(a)
There has not been compliance with the time schedule submitted by the applicant under Regulation .06 of this chapter;
(b)
Construction was not completed in accordance with the plans approved by the Commission;
(c)
The operational plans of the applicant were not ready to be implemented;
(d)
The facility is not capable of conducting live racing; or
(e)
The applicant will not conduct live racing on the dates requested from the Commission; or
(3)
Determines that the applicant:
(a)
Has not complied with all applicable laws, regulations, and ordinances, including those provisions regarding:
(i)
Zoning,
(ii)
Health, and
(iii)
Alcoholic beverages;
(b)
Has violated a law or regulation related to horse racing;
(c)
Has been convicted of a crime related to illegal gambling;
(d)
Has been convicted of a felony or a crime of moral turpitude that is reasonably related to the applicant's fitness to hold a racetrack license;
(e)
Is not of good moral character;
(f)
Has engaged in any act that is detrimental to the best interest of racing;
(g)
Has failed to implement plans presented to the Commission;
(h)
Has failed to comply with promises made, to the Commission; or
(i)
Has failed to comply with any provision of this chapter.
B.
In addition to other reasons, the Commission may suspend or revoke its approval of an applicant if the Commission determines that the applicant:
(1)
Provided false information in the license application; or
(2)
Failed to fully disclose the true owners of all interests, beneficial or otherwise, in a proposed racetrack facility.
Chapter annotations
Authority: Business Regulation Article, §11-210, Annotated Code of Maryland
History: Effective date: December 13, 1999 (26:25 Md. R. 1897)