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British Columbia Gaming Supplier Regulatory Overview27 August 2012Regulatory Management Counselors, P.C. Introduction In British Columbia, all gambling activities are conducted and operated by the British Columbia Lottery Corporation (“Corporation”). The Corporation owns all gaming equipment, including slot machines and table games, and contracts with private service contractors that develop the gaming facilities. These service providers often operate the non-gaming and ancillary services provided at the gaming facility.1 As the legal model in British Columbia requires both the government and private entities to fully operate gambling facilities, it is important for suppliers to recognize which party to approach when marketing products or services. Gambling activities are policed by the Gaming Policy and Enforcement Branch (“Branch”). As such, the Branch has the responsibility for registering entities and individuals that provide goods or services to licensed gambling facilities throughout the province. The Branch also has the responsibility for insuring the gaming industry’s integrity and that all interested parties comply with the British Columbia Gaming Control Act (“Act”).2 Gaming Service Provider Registration The Branch has established several classes of gaming service providers that supply goods or services to a gaming facility and require varying degrees of registration. As a general matter, a “gaming service provider” includes those that provide gaming services, gaming supplies, test/service gaming supplies, provide or train gaming workers, or provide the facilities for conducting gaming activities.3 Please be aware that the Branch has broadly defined “gaming service providers” to include both operators and suppliers, but has established different registration classes for each group. Furthermore, the Act defines “gaming supplies” as “supplies, equipment and devices used or intended to be used for gaming other than in relation to horse racing, and includes things supplied to gaming facilities, whether or not the things are intended to be used for gaming.”4 The supplier classes are as follows: 1. Class A Suppliers – entities that manufacture and/or distribute slot machines; 2. Class B Suppliers – entities that provide gaming supplies in excess of $25,000 CAN in any 12-month period; and 3. Class C Suppliers – entities that provide gaming supplies in an amount less than $25,000 CAN in any 12-month period.5 All classes of suppliers must complete the same forms and submit to background investigations in connection with filing for registration with the Branch. Fees The application and annual registration fees for each class are listed below: 1. Class A Suppliers – $20,000 CAN 2. Class B Suppliers – $5,000 CAN 3. Class C Suppliers – $1,000 CAN6 In addition, each applicant is required to submit a background investigation deposit based on the estimated cost of the investigation. Duration Registrations must be renewed annually and must include the required information as well as the applicable renewal fee. Application All supplier applicants must complete the Corporate Disclosure Form. In order to complete the form, the following information is needed: 1. Basic identification information; 2. Class of license applied for; 3. Corporate structure; 4. Description of goods or services provided; 5. List of entities or individuals with any financial interest in the applicant; 6. List of individuals or entities that have received loans from the applicant; 7. Criminal history; 8. Civil/regulatory action history; 9. Bankruptcy history; 10. Gaming and other professional/business license history; 11. List of financial institutions where business accounts are held; and 12. Tax audit or judgment history.7 In addition, the following documents must be included with the form: 1. Certificate/articles of incorporation; 2. Charter, bylaws, and other governing documents; 3. Ownership chart; 4. Organizational chart; 5. Financial statements, past five years; 6. Annual reports, past five years; 7. Tax returns, past five years; 8. Description of share structure, if applicable; and 9. Shareholder record, if applicable.8 Personal Disclosure Form In addition to the corporate applications, an applicant will also need to submit Personal Disclosure Forms for each qualifying individual employed by the applicant. Qualifying individuals include senior officials (defined as the top five highest-paid officers, chair/vice chair of the board of directors, president, vice president, secretary, treasurer, and general manager), shareholders with 5% or greater interest in the applicant, partners, and associates of the applicant.9 Fees There is an application fee of $250 CAN. In addition, the applicant is responsible for all investigative costs.10 Application All qualifying individuals must complete the Personal Disclosure Form 2. In order to complete the form, the following information is needed: 1. Basic identification information; 2. Class of registration sought; 3. Residence history, past 10 years; 4. Family relationships; 5. Employment history, past 20 years; 6. Employment disciplinary actions; 7. Corporate associations; 8. Positions of trust; 9. Education history; 10. Criminal history; 11. Civil/bankruptcy action history; 12. Professional licensures; 13. Gaming-related investments; 14. Garnishment history; 15. Asset/liability schedule; 16. Sources of income; 17. Net worth statement; and 18. Various financial schedules.11 In addition, the following documents must be submitted with the form: 1. Photo; and 2. Tax returns, past five years.12 Licensing Process Interested applicants must complete the appropriate corporate and personal disclosure forms and submit them to the Branch for review. The Branch will then conduct a criminal background check, a credit check, and verify the information contained in the application forms. If the cost of the investigation exceeds that of the initial investigation deposit, then the applicant may be required to submit a second deposit to the Branch. Exemptions Exemptions from registration are available for Institutional Investors. Those interested in obtaining such an exemption must complete the “Passive Waiver Form.” Reporting Requirements The Branch has created a document titled “Conditions of Registration for Gaming Service Providers” that details the ongoing reporting requirements that apply to registrants. As a general matter, these include compliance with all applicable statutes and regulations, reporting of changes in ownership or management, adverse licensing actions, and other items. In addition, key financial events, such as publication of financial statements or the conduct of an audit, must be reported. A copy of the document can be obtained by visiting the Branch’s website at http://www.pssg.gov.bc.ca/gaming/index.htm. Gaming Technology Standards In addition to its responsibility to oversee the registration process, the Branch also approves and certifies all gaming equipment. The Branch maintains a database of its technical standards for gaming equipment on its website, available at www.pssg.gov.bc.ca/gaming/registration/index.htm 1See 'BCLC Gambling Service Provider Commissions Report, 1997-2010,' British Columbia Lottery Corporation, p. 1. 2Gaming Control Act, SBC 2002, c 14, et seq. 3Gaming Control Act, SBC 2002, c 14, s 1. 4Gaming Control Act, SBC 2002, c 14, s 1. 5Gaming Control Regulation, B.C. Reg. 208/2002, s. 29(1)(f)-(h). 6Corporate Disclosure Form, Gaming Policy and Enforcement Branch, p. 1. 7Personal Disclosure Form 2, Gaming Policy and Enforcement Board. 8Corporate Disclosure Form, Gaming Policy and Enforcement Branch. 9Personal Disclosure Form 2, Gaming Policy and Enforcement Board, p. 1. 10Personal Disclosure Form 2, Gaming Policy and Enforcement Board, p. 1. 11Personal Disclosure Form 2, Gaming Policy and Enforcement Board. 12Personal Disclosure Form 2, Gaming Policy and Enforcement Board. Gaming industry advisor Regulatory Management Counselors, P.C. authored this article. Visit the Gaming Advisors section of this website to find out more about gaming licensing and compliance advisors. |