Arkansas at a Glance
Gaming License:
Yes
Non-Gaming License:
No
Vendor License Exemptions Available:
Yes
Temporary License:
Yes
Ownership Disclosure Threshold:
5%
Institutional Investor Waiver:
Yes
Fees:
$5,000
State Gaming Lab:
Private
Term of License:
3 Years
Deadline to Reapply:
60-90 Days Prior to Expiration
Political Contribution Restrictions:
No
Arkansas Gaming Supplier Regulatory Overview
Introduction
Arkansas has been home to horse and greyhound racing since the early 1900s. Oaklawn Racing Casino Resort (formerly Oaklawn Park Race Track) began thoroughbred racing in 1904, while Southland Casino Racing (formerly Southland Park) began greyhound racing in 1956. Today both horse and greyhound racing operate under the Racing Commission of the Arkansas Department of Finance and Administration.
In 2005, the Arkansas Legislature passed an Act, known as “Games of Skill” legislation, to allow for expanded gaming at horse or greyhound racing franchises. “Electronic games of skill” are defined as “games played through any electronic device or machine that affords an opportunity for the exercise of skill or judgment where the outcome is not completely controlled by chance alone.” These games do not include pari-mutuel wagering of any kind. Suppliers of electronic games of skill must be licensed by the Racing Commission.
A statewide referendum was passed in November 2018, amending the Arkansas Constitution to allow the two racinos to become full-scale casinos, in addition to authorizing two new casino facilities in Pope and Jefferson Counties. By April 2018, both Southland and Oaklawn had introduced table games and/or traditional slots. The Racing Commission adopted Casino gaming Rules in March 2019, and began accepting applications for casino gaming licenses on 1 May 2019. The Quapaw Nation broke ground on a $350 million casino resort in Jefferson County in August 2019 that is expected to open in June 2020. Suppliers of goods or services to the casino licensees must be licensed, unless they meet the qualifications for exemption.
On 1 July 2019, Arkansas became the ninth state to offer sports betting when Oaklawn Racing Casino Resort opened its sportsbook. Arkansas does not permit mobile sports wagering. Oaklawn offers wagering on a variety of sports, including football, basketball, baseball, hockey, soccer, combat sports, golf, auto-sport, tennis, Olympics, and World Cup Events. Sports wagering is regulated by the Arkansas Racing Commission.
Arkansas does not currently offer online gambling.
Service Industry License
A Service Industry License is required for all businesses or individuals who manufacture, sell, supply, or distribute machines or component parts of casino games. Businesses required to be licensed are those whose goods: are designed specifically for casino gaming operations; are needed to carry out casino gaming; have the capacity to affect the result of an authorized game; or have the capacity to affect the calculation, storage, collection, or control of gross revenues.
A business must be licensed if it repairs or maintains gaming equipment; provides management or operational services to a casino licensee; supplies materials, maintenance, supplies, management, or operational services; or conducts more than $150,000.00 in business with one casino licensee.
Key persons (“Persons Related with a Service Industry License)” of an applicant must also provide sufficient information and documentation to prove their relationship, character, and clean criminal record. The Racing Commission may deny a Service Industry License to the applicant if it fails to provide sufficient documentation.
Application Process
An applicant must establish through clear and convincing evidence to the Arkansas Racing Commission:
1. Its stability, integrity, and economic responsibility;
2. Its good character, honesty, and integrity;
3. That its qualifiers comply with the Casino Gaming Rules;
4. The integrity of the applicant’s investors, mortgage creditors, guarantors, and holders of bonds, notes, and other evidences of debt; and
5. The integrity of the applicant’s qualifiers.
An application for a Service Industry License should include:
1. Arkansas Racing Commission Business Entity Disclosure Form to be completed by the applicant and each company, individual, or entity holding an interest in the applicant;
2. Arkansas Racing Commission Personal History Disclosure and Supplemental form of Persons Related with Service Industry licensees, to be completed by each person who must be qualified for a license; and
3. The appropriate fees.
The Racing Commission will not evaluate any application if it does not have all of the required documentation.
