(1)
Contractual Transfers. Whenever any person contracts
to transfer a Sports Wagering License or an ownership interest in a Sports
Wagering Licensee or its parent, holding or intermediary company, or any
property relating to a sports wagering operation, under circumstances which
require that the transferee obtain licensure or be found qualified pursuant to
205 CMR
215.00:
Applicant and Qualifier Suitability
Determination, Standards, and Procedures and/or M.G.L. c. 23N, the
contract shall not specify a closing or settlement date which is earlier than
121 days after the submission of a completed transfer application. Said
application shall consist of:
(a) For the
transferee, the survey described at
205
CMR
211.01(1)(a);
(b) For the transferee and each new
qualifier, the materials described at
205
CMR
211.01(1)(c) through(e),
as appropriate;
(c) For the
transferee and each new qualifier, any attestation forms required by the
Bureau;
(d) A fully executed trust
agreement in accordance with
205
CMR
229.03(6) which shall
be subject to Commission approval. Any contract provision which specifies a
closing or settlement date sooner than 121 days after submission of the
transfer application shall be void for all purposes.
(2)
Transfers of Publicly Traded
Securities. Whenever any Person, as a result of a transfer of
publicly traded securities of a Sports Wagering Licensee or its parent, holding
or intermediary company, is required to be qualified under
205
CMR
215.02:
Persons Required to Be
Qualified and/or M.G.L. c. 23N, the Person including all related
qualifiers shall, within 30 days after a Schedule 13D or 13G is filed with the
U.S. Securities and Exchange Commission, or after the Bureau notifies the
Person that qualification is required, or within such additional time as the
Bureau may for good cause allow, file a completed transfer application as
described in
205
CMR
229.03(1). No extension
of the time for filing a completed transfer application shall be granted unless
the Person submits a written acknowledgement recognizing the jurisdiction of
the commission and the obligations imposed by M.G.L c. 23N and 205 CMR. If a
proposed transferee, including all related qualifiers, fails to timely file a
complete transfer application, such failure shall constitute a per se negative
finding of suitability to continue to act as a security holder, and the
Commission shall take appropriate action including requiring divestiture by the
transferee or redemption of the securities by the transferor.
(3) If a prospective transferee files a
complete transfer application in a timely manner the Commission shall hold a
hearing in accordance with
205
CMR
101.01(2)(d) and render
a decision on the interim authorization of the proposed transferee within 120
days after such filing or, if it is a contractual transfer, prior to the
proposed closing or settlement date. If interim authorization is approved for a
transfer governed by
205
CMR
229.03(1) then the
closing or settlement may occur, and the prospective transferee may hold the
securities or interests subject to the provisions of
205
CMR
229.03(4) until a final
determination of suitability is made by the commission. If interim
authorization is approved for a transfer governed by
205
CMR
229.03(2) then the
prospective transferee may continue to hold the securities or interests subject
to the provisions of
205
CMR
229.03(4) until a final
determination of suitability is made by the Commission.
(4) If, after a hearing, the Commission
denies interim authorization, there shall be no closing or settlement of a
contract to transfer an interest governed by
205
CMR
229.03(1) until the
Commission makes a final determination on the suitability of the transferee in
accordance with
205
CMR
215.01(1). If the
Commission denies interim authorization for a proposed transfer subject to
205
CMR
229.03(2), all
securities and interests subject to the transfer shall be promptly transferred
into the trust. If the commission grants interim authorization for any
transfer, it may at any time thereafter order all securities and interests
subject to the transfer transferred into the trust if it finds reasonable cause
to believe that the proposed transferee may be found unsuitable. If a
prospective transferee fails or refuses to timely transfer securities and
interests into the trust upon direction from the Commission said transferee
shall be issued a negative determination of suitability.
(5) After determining that a person is
required to be qualified in accordance with
205
CMR
215.02:
Persons Required to Be
Qualified, the Bureau shall commence an investigation into the
suitability of the transferee, which may be limited to a review of the
information required to be reviewed in an investigation undertaken in
accordance with
205
CMR
215.01(2)(b). The Bureau
shall produce and forward to the Commission an interim authorization report no
later than 90 days after the date that a complete transfer application is
submitted by the proposed transferee. The commission may approve interim
authorization if it finds that:
(a) The
transferee has submitted a complete transfer application;
(b) The transferee has submitted a fully
executed trust agreement in accordance with
205
CMR
229.03(6);
(c) The trustee or trustees required under
205
CMR
229.03(6) have
satisfied the qualification criteria applicable to qualifiers;
(d) There is no preliminary evidence of
anything that would serve to disqualify the transferee from licensure in
accordance with M.G.L. c. 23N, M.G.L. c. 23N, §§ 5, 6, and/or 9(a) or
205 CMR
215.00:
Applicant and Qualifier Suitability
Determination, Standards, and Procedures, nor is there any other
reason known at the time why a positive determination of suitability may not
ultimately be achieved;
(f) It is in the best interests of the
Commonwealth for the Sports Wagering Operation to continue to operate pursuant
to interim authorization; and
(g)
If the transfer will result in a change of control, the transferee has agreed
in writing in accordance with
205
CMR
229.04 to comply with all of the
transferor's existing license obligations or has otherwise petitioned the
Commission for modification or elimination of one or more of those obligations.
