2019 -- H 5241 SUBSTITUTE A

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LC001189/SUB A

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2019

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A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- VIDEO-LOTTERY GAMES,

TABLE GAMES AND SPORTS WAGERING

     

     Introduced By: Representatives Mattiello, Shekarchi, Slater, Morin, and O'Brien

     Date Introduced: January 31, 2019

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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     SECTION 1. Sections 42-61.2-1, 42-61.2-3.3, 42-61.2-4, 42-61.2-5 and 42-61.2-15 of the

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General Laws in Chapter 42-61.2 entitled "Video-Lottery Games, Table Games and Sports

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Wagering" are hereby amended to read as follows:

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     42-61.2-1. Definitions.

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     For the purpose of this chapter, the following words shall mean:

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     (1) "Casino gaming" means any and all table and casino-style games played with cards,

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dice, or equipment, for money, credit, or any representative of value; including, but not limited to,

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roulette, blackjack, big six, craps, poker, baccarat, paigow, any banking or percentage game, or

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any other game of device included within the definition of Class III gaming as that term is

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defined in Section 2703(8) of Title 25 of the United States Code and that is approved by the state

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through the division of state lottery.

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     (2) "Central communication system" means a system approved by the lottery division,

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linking all video-lottery machines at a licensee location to provide auditing program information

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and any other information determined by the lottery. In addition, the central communications

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system must provide all computer hardware and related software necessary for the establishment

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and implementation of a comprehensive system as required by the division. The central

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communications licensee may provide a maximum of fifty percent (50%) of the video-lottery

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terminals.

 

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     (3) "Collegiate sports or athletic event" shall not include a collegiate sports contest or

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collegiate athletic event that takes place in Rhode Island or a sports contest or athletic event in

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which any Rhode Island college team participates regardless of where the event takes place.

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     (4) "Credit facilitator" means any employee of a licensed, video-lottery retailer approved

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in writing by the division whose responsibility is to, among other things, review applications for

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credit by players, verify information on credit applications, grant, deny, and suspend credit,

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establish credit limits, increase and decrease credit limits, and maintain credit files, all in

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accordance with this chapter and rules and regulations approved by the division.

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     (5) "DBR" means the department of business regulation, division of gaming and athletics

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licensing, and/or any successor in interest thereto.

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     (6) "Director" means the director of the division.

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     (7) "Division", "division of lottery", "division of lotteries", or "lottery division" means

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the division of lotteries within the department of revenue and/or any successor in interest thereto.

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     (8) "Hosting facility" refers to Twin River and the Tiverton gaming facility.

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     (9) "Licensed, video-lottery retailer" means a pari-mutuel licensee specifically licensed

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by the director subject to the approval of the division to become a licensed, video-lottery retailer.

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     (10) "Net, table-game revenue" means win from table games minus counterfeit currency.

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     (11) "Net terminal income" means currency placed into a video-lottery terminal less

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credits redeemed for cash by players.

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     (12) "Newport Grand" means Newport Grand, LLC, a Rhode Island limited-liability

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company, successor to Newport Grand Jai Alai, LLC, and each permitted successor to and

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assignee of Newport Grand, LLC under the Newport Grand Master Contract, including, but not

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limited to, Premier Entertainment II, LLC and/or Twin River-Tiverton, LLC, provided it is a pari-

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mutuel licensee as defined in § 42-61.2-1 et seq.; provided, further, however, where the context

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indicates that the term is referring to the physical facility, then it shall mean the gaming and

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entertainment facility located at 150 Admiral Kalbfus Road, Newport, Rhode Island.

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     (13) "Newport Grand Marketing Year" means each fiscal year of the state or a portion

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thereof between November 23, 2010, and the termination date of the Newport Grand Master

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Contract.

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     (14) "Newport Grand Master Contract" means that certain master video-lottery terminal

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contract made as of November 23, 2005, by and between the division of lotteries of the Rhode

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Island department of administration and Newport Grand, as amended and extended from time to

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time as authorized therein and/or as such Newport Grand Master Contract may be assigned as

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permitted therein.

 

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     (15) "Online gaming account" means an account established at a hosting facility and

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opened by a patron in person on the premises of a hosting facility that a patron shall use for the

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deposit and withdrawal of funds used for online sports wagering.

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     (16) "Online sports wagering" means engaging in the act of sports wagering by the

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placing of wagers on sporting events or a combination of sporting events, or on the individual

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performance statistics of athletes in a sporting event or a combination of sporting events, over the

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Internet through computers, mobile applications on mobile devices or other interactive devices

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approved by the division, which wagers are accepted by a server-based gaming system located at

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the premises of a hosting facility authorized to accept sports wagers and administer payoffs of

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winning sports wagers; all such wagers shall be deemed to be placed and accepted at the premises

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of a hosting facility.