In addition, the Racing Commission will not issue a Service Industry License unless the applicant has established the individual qualifications of each one of the following entities or persons:
1. The entity;
2. The holding company of the entity;
3. Every owner of the entity who has more than 5% interest in the entity;
4. Every owner of the entity who the Racing Commission deems necessary to promote the purpose of the casino gaming rules;
5. Any director of the entity, except those who are not significantly involved;
6. Every officer of the entity who is significantly involved or has authority over business dealings with the casino licensee;
7. Any officer of the holding company of the entity who the Racing Commission considers necessary to protect the good character, honesty, and integrity of the entity;
8. Any employee who supervises the regional or local office which employs the sales representatives who solicit business from a casino licensee;
9. Any employee who functions as a sales representative or who regularly solicits business from a casino licensee;
10. Any other person connected to an entity who the Racing Commission considers should be licensed.
Prior to issuing a Service Industry License to the applicant, any Persons Related to the applicant must provide:
1. His relationship with the entity;
2. That he is 21 years of age (for persons who service gaming machines or work on the gaming floor);
3. That he is of good character and reputation, is honest, and has integrity;
4. That he has not been convicted by any state or federal court, including “nolo contendere” and “withheld adjudication,” for any crimes of moral turpitude, felonies, or violations of laws relating to games of chance or skill, or the gaming industry.
Duration
A Service Industry license is valid for a period of 3 years. The Racing Commission may issue a Service Industry license for a shorter time period or void the Service Industry for reasonable cause as it deems necessary.
Fees
There is a $5,000.00 application fee and $1,000.00 license fee associated with each license.
Additionally, the applicant is responsible for the costs of investigation.
Renewal
A licensee should file a renewal application at least ninety (90) days prior to the expiration of the license.
The fee is due each year on or before 1 January. A renewal application should include:
1. Arkansas Racing Commission Business Entity Disclosure Form, including all of the information that has changed since the initial Service Industry license or the last renewal;
2. Arkansas Racing Commission Personal History Disclosure and Supplemental Form for Persons Related with Service Industry licensees to be completed by each person who must be licensed, whether they have been previously licensed or not.
Exemption to a Service Industry License
The Racing Commission may elect to exempt an entity from obtaining a Service Industry License if it determines that the entity is not operating business in a regular and continuous manner. An entity may not be operating business in a regular and continuous manner if it demonstrates that it provides goods or services in “minimal or insignificant amounts,” and that granting a Service Industry License is not necessary to protect the public interest or advance the Racing Commission’s gaming policies. The Racing Commission may take the following factors into consideration:
1. Number of transactions;
2. Frequency of transactions;
3. Dollar amount of transactions;
4. Nature of equipment or services;
5. Maximum period of time necessary to complete the business subject of the transaction;
6. Public interest and gaming policy.
An entity interested in exemption should apply in writing to the Racing Commission requesting exemption. An application for exemption should include:
1. Contact information of and description of the service offered by the entity;
2. Names of the entity’s qualifiers;
3. The name of the casino licensee to whom the entity will provide services, including a description of the services with quantity and costs;
4. Number and frequency of transactions;
5. Dollar amount of transactions;
6. Sufficient reasons to convince the Racing Commission as to why granting a license is not necessary to protect the public interest.
Temporary Service Industry License
An applicant for a Service Industry License who holds a similar license in another jurisdiction in the United States may be granted a temporary Service Industry License.
The applicant must submit a written request with its application to be considered for a temporary license. A temporary license may be granted if:
1. The Commission determines, after investigation, that the licensing standards in a jurisdiction where the applicant is licensed are “similarly comprehensive, thorough, and provide equal, if not greater, safeguards,” and that granting the request is in the public interest;
2. A completed application has been filed;
3. The applicant has provided current, updated information related to its financial viability and suitability;
4. The applicant does not have any administrative or enforcement actions pending in another jurisdiction;
5. The applicant does not have any pending or ongoing investigations of “material violations” in another jurisdiction.
An applicant who is issued a temporary Service Industry License must still pay the fees associated with the License.