If the Commission approves interim authorization, during the
period of interim authorization, the Bureau shall continue its suitability
investigation as may be necessary for a determination of the suitability of the
person granted interim authorization. Within nine months after the interim
authorization decision, which period may be extended by the Commission for one
three-month period, the Commission shall hold a hearing and render a
determination on the suitability of the applicant in accordance with
205
CMR 215.01(1).
(6)
Trust
Agreements. A trust agreement required to be submitted with a
transfer application in accordance with
205
CMR
229.03(1) and (2) shall
be fully executed upon submission and contain, at a minimum, the following:
(a) A provision for the transfer and
conveyance to the trustee of all of the transferee's proposed present and
future right, title and interest in the sports wagering licensee, or its
parent, holding or intermediary company, including all voting rights in
securities upon the occurrence of an event described in
205
CMR
229.033(4) or if
otherwise directed to do so by the Bureau in its discretion, pending a final
suitability determination by the Commission.
(b) A provision consistent with the
provisions of
205
CMR
229.03 for the distribution of any trust
res upon a positive determination of suitability, negative determination of
suitability, or at the direction of the Commission in accordance with
205
CMR
229.03(8).
(c) A provision identifying the trustee(s)
and requiring the trustee to timely submit the materials described in
205
CMR
211.01(1)(c) through(f),
as applicable, in order to be found qualified by the Commission in accordance
with 205 CMR
215.01(1).
(d) A provision identifying the compensation
for the service, costs and expenses of the trustee(s), which shall be made
subject to the approval of the Commission.
(e) A mechanism by which the trustee may
effectuate divestiture or redemption of securities, or a like process, in the
event of a negative determination of suitability being issued to the
transferee.
(f) Any additional
provisions the Commission deems necessary and desirable.
(7) The trustee of the trust shall exercise
all rights incident to the ownership of the property subject to the trust, and
shall be vested with all powers, authority and duties necessary to the
unencumbered exercise of such right, and the transferee shall have no right to
participate in the earnings of the Sports Wagering Licensee or receive any
return on its investment or debt security holdings during the time the
securities or interest are in the trust. Earnings may, however, accrue to or
into the trust.
(8) The trust
agreement shall remain operative until the Commission issues the transferee a
positive determination of suitability in accordance with
205
CMR
215.01(1)(e) (and in
the event the interest has been placed into the trust, the trustee distributes
the trust res) or the Commission issues the transferee a negative finding of
suitability and the trust res is disposed of in accordance with
205
CMR
229.03(9). The trust
shall otherwise only be revocable prior to a determination of suitability being
issued upon Commission approval at the request of the settlor. In the event of
such a request the Commission may direct the trustee to dispose of the trust
res in accordance with
205
CMR
229.03(9).
(9) If the Commission issues a negative
determination of suitability in accordance with
205
CMR
215.01(1)(e)1., a
contract for the transfer of interests shall thereby be terminated for all
purposes without liability on the part of the transferor. In the event of such
negative determination, where the subject interests have been transferred into
a trust in accordance with
205
CMR
229.03(4), the trustee
shall endeavor and be authorized to attempt to sell, assign, convey or
otherwise dispose of all trust res in accordance with the means established in
accordance with
205
CMR
229.03(6)(e) or as
otherwise directed by the commission. Any subsequent transferee must be
appropriately licensed or qualified in accordance with
205 CMR
229.00. The disposition of trust res by the trustee
shall be completed within 120 days of the denial of qualification, or within
such additional time as the Commission may for good cause allow. The proceeds
of such disposition shall be distributed to the unsuitable transferee only in
an amount not to exceed the lower of the actual cost of the assets to such
unsuitable transferee, or the value of such assets calculated as if the
investment had been made on the date the assets were transferred into the
trust, and any excess remaining proceeds shall be paid to the Massachusetts
Sports Wagering Control Fund in accordance with M.G.L. c. 23N, §
15.