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     (17) "Online sports-wagering revenue" means:

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     (i) The total of cash or cash equivalents received from online sports wagering minus the

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total of:

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     (I) Cash or cash equivalents paid to players as a result of online sports wagering;

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     (II) Marketing expenses related to online sports wagering as agreed to by the division, the

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sports-wagering vendor, and the host facilities, as approved by the division of the lottery; and

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     (III) Any federal excise taxes (if applicable).

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     (ii) The term does not include any of the following:

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     (I) Counterfeit cash.

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     (II) Coins or currency of other countries received as a result of online sports wagering,

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except to the extent that the coins or currency are readily convertible to cash.

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     (III) Cash taken in a fraudulent act perpetrated against a hosting facility or sports-

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wagering vendor for which the hosting facility or sports-wagering vendor is not reimbursed.

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     (IV) Free play provided by the hosting facility or sports-wagering vendor as authorized

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by the division of lottery to a player and subsequently "won back" by the hosting facility or

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sports-wagering vendor, for which the hosting facility or sports-wagering vendor can demonstrate

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that it or its affiliate has not been reimbursed in cash.

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     (15)(18) "Pari-mutuel licensee" means:

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     (i) An entity licensed pursuant to § 41-3.1-3; and/or

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     (ii) An entity licensed pursuant to § 41-7-3.

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     (16)(19) "Payoff", when used in connection with sports wagering, means cash or cash

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equivalents paid to a player as a result of the player's winning a sports wager. A "payoff" is a type

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of "prize", as the term "prize" is used in chapters 61, 61.2, and 61.3 of this title.

 

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     (17)(20) "Premier" means Premier Entertainment II, LLC and/or its successor in interest

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by reason of the acquisition of the stock, membership interests, or substantially all of the assets of

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such entity.

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     (18)(21) "Rake" means a set fee or percentage of cash and chips representing cash

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wagered in the playing of a nonbanking table game assessed by a table games retailer for

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providing the services of a dealer, gaming table, or location, to allow the play of any nonbanking

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table game.

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     (22) "Server-based gaming system" means all hardware, software and communications

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devices that comprise a system utilized for the purpose of offering an electronic platform used in

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connection with the process of placing and accepting sports wagers.

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     (19)(23) "Sporting event" means any professional sport or athletic event, any Olympic or

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international sports competition event, and any collegiate sport or athletic event, or any portion

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thereof, including, but not limited to, the individual performance statistics of athletes in a sports

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event or combination of sports events, except "sports event" shall not include a prohibited sports

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event.

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     (20)(24) "Sports wagering" means the business of accepting wagers on sporting events or

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a combination of sporting events, or on the individual performance statistics of athletes in a

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sporting event or combination of sporting events, by any system or method of wagering. The term

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includes, but is not limited to, exchange wagering, parlays, over-under, moneyline, pools, and

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straight bets, and the term includes the placement of such bets and wagers. However, the term

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does not include, without limitation, the following:

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     (i) Lotteries, including video-lottery games and other types of casino gaming operated by

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the state, through the division, on the date this act is enacted [June 22, 2018].

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     (ii) Pari-mutuel betting on the outcome of thoroughbred or harness horse racing, or

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greyhound dog racing, including but not limited to, pari-mutuel wagering on a race that is

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"simulcast" (as defined in § 41-11-1), as regulated elsewhere pursuant to the general laws,

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including in chapters 3, 3.1, 4, and 11 of title 41.

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     (iii) Off-track betting on racing events, as regulated elsewhere pursuant to the general

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laws, including in chapter 10 of title 41.

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     (iv) Wagering on the respective scores or points of the game of jai alai or pelota and the

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sale of pari-mutuel pools related to such games, as regulated elsewhere pursuant to the general

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laws, including in chapter 7 of title 41.

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     (v) Lotteries, charitable gaming, games of chance, bingo games, raffles, and pull-tab

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lottery tickets, to the extent permitted and regulated pursuant to chapter 19 of title 11.

 

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     (21)(25) "Sports-wagering device" means any mechanical, electrical, or computerized

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contrivance, terminal, machine, or other device, apparatus, equipment, or supplies approved by

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the division and used to conduct sports wagering.

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     (22)(26) "Sports-wagering revenue" means:

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     (i) The total of cash or cash equivalents received from sports wagering minus the total of:

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     (I) Cash or cash equivalents paid to players as a result of sports wagering;

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     (II) The annual flat fee to the host communities as defined by § 42-61.2-5(c);

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     (III) Marketing expenses related to sports wagering as agreed to by the division, the

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sports-wagering vendor, and the host facilities, as approved by the division of the lottery; and

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     (IV) Any federal excise taxes (if applicable).

