Sec. 09.10.04.24. Telephone Account Betting

A. Definitions. In this regulation, the following terms have the meanings indicated:

(1) "Net betting revenue" means the gross amount of all bets placed through a TABS less:

(a) Return to bettors;

(b) State tax and all other amounts required by law to be paid to anyone other than a track licensee, horsemen, and breeders;

(c) Fees paid to the racetracks that hosted the live races in this State and out-of-State;

(d) Fees paid to a third-party operator of the TABS; and

(e) Costs of the racing association as agreed to between the:

(i) Racing association,

(ii) Organization representing a majority of the horsemen racing at the track where the TABS is operated, and

(iii) Organization representing a majority of the breeders of the breed of horses racing at the track where the TABS is operated.

(2) "Source market area" means the prescribed radius surrounding a racetrack within which the postal ZIP code for the principal residence of a telephone betting account holder is located.

(3) "Telephone account betting system (TABS)" means a system, established by a licensed racing association and approved by the Commission, by which an individual may open an account in order to bet on horse races by telephonic, electronic, or other means of communication.

B. General.

(1) Subject to the receipt of an application by a licensed racing association, the Commission may permit the racing association to establish and operate a TABS on days when the racing association is authorized to conduct racing.

(2) All bets placed through a TABS are:

(a) Considered to have been made in this State; and

(b) Subject to the laws of this State and the regulations of the Commission.

(3) A racing association operating a TABS may conduct betting on races through the TABS only on those races which the racing association is authorized to conduct.

C. Establishing and Maintaining Accounts.

(1) A telephone betting account may be established and maintained for an individual by a racing association authorized by the Commission to operate a TABS.

(2) A telephone betting account may be established for an individual whose principal residence is outside this State if the racing association complies with all applicable provisions of federal and state law.

(3) For the purposes of determining if a bet was made from within a source market area as provided under §Q of this regulation, the principal residential address of the individual account holder, as maintained by the TABS, is considered the location from which that bet originated.

D. A racing association shall obtain from each individual who applies for a telephone betting account the individual's:

(1) Name;

(2) Principal residential address including postal ZIP code;

(3) Social Security number;

(4) Proof of age and identity; and

(5) An initial deposit which is not:

(a) Less than the minimum amount established by the association, and

(b) More than $500, if the deposit is made by the use of a credit or debit card.

E. A racing association shall maintain the following information regarding each individual for whom it maintains a telephone betting account:

(1) Name;

(2) Principal residential address including postal ZIP code;

(3) Telephone number;

(4) Social Security number;

(5) Amount bet;

(6) Tracks on whose races bets were placed; and

(7) Such other information as the Commission may reasonably request.

F. A racing association shall furnish to each individual for whom it establishes an account:

(1) A personal identification number of not less than four alphanumeric characters;

(2) The identifying number assigned to the individual's account by the racing association;

(3) Instructions on how to operate the telephone betting account;

(4) Regulations of the Commission in regard to this type of betting; and

(5) Conditions imposed by the racing association on this type of betting.

G. A racing association may not establish an account for an individual who is younger than 18 years old.

H. Based on its business judgment, a racing association may:

(1) Refuse to establish an account for an individual; or

(2) Close the account of an individual.

I. A racing association may not accept a bet through a TABS if:

(1) The account holder does not submit the correct personal identification number; or

(2) The amount of the bet is greater than the available balance in the account.

J. Other than for bets and deposits, the only charges and credits that may be made to an account are the:

(1) Proceeds from a successful bet;

(2) Refunds;

(3) Withdrawals ordered by the account holder;

(4) Payments to an account holder upon the closing of the account;

(5) Fees, as established by a racing association and agreed upon by an account holder, for the maintenance of an account and related services; and

(6) Promotional considerations provided by the racing association.

K. Time.

(1) A racing association may delay the use of a deposit to an account, made with an instrument other than cash, until the time allowed by the banking industry for the dishonor of that instrument has passed.

(2) The proceeds from a successful bet, or the amount due from a refund, shall be credited to an individual's account as soon as reasonably practicable after the race or races upon which the bet was placed becomes official.

