S829

An Act concerning the placement of wagers on the results of horse races and supplementing chapter 5 of Title 5 of the Revised Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “Exchange Wagering Act.”

2. The Legislature finds and declares that:

a. The horse racing industry is economically important to this State, and the general welfare of the people of the State will be promoted by the advancement of horse racing and related projects and facilities in the State.

b. It is the intent of the Legislature, by authorizing exchange wagering in this State, to promote the economic future of the horse racing industry in this State, to foster the potential for increased commerce, employment and recreational opportunities in this State and to preserve the State's open spaces.

c. It is the further intent of the Legislature that exchange wagers may be taken in person, by direct telephone call, or by communication through other electronic media, and that, subject to federal law, exchange wagers may be taken from residents of jurisdictions other than this State.

d. The Legislature has determined that the New Jersey Racing Commission is best suited to oversee, license and regulate exchange wagering in the State.

3. As used in this act:

"Authority" means the New Jersey Sports and Exposition Authority created by section 4 of P.L.1971, c.137 (C.5:10-4).

“Back” means to wager on a selected outcome occurring in a given market.

"Commission" means the New Jersey Racing Commission created by section 1 of P.L.1940, c.17 (C.5:5-22).

“Exchange wagers” means wagers formed when two or more persons are confirmed as having placed identically opposing wagers in a given market.

“Exchange wagering” means a form of wagering in which two or more persons place directly opposing wagers on the outcome of a horse race in a given market.

"Exchange wagering licensee" means the New Jersey Sports and Exposition Authority, provided that the commission has granted its approval for the authority to establish an exchange wagering system as provided for in this act.

“Exchange wagering system" means the system through which exchange wagers are processed by the exchange wagering licensee pursuant to this act.

“Identically opposing wagers” means wagers formed when a bettor lays a selected outcome at the same price at which another bettor backs that same outcome, with the total amount subject to the lay being wholly commensurate to the total amount subject to the back.

“Lay” means to wager on a selected outcome not occurring in a given market.

“Market” means a particular outcome of a horse race or set of horse races that is subject to exchange wagering.

“Price” means the odds at which an exchange wager is matched.

“State” means each State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

4. Notwithstanding any law, rule, or regulation to the contrary, exchange wagering on the results of horse races conducted in this State or at jurisdictions outside of this State shall be lawful, provided the wagers are placed through the exchange wagering system authorized in accordance with the provisions of this act, P.L. , c. (C. ) (pending before the Legislature as this bill), and in accordance with commission rules, regulations, and conditions established therefor.

5. The commission is hereby authorized to issue a license to the authority to establish an exchange wagering system in accordance with the provisions of this act, P.L. , c. (C. ) (pending before the Legislature as this bill). The licensing process shall include the filing by the authority of an exchange wagering license application developed by the commission.

At the time of filing an application for licensure under this section, the authority shall submit to the commission a non-refundable filing fee in an amount established by regulation by the commission, and a certification in a form prescribed by the commission which specifies, but is not limited to, information about the operation of the exchange wagering system and the authority's participation therein.

Within 14 days of receipt of a completed application, certification and applicable fees, the commission’s executive director shall determine whether the same is in due form and meets the requirements of law in all respects. No later than 60 days following the receipt of the application, the commission shall make a final determination on the application. The commission shall approve the application if it determines that the authority has demonstrated by clear and convincing evidence that wagers placed through the proposed exchange wagering system will be accurately processed and that there will be sufficient safeguards to maintain the integrity of the horse racing industry in this State.

The commission's determination shall be submitted to the Attorney General for review and approval. The determination of the commission shall be deemed approved by the Attorney General if affirmatively approved or not disapproved by the Attorney General within 14 days of the date of submission. The decision of the Attorney General shall be deemed a final decision. Upon approval by the Attorney General, the commission shall issue to the authority a license to establish the exchange wagering system. The exchange wagering license shall be valid for a term of one year, and shall be subject to renewal annually, unless a different timeframe is otherwise prescribed by regulation of the commission.