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     (ii) The term does not include any of the following:

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     (I) Counterfeit cash.

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     (II) Coins or currency of other countries received as a result of sports wagering, except to

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the extent that the coins or currency are readily convertible to cash.

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     (III) Cash taken in a fraudulent act perpetrated against a hosting facility or sports-

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wagering vendor for which the hosting facility or sports-wagering vendor is not reimbursed.

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     (IV) Free play provided by the hosting facility or sports-wagering vendor as authorized

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by the division of lottery to a patron and subsequently "won back" by the hosting facility or

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sports-wagering vendor, for which the hosting facility or sports-wagering vendor can demonstrate

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that it or its affiliate has not been reimbursed in cash.

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     (23)(27) "Sports-wagering vendor" means any entity authorized by the division of lottery

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to operate sports betting on the division's behalf in accordance with this chapter.

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     (24)(28) "Table game" or "Table gaming" means that type of casino gaming in which

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table games are played for cash or chips representing cash, or any other representation of value

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that has been approved by the division of lotteries, using cards, dice, or equipment and conducted

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by one or more live persons.

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     (25)(29) "Table-game retailer" means a retailer authorized to conduct table gaming

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pursuant to §§ 42-61.2-2.1 or 42-61.2-2.3.

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     (26)(30) "Technology provider" means any individual, partnership, corporation, or

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association that designs, manufactures, installs, maintains, distributes, or supplies video-lottery

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machines or associated equipment for the sale or use in this state.

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     (27)(31) "Tiverton gaming facility" (sometimes referred to as "Twin River-Tiverton")

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means the gaming and entertainment facility located in the town of Tiverton at the intersection of

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William S. Canning Boulevard and Stafford Road.

 

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     (28)(32) "Twin River" (sometimes referred to as "UTGR") means UTGR, Inc., a

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Delaware corporation, and each permitted successor to and assignee of UTGR, Inc.; provided

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further, however, where the context indicates that the term is referring to a physical facility, then

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"Twin River" or "Twin River gaming facility" shall mean the gaming and entertainment facility

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located at 100 Twin River Road in Lincoln, Rhode Island.

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     (29)(33) "Twin River-Tiverton" means Twin River-Tiverton, LLC and/or its successor in

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interest by reason of the acquisition of the stock, membership interests, or substantially all of the

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assets of such entity.

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     (30)(34) "Video-lottery games" means lottery games played on video-lottery terminals

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controlled by the lottery division.

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     (31)(35) "Video-lottery terminal" means any electronic computerized video game

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machine that, upon the insertion of cash or any other representation of value that has been

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approved by the division of lotteries, is available to play a video game authorized by the lottery

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division, and that uses a video display and microprocessors in which, by chance, the player may

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receive free games or credits that can be redeemed for cash. The term does not include a machine

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that directly dispenses coins, cash, or tokens.

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     42-61.2-3.3. Sports wagering regulation.

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     (a) In addition to the powers and duties of the division director under §§ 42-61-4, 42-

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61.2-3, 42-61.2-4 and 42-61.2-3.1, and pursuant to § 42-61.2-2.4, the division director shall

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promulgate rules and regulations relating to sports wagering and set policy therefor. These rules

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and regulations shall establish standards and procedures for sports wagering and associated

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devices, equipment, and accessories, and shall include, but not be limited to:

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     (1) Approve standards, rules, and regulations to govern the conduct of sports wagering

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and the system of wagering associated with sports wagering, including without limitation:

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     (i) The objects of the sports wagering (i.e., the sporting events upon which sports-

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wagering bets may be accepted) and methods of play, including what constitutes win, loss, or tie

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bets;

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     (ii) The manner in which sports-wagering bets are received, payoffs are remitted, and

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point spreads, lines, and odds are determined for each type of available sports wagering bet;

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     (iii) Physical characteristics of any devices, equipment, and accessories related to sports

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wagering;

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     (iv) The applicable inspection procedures for any devices, equipment, and accessories

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related to sports wagering;

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     (v) Procedures for the collection of bets and payoffs, including but not limited to,

 

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requirements for internal revenue service purposes;

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     (vi) Procedures for handling suspected cheating and sports-wagering irregularities; and

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     (vii) Procedures for handling any defective or malfunctioning devices, equipment, and

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accessories related to sports wagering;

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     (viii) Procedures for investigation of patron complaints related to sports wagering;

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     (ix) Terms and conditions for online sports wagering;

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     (x) Internal controls for all aspects of online sports wagering, including procedures for

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system integrity, system security, operations, accounting and reporting of problem gamblers;

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     (xi) Operational controls for server-based gaming systems, software and hardware

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utilized for online sports wagering, including, but not limited to, appearance, functionality,

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contents, collection, storage and retention of data and security;

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     (xii) Operational controls for online gaming accounts, including, but not limited to,

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procedures for the establishment and closure of an online gaming account, funding of withdrawal

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of funds from an online gaming account and generation of an account statement for a patron's

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online gaming account.

