SWARC application and NON-REFUNDABLE SWARC application fee

SWARC has established a 45-day window from Sept. 6, 2022 through 5 p.m. on Oct. 21, 2022 for applicants to submit their applications and fees.

All application materials AND the SWARC application fee MUST be received by 5 p.m. on Oct. 21, 2022. It is the applicant’s responsibility to ensure that all application materials and the application fee have been submitted and received by SWARC.

Applications will be rejected if all application materials and the application fee are not RECEIVED by the deadline.

SWARC application fees are as follows. THE SWARC APPLICATION FEE IS NOT REFUNDABLE:

• Class B-1 Facility: $250,000
• Class B-2 Facility: $50,000
• Mobile: $500,000

MLGCC background investigation materials and investigative costs

Applicants must contact MLGCC’s Licensing Division at 410-230-2699 or [email protected] to request access to the eLicensing online portal. All information and documents required for MLGCC’s background investigations MUST be submitted into eLicensing AND investigative costs MUST be paid before an investigation can begin.

All MLGCC background investigation applications and investigative costs must be received by MLGCC no later than 14 days after the applicant submits its SWARC application and application fee to SWARC.

Investigative costs will vary widely, depending on the complexity of the applicant’s personal and business finances. Generally, these costs are as follows:

• $2,000 deposit for each facility or mobile applicant
• $5,287.25 for each principal employee
• $437.25 for each non-principal sports wagering employee
• $3,550 to $6,000 for each contractor
• $100 to $1,000 for each vendor

SWARC Competitive Process

SWARC will review any applications that have been submitted, along with the application fee, by the deadline. Page 14 of the SWARC mobile application and Page 17 of the SWARC Class B facility application provide the evaluation criteria that SWARC will follow.

SWARC will inform MLGCC of all applicants that are eligible for consideration. The primary reasons an applicant may not be eligible are if a proposed sports wagering facility location is within an exclusion zone identified in the sports wagering law, or if an applicant has provided an incomplete SWARC application or is late in submitting its SWARC application and paying the SWARC application fee.

SWARC will conduct a competitive process to select those eligible applicants to whom it intends to award licenses. SWARC is prohibited from awarding a license to an applicant that has not been found qualified by MLGCC. Thus, SWARC cannot award a license to an applicant until it has been informed by MLGCC that the applicant is qualified.

MLGCC Investigations

While SWARC’s competitive review of eligible applicants is ongoing, MLGCC will be conducting background investigations of eligible applicants.

Applicants or prospective applicants MUST submit all required background investigation materials and investigative fees before an investigation can begin. In any event, the applicable MLGCC background applications and investigative fees must be submitted no later than 14 days after the applicant submits to SWARC its SWARC application and application fee.

MLGCC’s Licensing staff will provide specific guidance to each applicant regarding background investigation materials and fees that are due.

MLGCC’s investigations determine whether an applicant has demonstrated, by clear and convincing evidence, that it has the honesty, integrity, good character and financial stability to be “qualified” for a sports wagering license. MLGCC’s Licensing staff will be in frequent contact with applicants during their background investigations to guide them through the process.

MLGCC Qualification Hearing

After an investigation is complete, the Licensing staff will present their findings to the MLGCC during a public hearing. These hearings are often conducted during the MLGCC’s monthly public meetings, but the MLGCC may also call special public meetings for the purpose of holding sports wagering licensing qualification hearings. Applicants are provided with the opportunity to address the MLGCC during the hearings. The MLGCC then notifies SWARC of applicants that it has found “qualified.”

SWARC License Award

After receiving notification from MLGCC, SWARC determines which “qualified” applicants will be “awarded” licenses. SWARC then informs MLGCC of the “awardees.”

MLGCC Operational Requirements

After an applicant has been “awarded” a license by SWARC, staff from Maryland Lottery and Gaming will guide the awardee through numerous operational requirements that all awardees must meet before they are “issued” a license and can launch sports wagering operations.

