Sec. 104. Licensing by Qualified Regulatory Authorities
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Notwithstanding any other provision of law and subject to the provisions of this title, a licensee may accept a bet or wager with respect to Internet poker from an individual located in the United States and may offer related services so long as the license of the licensee issued under this title remains in good standing. If a person seeks a certificate of suitability from a qualified regulatory authority to provide services to a licensee or applicant as a significant vendor with respect to an Internet poker facility, such person shall not be required to obtain a license under this title to provide such services with respect to that Internet poker facility.
No licensee may engage, under any license issued under this title, in the operation of an Internet poker facility that knowingly accepts bets or wagers initiated by persons who reside in any State which provides notice that it will prohibit such bets or wagers, if the Governor or other chief executive officer of such State informs the Secretary of such prohibition in a letter that identifies the nature and extent of such prohibition. The establishment, repeal, or amendment by a State of any prohibition described in subparagraph
(A)shall apply, for purposes of this title, beginning on the day that occurs after the end of the 60-day period beginning on the later of— the date a notice of such establishment, repeal, or amendment is provided by the Governor or other chief executive officer of such State in writing to the Secretary; or the effective date of such establishment, repeal, or amendment. Any State prohibition described in subparagraph
(A)shall not apply to the acceptance by a licensee of bets or wagers from persons located within the tribal lands of a federally recognized Indian tribe that— has itself not opted out pursuant to subsection (b); or would be entitled pursuant to other applicable law to permit such bets or wagers to be initiated and received within its territory without use of the Internet. No Internet poker licensee knowingly may accept a bet or wager from a person located in the tribal lands of any federally recognized Indian tribe which prohibits such activities or other contests if the principal chief or other chief executive officer of such federally recognized Indian tribe informs the Secretary of such prohibition in a letter that identifies the nature and extent of such prohibition. The establishment, repeal, or amendment by any federally recognized Indian tribe of any prohibition referred to in subparagraph
(D)shall apply, for purposes of this title, beginning on the day that occurs after the end of the 60-day period beginning on the later of— the date a notice of such establishment, repeal, or amendment is provided by the principal chief or other chief executive officer of such federally recognized Indian tribe in writing to the Secretary; or the effective date of such establishment, repeal, or amendment. The Secretary shall notify all licensees and applicants of all States and federally recognized Indian tribes that have provided notice pursuant to subparagraph
(A)or (D), as the case may be, promptly upon receipt of such notice and in no event fewer than 30 days before the effective date of such notice. The Secretary shall take effective measures to ensure that any licensee under this subchapter, as a condition of the license, complies with any limitation or prohibition imposed by any State or federally recognized Indian tribe to which the licensee is subject. A violation of subparagraph
(A)or
(D)shall be a violation of this title enforceable under section 105. A person seeking to operate an Internet poker facility under this title shall submit to the qualified regulatory authority of the State or federally recognized Indian tribe where servers for such Internet poker facility are located or will be located an application for a license at such time, in such form, and in such manner as the qualified regulatory authority considers appropriate, including at a minimum the following: Complete financial information about the applicant. Documentation showing the organization of the applicant and all related businesses and affiliates. The criminal and financial history of— the applicant; each of the senior executives and directors of the applicant; any other person who is in control of the applicant; and such other persons as the qualified regulatory authority considers appropriate. Such other information as may be necessary for the suitability analysis required under subsection (c). Disclosure of all other applications for licenses previously or simultaneously submitted under this paragraph to other qualified regulatory authorities and whether those applications are pending, were granted, or were denied. A detailed description of the applicant's plan for complying with all applicable requirements and regulations prescribed pursuant to this title. A certification by the applicant that the applicant agrees to be subject to— jurisdiction in Federal courts and in the courts of the State or federally recognized Indian tribe of the qualified regulatory authority to which the applicant has applied; and all applicable provisions of Federal law. Each qualified regulatory authority shall report all applicants for licensure and the dispositions of their applications to the Secretary promptly upon disposition of each application or in such intervals as the Secretary may prescribe. Such report shall include such information or documentation as the Secretary may require. No applicant shall be eligible to obtain a license under this title unless a qualified regulatory authority, with whom the applicant has filed an application for a license, has determined, upon completion of a background check and investigation, that the applicant, any person deemed to be in control of the applicant, all significant vendors of the applicant, and any other person determined by the qualified regulatory authority as having significant influence on the applicant are suitable for licensing or for receiving a certificate of suitability as applicable. Prior to issuing a license under this section, a qualified regulatory authority shall conduct the investigation and analysis described in paragraph