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     (2) Establishing the method for calculating sports-wagering revenue and online sports-

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wagering revenue and standards for the daily counting and recording of cash and cash equivalents

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received in the conduct of sports wagering, and ensuring that internal controls are followed and

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financial books and records are maintained and audits are conducted;

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     (3) Establishing the number and type of sports-wagering bets authorized at the hosting

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facility, including any new sports-wagering bets or variations or composites of approved sports-

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wagering bets, and all rules related thereto;

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     (4) Establishing any sports-wagering rule changes, sports-wagering minimum and

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maximum bet changes, and changes to the types of sports-wagering products offered at a

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particular hosting facility, including but not limited to, any new sports-wagering bets or variations

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or composites of approved sports-wagering bets, and including all rules related thereto;

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     (5) Requiring the hosting facility and/or sports-wagering vendor to:

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     (i) Provide written information at each sports-wagering location within the hosting

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facility about wagering rules, payoffs on winning sports wagers, and written information

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prominently displayed on any electronic platform available to the player through a server-based

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gaming system and other information as the division may require;

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     (ii) Provide specifications approved by the division to integrate and update the hosting

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facility's surveillance system to cover all areas within the hosting facility where sports wagering

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is conducted and other areas as required by the division. The specifications shall include

 

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provisions providing the division and other persons authorized by the division with onsite access

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to the system;

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     (iii) Designate one or more locations within the hosting facility where sports-wagering

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bets are received;

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     (iv) Ensure that visibility in a hosting facility is not obstructed in any way that could

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interfere with the ability of the division, the hosting facility, or other persons authorized under

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this section or by the division to oversee the surveillance of the conduct of sports wagering;

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     (v) Ensure that the count rooms for sports wagering have appropriate security for the

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counting and storage of cash;

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     (vi) Ensure that drop boxes are brought into or removed from an area where sports

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wagering is conducted or locked or unlocked in accordance with procedures established by the

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division;

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     (vii) Designate secure locations for the inspection, service, repair, or storage of sports-

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wagering equipment and for employee training and instruction to be approved by the division;

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     (viii) Establish standards prohibiting persons under eighteen (18) years of age from

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participating in sports wagering;

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     (ix) Establish compulsive and problem gambling standards and/or programs pertaining to

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sports wagering consistent with this chapter;

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     (6) Establishing the minimal proficiency requirements for those individuals accepting

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sports wagers and administering payoffs on winning sports wagers. The foregoing requirements

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of this subsection may be in addition to any rules or regulations of the DBR requiring licensing of

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personnel of state-operated gaming facilities;

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     (7) Establish appropriate eligibility requirements and standards for traditional sports-

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wagering equipment suppliers; and

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     (8) Any other matters necessary for conducting sports wagering.

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     (b) The hosting facility shall provide secure, segregated facilities as required by the

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division on the premises for the exclusive use of the division staff and the gaming enforcement

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unit of the state police. The space shall be located proximate to the gaming floor and shall include

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surveillance equipment, monitors with full camera control capability, as well as other office

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equipment that may be deemed necessary by the division. The location and size of the space and

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necessary equipment shall be subject to the approval of the division.

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     42-61.2-4. Additional powers and duties of director and lottery division.

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     In addition to the powers and duties set forth in §§ 42-61-4 and 42-61.2-3, the director

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shall have the power to:

 

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     (1) Supervise and administer the operation of video lottery games and sports wagering in

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accordance with this chapter and with the rules and regulations of the division;

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     (2) Suspend or revoke upon a hearing any license issued pursuant to this chapter or the

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rules and regulations promulgated under this chapter;

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     (3) In compliance with the provisions of chapter 2 of title 37, enter into contracts for the

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operation of a central communications system and technology providers, or any part thereof;

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     (4) In compliance with the provisions of chapter 2 of title 37, enter into contracts for the

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provision of sports-wagering systems, facilities, and related technology necessary and/or

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desirable for the state-operated sports wagering to be hosted at Twin River and the Tiverton