Key Employee of Service Industry Company License
Key Employees of a Service Industry Company are those employees “who have direct access to the Casino Gaming equipment, games, surveillance or computer systems.” The qualifications for a Key Employee of a Service Industry Company License are the same as those for a Person Related with a Service Industry License. Those qualifications are:
1. His relationship with the entity;
2. That he is 21 years of age (for persons who service gaming machines or work on the gaming floor);
3. That he is of good character and reputation, is honest, and has integrity;
4. That he has not been convicted by any state or federal court, including “nolo contendere” and “withheld adjudication,” for any crimes of moral turpitude, felonies, or violations of laws relating to games of chance or skill, or the gaming industry.
Duration
Key Employee of a Service Industry Company Licenses are issued for a term of three years.
Fees
There is a $300.00 application fee and a $75.00 license fee associated with a Key Employee License.
Investigative costs that exceed the application fee will be billed to the applicant.
Renewal
A Key Employee of a Service Industry Company should renew its license within sixty (60) days of the license’s expiration.
Institutional Investors
Institutional investors may apply to the Racing Commission for a waiver of the requirements of the Casino Gaming Rules “with respect to the ownership of the voting or equity securities” if the investor intends to and does hold the securities for investment purposes only. An investor who owns more than 15 percent of the voting or equity securities is not eligible for a waiver. A waiver granted by the Racing Commission is effective as long as the investor continues to meet the criteria for a waiver.
An application for a waiver must include:
1. A description of the investor’s business and a statement outlining why it is within the definition of “institutional investor;”
2. A certification under oath that:
a. the securities will be acquired and held for investment purposes;
b. a statement by the signatory explaining the signatory’s authority to sign the certification;
c. the applicant agrees to comply with the Casino Gaming Rules, to be under the jurisdiction of Arkansas courts, and to consent to Arkansas as the choice forum in the event of dispute; and
d. the applicant agrees that it will not sell, assign, or transfer its security without prior approval by the Racing Commission;
3. A description of all actions taken by the investor relating to any dispute or controversy relating to the application or waiver;
4. The contact information of the qualifiers of the investor, as well as persons who have direct control over the investor’s holdings of voting and equity securities;
5. The contact information and tax identification of each person who has the power to control the investor’s exercise of its rights;
6. The name of each person who owns more than 5 percent of the investor’s voting securities;
7. A list of the investor’s affiliates;
8. A list of all regulatory agencies with which the investor or affiliate that owns any voting or equity securities or any other interest in a company which is licensed or registered with the Racing Commission files periodic reports, and the contact information of a person at each agency;
9. A disclosure of all criminal or regulatory sanctions from the past 10 years, and any administrative or court proceedings from the past 5 years against the investor or any of its qualifiers employed in the past 12 months;
10. Any other information the Racing Commission may request.
Electronic Games of Skill Supplier License
Electronic games of skill are defined as “games played through any electronic device or machine that afford an opportunity for the exercise of skill or judgment when the outcome is not completely controlled by chance alone.” Electronic games of skill are offered at Arkansas’s horse and greyhound race tracks, but do not include pari-mutuel wagering, simulcast wagering, or races conducted in the past and rebroadcast electronically.
To provide services to an electronic games of skill franchise holder, a supplier must:
1. Demonstrate that he has the capability and qualifications necessary to reasonably furnish the equipment and perform the services to be provided by the supplier; and
2. Obtain a license from the Racing Commission.
The Racing Commission will conduct background checks on all supplier applicants prior to issuing a license.
Fees
Each supplier license has a fee of $1,000 for each year that the license is in effect.
