New Jersey Administrative Code › Title 13 - LAW AND PUBLIC SAFETY › Chapter 74C - EXCHANGE WAGERING › Subchapter 3 - TRANSFER OR ASSIGNMENT OF EXCHANGE WAGERING LICENSE TO A SUCCESSOR IN INTEREST; OPERATION OF EXCHANGE WAGERING SYSTEM BY PERSON OR ENTITY OTHER THAN THE EXCHANGE WAGERING LICENSEE; IN-STATE REQUIREMENT FOR EXCHANGE WAGERING SYSTEM COMPONENTS; REGULATORY COSTS; EXCHANGE WAGERING SYSTEM REVENUE DISTRIBUTION › Section 13:74C-3.2 - Operation of exchange wagering system by person or entity other than the exchange wagering licensee; exchange management agent; and exchange services agent

Current through Register Vol. 56, No. 14, July 15, 2024
(a) The
				exchange wagering licensee may employ an exchange management agent, subject to
				the following requirements:
1. In the event
				the exchange wagering licensee intends to enter into a written agreement with
				an exchange management agent, the parties to the proposed agreement shall file
				a joint petition with the Commission seeking approval for such. Through the
				petition, the parties shall specify whether the exchange management agent is to
				conduct or operate the exchange wagering system for the exchange wagering
				licensee, whether the exchange management agent will act as agent for the
				Authority in all matters approved by the Commission, and whether the exchange
				management agent will employ other persons or entities to perform any of its
				duties. With the prior approval of the Commission, the exchange wagering
				licensee and exchange managing agent may enter into such a written agreement.
				Notwithstanding this ability, exchange wagering shall only be conducted by the
				exchange wagering licensee pursuant to a valid exchange wagering license issued
				by the Commission, which shall at all times be held by the exchange wagering
				licensee.
2. The Commission shall
				not approve such a written agreement unless it is demonstrated, by clear and
				convincing evidence, that: both the written agreement and the written internal
				control procedures of the exchange wagering licensee set forth sufficient
				provisions to ensure that the exchange wagering licensee maintains meaningful
				and adequate oversight controls with respect to both the exchange wagering
				system and its exchange wagering license; and that the written internal control
				procedures of the exchange management agent set forth procedures to be
				implemented, as may be appropriate, considering the functions to be performed
				by the exchange management agent, to effectively operate the exchange wagering
				system; to ensure that wagers placed through the exchange wagering system will
				be accurately processed and that all aspects of wagering integrity and wagering
				recordkeeping will be maintained; to effectively ensure that the exchange
				wagering system operates with fiscal soundness and technological reliability;
				to effectively ensure that there will be sufficient safeguards to maintain the
				integrity of the horse racing industry in this State; and to effectively ensure
				compliance with this chapter. As required at
				N.J.A.C.
				13:74C-2.1(b)8  and 2.2(d)8,
				the internal control procedures of the exchange wagering licensee shall include
				a certification that it has reviewed the internal control procedures of the
				exchange management agent and finds them to be sufficient.
3. The written agreement between the exchange
				wagering licensee and exchange management agent shall with specificity
				designate which functions related to the exchange wagering system shall be
				maintained or retained by the exchange wagering licensee, and which functions
				related to the exchange wagering system shall be performed by the exchange
				management agent.
4. The written
				agreement between the exchange wagering licensee and exchange management agent
				shall contain provisions that clearly provide for the portion of exchange
				wagering revenues payable to the exchange management agent as
				compensation.
5. Prior to acting
				upon a joint petition to approve such a written agreement, the Commission shall
				initiate and conduct an investigation into the qualifications of the person or
				entity subject of the exchange management agent license application, at cost to
				such person or entity. The Commission shall not approve any such written
				agreement unless the exchange management agent demonstrates, by clear and
				convincing evidence, that it and its employees are suitable, in terms of
				background and qualifications, to perform the functions subject of the written
				agreement, and to hold a license by the Commission to engage in such
				activities.
6. The Commission may
				prescribe such conditions and terms, as the Commission deems appropriate, in
				approving any written agreement pursuant to this section.
7. Unless otherwise approved by the
				Commission, a person or entity approved by the Commission as an exchange
				management agent shall be responsible for any regulatory requirements or
				conditions previously imposed upon the exchange wagering licensee, as concerns
				the particular functions assumed by such person or entity.