(1)to determine whether the applicant or person— is a person of good character, honesty, and integrity; is a person whose prior activities, criminal record, if any, reputation, habits, and associations do not— pose a threat to the public interest or to the effective regulation and control of Internet poker facilities; or create or enhance the dangers of unsuitable, unfair, or illegal practices, methods, and activities in the conduct of Internet poker facilities or the carrying on of the business and financial arrangements incidental to such facilities; is capable of and likely to conduct the activities for which the applicant is licensed or receives a certificate of suitability in accordance with the provisions of this title, any regulations prescribed under this title, and all other applicable laws; with respect to applicants, has or guarantees acquisition of adequate business competence and experience in the operation of casino gaming facilities or Internet poker facilities; with respect to applicants, has or will obtain sufficient financing for the nature of the proposed operation and from a source that the qualified regulatory authority has not found unsuitable under the criteria established under subparagraph (B); and has disclosed to the qualified regulatory authority all known affiliations or relationships, whether direct or indirect. An applicant or any other person may not be determined to be suitable under this subsection if the applicant or such person— has failed to provide information and documentation material to a determination of suitability for licensing under paragraph (1); has supplied information which is untrue or misleading as to a material fact pertaining to any such determination; has been convicted of an offense that is punishable by imprisonment of more than 1 year; is delinquent in the payment of any applicable Federal or State tax, tax penalty, addition to tax, or interest owed to a jurisdiction in which the applicant or person operates or does business, unless such payment has been extended or is the subject of a pending judicial or administrative dispute; has not certified in writing that the person submits to personal jurisdiction in the United States; or fails to comply with such other standard as the applicable qualified regulatory authority considers appropriate. No applicant nor any other person may be eligible for a license or certificate of suitability under this section if such applicant or person has been convicted of accepting bets or wagers from any other person through an Internet poker facility in felony violation of Federal or State law. The ineligibility of an applicant or other person under this subparagraph shall terminate on the date that is 5 years after the date on which the first license is issued under this section. No applicant or person who has purchased the assets of a person described in clause
(i)subsequent to the enactment of this Act shall be eligible for a license or certificate of suitability under this section until the date that is 5 years after the date on which the first license is issued. A licensee (and any other person who is required to be determined to be suitable for licensing in connection with such licensee) shall meet the standards necessary to be suitable for licensing or to receive a certificate of suitability, as the case may be, throughout the term of the license. If a qualifying body determines under paragraph
(1)that a significant vendor of an applicant is suitable under such paragraph, the qualifying body shall issue a certificate to such vendor that certifies the suitability of such vendor. A qualified regulatory authority that issues a certificate to a significant vendor under subparagraph
(A)shall revoke the certificate if at any time the significant vendor no longer meets the standards necessary for a determination of suitability. A qualified regulatory authority may, but need not, accept a certificate issued to a significant vendor by another qualified regulatory authority as evidence of the suitability of the significant vendor. A licensee shall promptly notify the qualified regulatory authority that issued the license to the licensee of all persons that are not significant vendors that— direct, provide, or solicit customers to or for the licensee’s Internet poker facility, or materially assist in any of those tasks, in return for a commission or other fee; hold themselves out to the public as offering bets or wagers on licensee’s behalf; offer bets or wagers under their own names or brands but using and relying on licensee’s Internet poker facilities; license trademarks, trade names, service marks, or other similar intellectual property to the licensee; or own a substantial interest in or control a person described in clause (i), (ii), (iii), or (iv). A qualified regulatory authority that reviews an application of an applicant for a license or issues a license to a licensee may, at the sole discretion of the qualified regulatory authority and on a case-by-case basis, require as a condition of such license that a person meet suitability requirements under paragraph
(1)if the person— is described in subparagraph