(3) A valid withdrawal order by the holder of an account shall be honored within 5 business days of its receipt.

(4) A racing association shall pay the account holder the balance in the account within 5 business days after the account is closed.

L. A racing association operating a TABS shall:

(1) Make an account activity report available to an account holder quarterly;

(2) Close an account which has not had any betting activity for a 12-month period; and

(3) Notify a Commission representative within 24 hours of the event, if for any reason a bet placed by an account holder in accordance with the established telephone account betting procedures is not accepted.

M. Exception to an Account Activity Report.

(1) If an account holder takes exception to an account activity report issued by a racing association as required by §L(1) of this regulation, the account holder shall submit the exception in writing to the racing association within 30 days of the issuance of the account activity report.

(2) If the exception is not resolved by the racing association within 15 days of its receipt, the racing association shall promptly notify, in writing, the:

(a) Commission of the exception; and

(b) Account holder of the right to request a hearing before the Commission to resolve the exception.

(3) Upon receipt of a request from an account holder to conduct a hearing to resolve the exception, the Commission shall schedule and conduct a hearing.

N. Accounts.

(1) Before being granted the right to operate a TABS, and every 6 months thereafter, a racing association shall furnish the Commission with proof that the account holders will be guaranteed the full value of their accounts regardless of the acts of the association or any other entity.

(2) If the proof offered under §N(1) of this regulation is not acceptable to the Commission, the Commission may require the racing association to purchase a bond or other form of insurance guaranteeing that the account holders receive the full value of their accounts.

O. An account holder shall notify the racing association maintaining that individual's account, in writing, of any change of the account holder's principal residential address.

P. Confidentiality.

(1) Except as otherwise provided, all information regarding an account shall be maintained in confidence by a racing association including:

(a) The account number;

(b) The personal identification number;

(c) Personal information regarding the account holder; and

(d) Transactions.

(2) Information regarding an account may be disclosed;

(a) To the account holder,

(b) To the Commission; and

(c) As otherwise required by State law, federal law, or the regulations of the Commission.

Q. Source Market Areas.

(1) There shall be a source market area for each racing association that is authorized to operate a TABS.

(2) The source market area of a racing association consists of all postal addresses located within a 35-mile radius of the racing association, subject to the following:

(a) Address locations shall be determined by postal ZIP codes;

(b) If a portion of a postal ZIP code is within a source market area established by this subsection, the entire postal ZIP code shall be included within that source market area; and

(c) The source market area for a racing association that is not a mile thoroughbred track licensee or a harness track licensee is applicable only during the period of time it holds live racing.

(3) Unless otherwise agreed between the applicable racing associations, an individual residing within a source market area may only establish a telephone betting account with a racing association in whose source market area the customer resides.

(4) An individual residing outside of any source market area may establish a telephone betting account with any racing association in the State that is authorized to operate a TABS.

R. Net Betting Revenue.

(1) The net betting revenue derived from bets originating from the source market area of a racing association shall be retained by the racing association.

(2) The net betting revenue derived from bets originating from the source market area of one racing association, which overlaps the source market area of another racing association, shall be divided among the racing associations:

(a) As set forth in a written agreement; or

(b) As provided in §V of this regulation if a written agreement is not then in effect.

(3) During the period live racing is conducted at the Timonium racetrack:

(a) The net betting revenue from the source market areas of Laurel Park, Pimlico Race Course, and Timonium shall be divided among the racing associations operating these racetracks in accordance with a written agreement; or

(b) Absent an agreement, the net betting revenue from the source market areas of Laurel Park, Pimlico Race Course, and Timonium shall be retained by the racing association licensed to operate Timonium.

(4) A racing association operating a TABS shall retain the net betting revenue derived from a bet made through its TABS by an individual residing outside the source market areas established under this regulation.