With the approval of the commission, the authority may enter into a contract or agreement with a person or entity to conduct or operate the exchange wagering system and to act as the agent of the authority in all exchange wagering matters approved by the commission. The exchange wagering license may not be transferred or assigned to a successor in interest without the approval of the commission and the Attorney General, which approval may not be unreasonably withheld.

6. a. The commission shall have full power to prescribe rules, regulations, and conditions under which exchange wagering may be conducted in this State, consistent with this act, P.L. , c. (C. ) (pending before the Legislature as this bill), including, but not limited to the manner in which exchange wagers may be accepted, the requirements for any person to participate in exchange wagering, the distribution of winnings, and the distribution of other sums involved in exchange wagers.

b. The commission shall have full power to prescribe rules, regulations and conditions under which the exchange wagering license is issued or renewed in this State, including requiring an annual audit of the exchange wagering licensee's books and records pertaining to exchange wagering, and to revoke, suspend or refuse to renew the license if in the opinion of the commission the revocation of, suspension of or refusal to renew such license is in the public interest; provided, however, that such rules, regulations and conditions shall be uniform in their application.

c. The commission shall have no right or power to determine who shall be officers, directors or employees of any exchange wagering licensee, or the salaries thereof; provided, however, that the commission may compel the discharge of any official or employee of the licensee or the exchange wagering system who: (1) fails or refuses for any reason to comply with the rules or regulations of the commission; (2) fails or refuses for any reason to comply with any of the provisions of this act; (3) fails to establish by clear and convincing evidence in the opinion of the commission good character, honesty, competency and integrity; or (4) has been convicted of a crime involving fraud, dishonesty or moral turpitude.

7. a. A person shall not be permitted to open an exchange wagering account, or place an exchange wager through the exchange wagering system, except in accordance with federal law and this act, through the exchange wagering licensee, and no entity, other than the exchange wagering licensee, shall accept an exchange wager from a person within this State or from another state. A person may not place an exchange wager unless the person has established an exchange wagering account with the exchange wagering licensee. To establish an exchange wagering account, a person shall be at least 18 years of age, and a resident of this State, or of another state within which the placement of wagers on the results of horse races would not be unlawful under federal law or the laws of that state.

b. The account shall be in the name of a natural person and may not be in the name of any beneficiary, custodian, joint trust, corporation, partnership or other organization or entity.

c. An account may be established by a person completing an application form approved by the commission and submitting it together with a certification, or other proof, of age and residency. The form shall include the address of the principal residence of the prospective account holder and a statement that a false statement made in regard to an application may subject the applicant to prosecution.

d. The prospective account holder shall submit the completed application to the exchange wagering licensee or such other person or entity as may be approved by the commission. The exchange wagering licensee may accept or reject an application after receipt and review of the application and certification, or other proof, of age and residency for compliance with this act.

e. Any prospective account holder who provides false or misleading information on the application is subject to rejection of the application or cancellation of the account by the exchange wagering licensee without notice.

f. The exchange wagering licensee shall have the right to suspend or close any exchange wagering account at its discretion.

g. Any person not in good standing with the commission shall not be entitled to maintain an exchange wagering account.

h. The address provided by the applicant in the application shall be deemed the proper address for the purposes of mailing checks, account withdrawals, notices and other materials.

i. An exchange wagering account shall not be assignable or otherwise transferable.

j. Except as otherwise provided in this act or in regulations which the commission may adopt hereunder, all exchange wagers shall be final and no wager shall be canceled by the account holder at any time after the wager has been accepted by the exchange wagering licensee.

k. The exchange wagering licensee may at any time declare the system closed for receiving any wagers on any race or closed for all exchange wagering.