(A)with respect to the applicant or licensee; provides services to an applicant or licensee and the qualified regulatory authority determines that with respect to such services, there is a substantial risk of circumvention of the suitability requirements applicable to significant vendors; or is associated with the applicant or licensee or one of the significant vendors of the applicant or licensee and the qualified regulatory authority determines such person may pose a threat to the integrity of Internet poker facilities operated by the applicant or licensee. A qualified regulatory authority may require such information from an applicant, licensee, significant vendor or other person identified in this paragraph as the qualified regulatory authority considers necessary to carry out this paragraph. If the Secretary or the qualified regulatory authority that issued a license to a licensee finds that the licensee, or any other person that is subject to a required determination of suitability in connection with such licensee, fails to meet the suitability requirements of this subsection at any time during the tenure of the license, the Secretary or the qualified regulatory authority may take action to protect the public interest, including, if the Secretary or qualified regulatory authority considers necessary, the suspension or termination of the license. Notwithstanding a determination under subparagraph (A), the Secretary or the qualified regulatory authority that issued a license to a licensee may allow the licensee to continue engaging in licensed activities by imposing conditions on the person to which subparagraph
(A)is applicable under penalty of revocation or suspension of a license or certificate of suitability, including— the identification of any person determined to be unsuitable; and the establishment of appropriate safeguards to ensure such person is excluded from any management or involvement in operation of the licensed activities. Each qualified regulatory authority shall establish standards and procedures for conducting background checks and investigations for purposes of this subsection. Any written or oral statement made in the course of an official proceeding of the Secretary or a qualified regulatory authority, by any member thereof, or any witness testifying under oath which is relevant to the purpose of the proceeding and relates to the review of an application for a license under this title, is privileged and shall not give rise to liability for defamation or relief in any civil action. Notwithstanding section 552 of title 5, United States Code, or any other Federal, State, or tribal law to the contrary, any communication or document of an applicant, licensee, significant vendor, or affiliate thereof, which is made or transmitted pursuant to this title to the Secretary or a qualified regulatory authority or any of their agents or employees, except information that is already public, shall be privileged and shall not be disclosed by the Secretary or the qualified regulatory authority without the prior written consent of the applicant, licensee, significant vendor, or affiliate thereof (as applicable), or pursuant to a lawful court order, grand jury subpoena, or similar procedure. To the extent practicable, the Secretary or qualified regulatory authority shall provide timely notice of the proceedings to the applicant, licensee, significant vendor, or affiliate thereof (as applicable). Any privilege recognized under any other applicable provision of Federal, State, or tribal law, including attorney-client, physician-patient, and accountant-client privileges, shall not be waived or lost because a document or communication otherwise protected by the privilege is disclosed to the Secretary or a qualified regulatory authority. Any communication or document, except information that is already public, shall be treated as confidential and may not be disclosed, in whole or part, by the Secretary or a qualified regulatory authority without a lawful court order or as otherwise expressly required by law, if the communication or document is— required by the Secretary or qualified regulatory authority to be disclosed by the applicant, licensee, or significant vendor, including applications, financial or earnings information, and criminal records, whether of the applicant or licensee or of any affiliate, employee, officer, director, or significant vendor thereof, or of any other third party; or prepared or obtained by an agent or employee of the Secretary or qualified regulatory authority that contains information described in clause (i). In order to obtain a license under this section, an Internet poker facility shall demonstrate to the qualified regulatory authority that such facility maintains appropriate safeguards and mechanisms, in accordance with standards established by the qualified regulatory authority, including appropriate safeguards and mechanism to— ensure, to a reasonable degree of certainty, that the individual placing a bet or wager is not less than 21 years of age; ensure, to a reasonable degree of certainty, that the individual placing a bet or wager is physically located in a jurisdiction that has not prohibited such bets or wagers at the time the bet or wager is placed; ensure, to a reasonable degree of certainty, that all taxes relating to Internet poker from persons engaged in bets or wagers relating to such Internet poker are collected or reported, as required by law, at the time of any payment of proceeds of such bets or wagers; ensure that all taxes relating to the operation of an Internet poker facility from any licensee are collected and disbursed as required by law and that adequate records to enable later audit or verification are maintained; prevent, to a reasonable degree of certainty, fraud, money laundering, and terrorist financing; ensure, to a reasonable degree of certainty, compliance with the requirements of section 106; protect, to a reasonable degree of certainty, the privacy and online security of any person engaged in bets or wagers with the licensee’s Internet poker facility; ensure that any user fee required under subsection
