A5138

An Act permitting the placement of certain wagers by business entities and supplementing Title 5 of the Revised Statutes and chapter 37 of Title 2C of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Notwithstanding the provisions of the “Off-Track and Account Wagering Act,” P.L.2001, c.199 (C.5:5-127 et seq.), the “Casino Simulcasting Act,” P.L.1992, c.19 (C.5:12-191 et seq.), the “Exchange Wagering Act,” P.L.2011, c.15 (C.5:5-168 et seq.), and P.L.2018, c.33 (C.5:12A-10 et seq.), or any other law, rule, or regulation to the contrary, a horse racing or sports pool operator may accept wagers from a designated individual of a business entity if the business entity has established a wagering account with the operator and provided certain information to the operator pursuant to section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill). All wagers placed by a business entity shall comply with applicable State and federal laws.

For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill):

“business entity” means a corporation, partnership, limited partnership, or a limited liability company organized under the laws of this State; and

“designated individual” means a person listed as an officer, director, partner or manager of a business entity in the business entity’s filings with the Division of Revenue and Enterprise Services in the Department of the Treasury, or any other natural person authorized by the business entity in writing to place wagers on behalf of the business entity.

2. a. A business entity that chooses to establish a wagering account with a horse racing or sports pool operator shall provide to the operator:

(1) the name, residential address, copy of a valid photo identification which evidences that the person is at least 21 years of age, and social security number or individual taxpayer identification number, of each of the business entity’s equity owners, holders of indebtedness, directors, officers, managers and partners, anyone entitled to payments based on the profits or revenues, and any designated individuals;

(2) copies of the business entity’s formation documents and all filings made with the Division of Revenue and Enterprise Services in the Department of the Treasury;

(3) any other documentation or information the Casino Control Commission, the Division of Gaming Enforcement, and the Racing Commission may require; and

(4) any other documentation or information the horse racing or sports pool operator may require.

In the event the information provided pursuant to this section changes, the business entity shall submit updated documents reflecting the changes to the horse racing or sports pool operator within five business days from the date the change occurred.

b. A business entity placing wagers shall also:

(1) maintain in this State originals or copies of records received from the operator for all wagers placed;

(2) maintain an account with a bank or other financial institution in this State having a principal office, branch or agency located in the State from which the entity shall transfer and receive all funds used in wagering with a horse racing or sports pool operator; and

(3) make all records produced pursuant to this subsection available for review by the Casino Control Commission, the Division of Gaming Enforcement, and the Racing Commission.

3. It shall be unlawful for any person either solely or in conjunction with others:

a. to knowingly pay or distribute profits or compensation to a designated individual or equity owner who is not disclosed to a horse racing or sports pool operator pursuant to subsection a of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);

b. to knowingly pay or distribute a percentage of revenue derived from the wagering activity of a business entity to a person who is not disclosed to a horse racing or sports pool operator pursuant to subsection a. of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);

c. to wager with money received from a person who is not disclosed to a horse racing or sports pool operator pursuant to subsection a of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill);

d. to place a wager on behalf of a person who is not disclosed to a horse racing or sports pool operator pursuant to subsection a of section 2 of P.L. , c. (C. ) (pending before the Legislature as this bill); or

e. to knowingly submit any false information as required by this section.

4. The Casino Control Commission shall, in consultation with the Division of Gaming Enforcement and the Racing Commission, adopt rules and regulations pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.) as deemed necessary to carry out the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).

5. A person who willfully violates, attempts to violate, or conspires to violate any provisions of P.L. , c. (C. ) (pending before the Legislature as this bill) shall be guilty of a crime of the second degree punishable by a minimum term of five years imprisonment and a maximum term of ten years, by a fine of no more than $50,000, or by both a term of imprisonment and a fine.

6. This act shall take effect 180 days following the date of enactment but the Casino Control Commission, the Division of Gaming Enforcement, and the Racing Commission may take anticipatory action in advance of the effective date to ensure timely implementation of this act.

STATEMENT

This bill would permit wagering by business entities with horse racing or sports pool operators. Business entity wagering functions similar to a mutual fund whereby funds pooled together from different investors are then used by fund managers to wager on various sporting events in an attempt to produce a profit for investors. The business entity’s gains or losses would be shared by each investor in proportion to his or her equity share. Business entities would not be permitted to wager on casino games.

Business entities that choose to establish a wagering account with a horse racing or sports pool operator would be required to provide certain documentation to the operator showing that all those associated with the business entity are over 21 years of age and that the business entity has been properly formed, along with any other documents required by the Casino Control Commission, the Division of Gaming Enforcement, the Racing Commission, or a horse racing or sports pool operator. A business entity would also be required to maintain originals or copies of records received from the operator for all wagers placed, maintain an account with a bank or other financial institution in the State, and make the above records available for review by the Casino Control Commission, the Division of Gaming Enforcement, and the Racing Commission.

It would be unlawful for any person solely, or in conjunction with others, to knowingly distribute funds to a designated individual or equity owner who is not disclosed to the horse racing or sports pool operator, distribute revenue from a business entity’s wagering activities to an individual that has not been disclosed to the horse racing or sports pool operator, wager money on behalf of an individual who has not been disclosed to the horse racing or sports pool operator, or submit false information required by the bill. Under the bill, violations would be a second degree crime punishable by fines, imprisonment, or both.