8. a. Credits to an exchange wagering account shall be made as follows:

(1) The account holder's deposits to the exchange wagering account shall be submitted by the account holder to the exchange wagering licensee and shall be in the form of one of the following:

(a) cash given to the exchange wagering licensee;

(b) check, money order, negotiable order of withdrawal, or wire or electronic transfer, payable and remitted to the exchange wagering licensee; or

(c) charges made to an account holder's debit or credit card upon the account holder's direct and personal instruction, which instruction may be given by telephone communication or other electronic means to the exchange wagering licensee or its agent by the account holder if the use of the card has been approved by the exchange wagering licensee.

(2) Credit for winnings from wagers placed with funds in an exchange wagering account shall be posted to the account by the exchange wagering licensee.

(3) The exchange wagering licensee shall have the right to refuse for any reason all or part of any wager or deposit to the account.

(4) Funds deposited in the account shall not bear interest to the account holder.

b. Debits to a wagering account shall be made as follows:

(1) Upon receipt by the account wagering licensee of an account wager properly placed pursuant to section 9 of this act, P.L. ,

c. (C. ) (pending before the legislature as this bill), the exchange wagering licensee shall determine whether there are sufficient funds in the holder's wagering account to cover the amount of the wager and any additional applicable transaction or other fees due to the licensee under the commission’s rules and regulations. If so, the wager shall be accepted. Following the matching of the wager to an identically opposing wager or wagers, and determination of the outcome of the horse race or races on which the exchange wagers were placed by two or more exchange wagering account holders, the amounts due shall be deducted from the exchange wagering account of an account holder who lost the wager, and paid accordingly to the exchange wagering account of the account holder who won the wager, and any applicable transaction or other fees on the exchange wagering accounts shall be additionally deducted and retained by the licensee for use and distribution pursuant to the commission’s rules and regulations.

(2) The exchange wagering licensee may authorize a withdrawal from an exchange wagering account when the account holder submits to the licensee, the licensee's agent, or such other entity as may be approved by the commission the following:

(i) proper identification;

(ii) the correct personal identification number; and

(iii) a properly completed and executed withdrawal slip on a form approved by the commission.

Upon receipt of a properly completed and executed withdrawal form, and if there are sufficient funds in the account to cover the withdrawal, the licensee shall send, within three business days of receipt, a check to the holder at the address specified in the application for the exchange wagering account. The check shall be made payable only to the holder of the exchange wagering account and in the amount of the requested withdrawal.

9. The exchange wagering licensee may accept exchange wagers from residents of New Jersey and other states, only in accordance with this act, federal law, and the laws of the account holder’s state, and as follows:

a. A wager to back or lay a particular market, specifying the price of the wager, shall be placed directly with the exchange wagering licensee by the holder of the exchange wagering account.

b. The account holder placing the wager shall provide the licensee with the correct personal identification number of the holder of the exchange wagering account.

c. A licensee may not accept a wager, or series of wagers, in an amount in excess of funds on deposit in the wagering account of the holder placing the wager. Funds on deposit include amounts credited under section 8 of this act and in the account at the time the wager is placed.

d. Only the holder of an exchange wagering account shall place a wager. Unless otherwise approved by the commission, no person, corporation or other entity shall directly or indirectly act as an intermediary, transmitter or agent in the placing of wagers for a holder of an exchange wagering account; provided, however, that the use of credit or debit cards specifically approved by the licensee or the use of checks, money orders or negotiable orders of withdrawal or the use of telephonic, computer or electronic means by the account holder to place such wagers shall not be prohibited.

e. The account holder may place a wager in person, by direct telephone call or by communication through other electronic media, as may be lawful under federal law and the laws of the account holder’s state.

10. All amounts remaining in exchange wagering accounts inactive or dormant for such period and under such conditions as established by regulation shall be distributed in accordance with the commission’s rules and regulations.