(e)is paid to the qualified regulatory authority; ensure, to a reasonable degree of certainty, that Internet poker games are fair and honest, and to prevent, to a reasonable degree of certainty, cheating, including collusion, and use of cheating devices, including use of software programs (sometimes referred to as bots ) that make bets or wagers according to algorithms; and such other mechanisms and safeguards as the qualified regulatory authority shall require, including independent testing of hardware, software, communication equipment, and other necessary devices to ensure the integrity, accountability, randomness of play and security of the network. The cost of administering this title with respect to each applicant, licensee, and significant vendor, including the cost of any review or examination of a licensee or its significant vendors to ensure compliance with the terms of the license and this title, shall be assessed by the qualified regulatory authority receiving an application or issuing a license against the applicant, licensee, or significant vendor, as the case may be, by written notice in an amount that the qualified regulatory authority determines is necessary to— meet the qualified regulatory authority's expenses in carrying out such administration, review, or examination; and to cover the qualified regulatory authority’s share of the amount determined by the Secretary under paragraph
(3)to cover the expenses incurred by the Secretary in carrying out the provisions of this title. Expenses that are attributable to review or examination of a particular applicant, licensee, or significant vendor shall be assessed under subparagraph
(A)against that applicant, licensee, or significant vendor. Expenses for general administration shall be assessed against all licensees equally. Amounts assessed by a qualified regulatory authority as user fees under this paragraph shall— be remitted to the Secretary, in the amount of that State’s or federally recognized Indian tribe’s share as determined under paragraph
(3)for deposit in the Treasury in accordance with subparagraph
(B)of such paragraph; and be available to the qualified regulatory authority to cover expenses incurred by the qualified regulatory authority in carrying out the provisions of this title; and not be construed to be Government funds or appropriated monies, or subject to apportionment for the purposes of any other provision of law. If a licensee or significant vendor fails to pay a user fee to a qualified regulatory authority under this paragraph after the assessment of the fee has become final— the qualified regulatory authority may recover the amount assessed by action in any State or tribal court in the jurisdiction of the qualified regulatory authority, or in any appropriate United States district court, along with any costs of collection and attorney fees; and such failure may be grounds for denial of an application for a license under this title or revocation of a license or certificate of suitability under this title. In any civil action under clause (i), a court may review the validity and adjust the amount of the user fees. A user fee assessed against a significant vendor may be paid by an applicant or licensee on behalf of the significant vendor. With respect to a licensee, a user fee shall be the direct and exclusive obligation of the licensee and may not be deducted from amounts available as deposits to any person placing a bet or wager with the licensee. The Secretary shall determine the funding requirements necessary to meet the Secretary’s cost of administering this title and notify each qualified regulatory authority of its proportional share to be collected by such regulatory authority under paragraph (1)(A). Amounts remitted to the Secretary under paragraph (1)(D)(i) shall— be deposited into a separate account in the Treasury to be known as the Internet Poker Oversight Fund ; and be available to the Secretary in such amounts, subject to appropriations, to cover expenses incurred by the Secretary in carrying out the provisions of this title. A qualified regulatory authority may issue licenses under this title for the operation of an Internet poker facility to any applicant that— owns or controls a company that operates a casino gaming facility or qualified card room and owned or controlled such facility or card room on the date that is 10 days before the date of enactment of this Act; for the duration of the 5-year period ending on the date on which the applicant submits an application under subsection (b)(1), owned or controlled a casino gaming facility or qualified card room; is owned or controlled by a person who— owns or controls a company that operates a casino gaming facility or qualified card room and owned or controlled such facility or card room on the date that is 10 days before the date of enactment of this Act; or for the duration of the 5-year period ending on the date on which the applicant submits an application under subsection (b)(1), owned or controlled a casino gaming facility or qualified card room; for the duration of the 5-year period ending on the date on which the applicant submits an application under subsection (b)(1), under license issued by a State or federally recognized Indian tribe manufactured and supplied to casino gaming facilities with not fewer than 500 slot machines; and meets other criteria established by the Secretary or by the qualified regulatory authority under this title. Beginning on the date that is 2 years after the date of first issuance specified in section 115(b), the Secretary may, by rule, authorize the issuance of licenses to applicants other than those described in paragraph
(1)if the Secretary determines, after providing the public with notice and an opportunity to comment, that such authorization will not significantly increase the risk that the standards described in subsection
(d)will not be satisfied by licensees. Notwithstanding any certificate of suitability or license issued by a qualified regulatory authority, the Secretary may suspend or revoke such certificate or license if the Secretary has reason to believe that the recipient does not meet the suitability requirements established under subsection