S. Allocation of Net Betting Revenue. All net betting revenue retained or received by a racing association shall be allocated:

(1) In accordance with an agreement between the racing association, the organization representing a majority of the horsemen racing at the track operated by the racing association, and the organization representing a majority of the breeders of the breed of horses racing at the track operated by the racing association; or

(2) Absent an agreement as referenced under §S(1) of this regulation, in accordance with the relevant provisions of Business Regulation Article, Title 11, Annotated Code of Maryland.

T. Reports to the Commission. Not later than 75 days after the end of the calendar year, a racing association shall file with the Commission a report, certified by an independent certified public accountant, of all of the costs and expenses deducted in any calendar year by the racing association in calculating net betting revenue.

U. Contracting for Use of TABS.

(1) A racing association may contract with one or more entities to conduct betting through the TABS established by the racing association.

(2) The racing association contracting with an entity to conduct betting through the TABS established by the racing association shall:

(a) Prohibit that entity from accepting bets from residents within the source market area of another racing association unless that racing association agrees;

(b) If racing association referenced in §U(2)(a) of this regulation agrees, collect and remit to that racing association the net betting revenue from bets made within the source market area of that racing association; and

(c) Collect and keep the net betting revenue for bets made within the State but outside of the source market area of any racing association.

(3) Revenues and expenses of the contracted entity referenced in §U(1) of this regulation derived from betting conducted through the TABS established by a racing association, other than as provided in §U(2) of this regulation, may not be included in net betting revenue.

(4) After payment to the contracted entity referenced in §U(1) of this regulation for services performed, the revenue retained by the racing association from bets facilitated by that entity, other than the amounts referenced in §U(2) of this regulation, shall be allocated:

(a) In accordance with an agreement between:

(i) The racing association,

(ii) The organization representing a majority of the horsemen racing at the track operated by the racing association, and

(iii) The organization representing a majority of the breeders of the breed of horses racing at the track operated by the racing association; or

(b) Absent an agreement as referenced under §U(4)(a) of this regulation, in accordance with the relevant provisions of Business Regulation Article, Title 11, Annotated Code of Maryland.

V. Allocation of Net Betting Revenue from Overlapping Source Market Areas. If there is no written agreement in effect among the racing associations licensed to operate Laurel Park, Pimlico Race Course, and Rosecroft Raceway as to the allocation among them of net betting revenue from the source market areas of Laurel Park or Pimlico Race Course that overlap with the source market area of Rosecroft Raceway, then the allocation shall be determined by a formula that gives equal weight to each of the following three factors, each factor to be calculated as the arithmetical mean average of the factor during 1999 and the last calendar year immediately preceding the period for which the calculation is to be made.

(1) Factor 1: Handle bet in Maryland, other than through a TABS, by breed, with the racing associations licensed to operate Laurel Park and Pimlico Race Course credited with all thoroughbred handle, and the racing association licensed to operate Rosecroft Raceway credited with all standardbred handle;

(2) Factor 2: Handle bet in Maryland, other than through a TABS, by the time of day, with the racing associations licensed to operate Laurel Park and Pimlico Race Course credited with all handle on racing programs that begin at 6 p.m. Eastern Time or earlier on any day, and the racing association licensed to operate Rosecroft Raceway credited with all handle on racing programs that begin after 6 p.m. Eastern Time on any day; and

(3) Factor 3: Handle bet in Maryland, other than through a TABS, by location, with the:

(a) Racing associations licensed to operate Laurel Park and Pimlico Race Course credited with all handle bet at Laurel Park, Pimlico Race Course, and any satellite simulcast betting facility established after January 1, 2000, located exclusively within their respective source market areas and not overlapping with the source market area of the racing association licensed to operate Rosecroft Raceway,

(b) Racing association licensed to operate Rosecroft Raceway credited with all handle bet at Rosecroft Raceway and any satellite simulcast betting facility established after January 1, 2000, located exclusively within its source market area and not overlapping with the source market area of the racing associations licensed to operate Laurel Park or Pimlico Race Course, and

(c) Racing associations licensed to operate Laurel Park and Pimlico Race Course and the racing association licensed to operate Rosecroft Raceway credited with 80 percent and 20 percent respectively, of the handle bet at all other satellite simulcast betting facilities.