11. All persons engaged in conducting wagering-related activities through the exchange wagering system, whether employed directly by the licensee or by a person or entity conducting or operating the exchange wagering system pursuant to a contract or agreement with the licensee, shall be licensed or registered in accordance with such regulations as may be promulgated by the commission hereunder. All other employees of the exchange wagering system shall be licensed or registered in accordance with regulations of the commission. The commission shall have full power to prescribe rules, regulations and conditions under which all such licenses are issued, or registrations made, in this State and to revoke or refuse to issue a license, or revoke or refuse to accept a registration, if in the opinion of the commission the revocation or refusal is in the public interest, provided, however, that such rules, regulations and conditions shall be uniform in their application, and further provided that no fee shall be in excess of $50 for each license so granted or registration accepted.

12. The provisions of this act shall be deemed to be severable, and if any phrase, clause, sentence or provision of this act is declared to be unconstitutional or the applicability thereof to any person is held invalid, the remainder of this act shall not thereby be deemed to be unconstitutional or invalid.

13. The commission shall promulgate rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), to effectuate the purposes of this act.

14. This act shall take effect immediately.

STATEMENT

This bill authorizes exchange wagering on the results of horse races, and provides that the New Jersey Racing Commission may issue a license to the New Jersey Sports and Exposition Authority to establish an exchange wagering system. Under the bill, exchange wagering may be conducted through that system by exchange wagering account holders who may be residents of this State, or of other jurisdictions in the United States within which wagering on the results of horse races is not unlawful under the laws of that jurisdiction and federal law.

Under the bill, “exchange wagering” is defined as a form of wagering in which two or more persons place directly opposing wagers on the outcome of a horse race or races. Exchange wagering allows a bettor to “back” or wager on a selected outcome occurring, and another bettor to “lay” or wager on that same outcome not occurring. A back and a lay become identically opposing wagers, and are matched, when a bettor lays a selected outcome at the same price at which another bettor backs that same outcome, with the total amount subject to the lay being wholly commensurate to the total amount subject to the back. These identically opposing wagers, which may involve at least two persons wagering, become exchange wagers when matched through the exchange wagering system. Under the bill, once the outcome of the race or races is determined, funds would be transferred from the exchange wagering account of the bettor who lost the wager to that of the bettor who won the wager, and applicable transaction or other fees would be levied by the exchange wagering licensee for use and distribution as provided by the commission’s rules and regulations.

The bill authorizes the commission to consider an application by the authority to establish the exchange wagering system. The commission is to issue the license if it determines that the authority has demonstrated, by clear and convincing evidence, that wagers placed through the proposed exchange wagering system will be accurately processed, and that the system would contain sufficient safeguards to maintain the integrity of the horse racing industry in this State. The issuance of the license is subject to the approval of the New Jersey Attorney General. The bill further provides that the authority may enter into a contract or agreement with a person or entity to conduct or operate the exchange wagering system, and may transfer the license to a successor in interest upon approval of the commission and the Attorney General.

The bill also prescribes certain conditions for the establishment of the exchange wagering system, including, but not limited to, the requirement for: (a) an exchange wagering account holder to be at least 18 years of age, and a resident of this State or of another United States jurisdiction within which the placement of wagers on the results of horse races would not be considered unlawful under the laws of that jurisdiction and federal law; (b) necessary documentation to be submitted by an applicant for an exchange wagering account in order to open the account and place wagers through the exchange wagering system; (c) the types of credits and debits that may be made to an exchange wagering account by the authority and the account holder; and (d) the manner in which wagers may be placed, in person, by direct telephone call, or by communication through other electronic media, as may be lawful under federal law and the laws of the account holder’s jurisdiction.

The bill further provides that the commission may promulgate the necessary rules and regulations with respect to exchange wagering, including, but not limited to, the manner in which exchange wagers may be accepted; the requirements for any person to participate in exchange wagering; the distribution of winnings and other sums involved in exchange wagers; conditions under which the exchange wagering license is issued or renewed in this State; performance of an annual audit of the exchange wagering licensee's books and records pertaining to exchange wagering; and the licensing of employees engaged in conducting wagering related activities.