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gaming facilities, including technology related to the operation of on-premises remote sports

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wagering, or any part thereof; and

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     (5) In compliance with the provisions of chapter 2 of title 37, enter into contracts for the

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provision of server-based gaming systems, facilities, and related technology necessary and/or

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desirable for the state-operated online sports wagering; and

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     (5)(6) Certify monthly to the budget officer, the auditor general, the permanent joint

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committee on state lottery, and to the governor a full and complete statement of lottery revenues,

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prize disbursements, and other expenses for the preceding month; ensure that monthly financial

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reports are prepared providing gross monthly revenues, prize disbursements, other expenses, and

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net income for keno and for all other lottery operations; submit this report to the state budget

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officer, the auditor general, the permanent joint committee on state lottery, the legislative fiscal

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advisors, and the governor no later than the twentieth business day following the close of the

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month; at the end of each fiscal year the director shall submit an annual report based upon an

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accrual system of accounting which shall include a full and complete statement of lottery

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revenues, prize disbursements, and expenses, to the governor and the general assembly, which

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report shall be a public document and shall be filed with the secretary of state. The monthly report

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shall be prepared in a manner prescribed by the members of the revenue estimating conference.

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     42-61.2-5. Allocation of sports-wagering revenue. Allocation of sports-wagering and

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online sports wagering revenue.

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     (a) Notwithstanding the provisions of § 42-61-15, the division of lottery is authorized to

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enter into an agreement, limited to in-person on-site sports wagering, to allocate sports-wagering

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revenue derived from sports wagering and online sports wagering at the Twin River and Tiverton

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gaming facilities (the hosting facilities) between the state, the state's authorized sports-wagering

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vendor, and the host facilities. The allocation of sports-wagering revenue and online sports-

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wagering revenue shall be:

 

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     (1) To the state, fifty-one percent (51%) of sports-wagering revenue and online sports-

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wagering revenue;

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     (2) To the state's authorized sports-wagering vendor, thirty-two percent (32%) of sports-

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wagering revenue and online sports-wagering revenue; and

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     (3) To the host facilities, seventeen percent (17%) of sports-wagering revenue and online

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sports-wagering revenue.

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     (b) Sports-wagering revenue and online sports-wagering revenue allocated to the state

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shall be deposited into the state lottery fund for administrative purposes and then the balance

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remaining into the general fund.

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     (c) The town of Lincoln shall be paid an annual flat fee of one hundred thousand dollars

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($100,000) and the town of Tiverton shall be paid an annual flat fee of one hundred thousand

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dollars ($100,000) in compensation for serving as the host communities for sports wagering.

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     42-61.2-15. Table game and sports-wagering hours of operation.

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     (a) To the extent table games are authorized at the premises of a table-game retailer, such

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table games may be offered at the premises of a table-game retailer for all or a portion of the days

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and times that video-lottery games are offered.

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     (b) To the extent sports wagering is authorized at the premises of a table-game retailer,

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such sports wagering may be offered at the premises of such table-game retailer for all or a

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portion of the days and times that video-lottery games are offered.

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     (c) To the extent online sports wagering is authorized at a hosting facility, such online

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sports wagering may be offered without any restriction on hours of operation and shall not be

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limited by the days and times that video-lottery games and/or table games are offered.

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     SECTION 2. Chapter 42-61.2 of the General Laws entitled "Video-Lottery Games, Table

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Games and Sports Wagering" is hereby amended by adding thereto the following section:

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     42-61.2-16. General requirements for online sports wagering.

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     (a) Online sports wagering shall only occur within the state of Rhode Island. A hosting

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facility shall only accept online wagers from players that have been affirmatively located as being

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physically present in the state of Rhode Island at the time of their wager.

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     (b) The server-based gaming system shall employ a mechanism to detect the physical

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location of a player when the player logs onto the system and as frequently as specified in any

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regulations promulgated by the state, through the division. If the system detects that the physical

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location of the patron is in an area outside the state of Rhode Island, the system shall not accept

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that patron's wagers until such time as the patron is in the state of Rhode Island.

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     (c) The server-based gaming system and all hardware, software, and other technology or

 

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equipment located on a hosting facility's premises and used to conduct online sports wagering

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shall be located in a restricted area on the hosting facility's premises.

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     (d) Online sports wagering shall only be engaged in by patrons who have established an

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online gaming account in person on the premises of a hosting facility.

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     SECTION 3. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- VIDEO-LOTTERY GAMES,

TABLE GAMES AND SPORTS WAGERING

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     This act would authorize and provide for online sports wagering through authorized

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hosting facilities in Rhode Island.

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     This act would take effect upon passage.

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