(c)or, as applicable, any other requirement imposed on a licensee under this title. The Secretary may not overturn a decision by a qualified regulatory authority to deny or to terminate a license or to deny or revoke a certificate of suitability. If a qualified regulatory authority denies a license, terminates a license, denies a certificate of suitability, or revokes a certificate of suitability to a person and within 12 months of such denial, termination, or revocation another qualified regulatory authority grants such person a license or certificate of suitability, the Secretary shall— commence a review of such license or certificate of suitability; and not later than 90 days after such commencement, determine whether to act under paragraph (3). In this subsection, the term control means, with respect to a person, the possession, directly or indirectly, of the power to direct or influence the direction of the management or policies of the person, whether through the ownership of voting securities, through a management, executive officer, or board position, by shareholders or similar agreement, or otherwise. A licensee shall maintain its remote gaming equipment within the territory of the United States throughout the term of its license. A qualified regulatory authority shall require applicants that seek a license from such qualified regulatory authority to locate that equipment within the territory of the State or on the Indian land of the tribe of the qualified regulatory authority. A decision by a qualified regulatory authority not to grant a person a license or certificate of suitability, or to terminate a license, or revoke a certificate of suitability, is not reviewable under Federal law or the law of any jurisdiction other than the jurisdiction of the qualified regulatory authority. The State or federally recognized Indian tribe of the jurisdiction of the qualified regulatory authority may, but need not, provide an opportunity to appeal. Any license issued under this title shall be issued for a 5-year term beginning on the date of issuance. A license may be renewed in accordance with requirements prescribed by the qualified regulatory authority that issued the license under this title. A transfer of a license, change of control of a licensee, or change in significant vendor shall require prior approval by the qualified regulatory authority that issued the license. The qualified regulatory authority shall at a minimum ensure the suitability requirements of subsection
(c)continue to be satisfied before approving any such transfer or change. A determination of whether a game, hand, tournament, or other contest of a licensee is Internet poker shall be made in the first instance by the qualified regulatory authority that issued the license to such licensee under this title. A licensee or qualified regulatory authority may file a challenge with the Secretary regarding any determination of the qualified regulatory authority under subparagraph
(A)that a game, hand, tournament, or other contest of another licensee is Internet poker. If a challenge is made under clause (i), the Secretary shall make a determination of whether the game, hand, tournament, or other contest is Internet poker not later than 30 days after the date on which the challenge is made. A licensee that offers a game, hand, tournament, or other contest that is challenged under clause
(i)may continue to offer such game, hand, tournament, or other contest until the Secretary makes a determination under clause (ii). Not later than 30 days after the date on which the Secretary makes a determination under subparagraph (B)(iii), a licensee or a qualified regulatory authority may appeal such determination to the United States District Court for the District of Columbia. Such court shall set aside the Secretary’s determination if the court determines that the Secretary's determination was— arbitrary, capricious, an abuse of discretion, or otherwise not consistent with law; or without observance of procedure required by law. Except as provided in paragraph
(1)and unless otherwise specifically provided in this title, actions taken by a qualified regulatory authority may be challenged by applicants and licensees only as permitted under the law of the State or federally recognized Indian tribe in which the qualified regulatory authority is located. The Secretary may issue a summons with respect to an applicant or licensee necessary to carry out the provisions of this title. A summons issued by the Secretary pursuant to this paragraph may require that books, papers, records, or other data stored or maintained at any place be produced at any— business location of a licensee or applicant for a license; designated location in the State or Indian lands of the applicable qualified regulatory authority; or designated location in the District of Columbia. The Secretary shall not be liable for any expense incurred in connection with the production of books, papers, records, or other data under this paragraph. Service of a summons issued under this subsection may be by registered mail or in such other manner calculated to give actual notice as determined by the Secretary. The Secretary may invoke the aid of any court of the United States to compel compliance with the summons within the jurisdiction of which— the investigation which gave rise to the summons or the examination is being or has been carried on; the person summoned is an inhabitant; or the person summoned carries on business or may be found. The court may issue an order requiring the person summoned to appear before the Secretary— to produce books, papers, records, and other data; to give testimony as may be necessary to explain how such material was compiled and maintained; to allow the Secretary to examine the business of a licensee; and to pay the costs of the proceeding. Any failure to obey the order of the court under this paragraph may be punished by the court as a contempt thereof. All process in any case under this subsection may be served in any judicial district in which such person may be found.