All sports wagering facility and mobile licensees are required to complete the following steps:

• MLGCC must find each licensee’s contractors (including, if applicable, a licensee’s sports wagering facility operator or mobile operator) and staff qualified for licenses. SWARC’s approval of these licenses is not required.
• Each licensee must submit documentation and receive MLGCC approval of its internal control procedures; security and surveillance systems and procedures; technology and back-office systems; and responsible gaming plan.
• Each licensee must verify that it has trained its staff to conduct sports wagering operations.
• Each licensee must successfully complete a controlled demonstration of its sports wagering operations, which involves scheduling at least two dates to conduct live wagering under the observation of Maryland Lottery and Gaming staff.

MLGCC staff will guide awardees through each of these steps beginning as soon as their sports wagering operator, if any, has been identified. The controlled demonstration of sports wagering operations is the final step in the process. After completion of a successful controlled demonstration, MLGCC may “issue” a license allowing the licensee to commence sports wagering operations.

.19 Ownership Criteria

A. SWARC may not award a license to an Applicant that has not demonstrated direct or indirect ownership of not less than 5% by individuals with Personal Net Worth of less than $1,847,000 each.

B. Owners of the Applicant intended to satisfy this ownership criteria shall provide to the Applicant a signed, notarized certification stating that the individual’s Personal Net Worth is less than $1,847,000 and such certifications must be submitted with the Applicant’s SWARC application.

“Personal Net Worth” is defined in COMAR 36.11.01.02C(10) as the net value of the assets held by an individual, including the individual’s share of assets held jointly or as community property with the individual’s spouse, after total liabilities are deducted. Personal Net Worth does not include:

(1) the individual’s ownership interest in the Applicant;

(2) the individual’s equity in his or her primary place of residence;

(3) any mortgage or loan secured by his or her primary place of residence as a liability; or

(4) the cash value of any qualified retirement savings plans or individual retirement accounts.

The ownership criteria applies to every entity that submits an application for a competitive sports wagering license.

Therefore, every applicant for a competitive sports wagering license must include one or more individuals (each having a personal net worth of less than $1,847,000), who together own at least 5% of the applicant. This ownership may be direct or indirect as described below. Therefore, applicants that are sole proprietors, corporations, partnerships, limited liability companies, or other entities, where all of the owners have net worth of more than $1,847,000, must recruit additional investors to satisfy the ownership criteria.

The ownership must be effective as of the date an application is submitted to SWARC, but agreements may be contingent upon being awarded a license by SWARC.

Yes. All applicants for a competitive sports wagering license must satisfy the ownership criteria.  If the publicly held company cannot demonstrate that its public stockholders satisfy the ownership criteria, then the publicly held company must consider other alternatives to satisfy the criteria. Options may include forming a subsidiary, joint venture or other arrangement with individuals that satisfy the personal net worth criteria.

A direct owner of an applicant is an individual who owns shares (or other equity interests) directly in the applicant.  For example, if an individual owns 5% of the shares (or other equity interests) in an applicant, then the individual is a direct owner of the Applicant.

An indirect owner of an applicant is an individual who owns shares (or other equity interests) in another entity which, in turn, owns shares (or other equity interests) in the applicant.  For example, if Person A holds a 25% share of Company X and Company X holds a 20% share of the applicant, then Person A is an indirect owner of a 5% share of the applicant (25% of the 20% share).

To qualify as an owner of the applicant, a person must hold an interest in an applicant that is evidenced by: (a) record ownership; (b) stock or other ownership in which the holder thereof participates in the capital or profits of the applicant; or (c) an interest that entitles the person to benefit substantially and is equivalent to ownership by an agreement, relationship, or other arrangement.

As noted in the regulation, an applicant may rely upon a notarized certification of an owner attesting to the owner’s personal net worth (calculated as provided in the regulation).

Yes. A revenue- or profit-sharing arrangement between an applicant and persons satisfying the net worth limitation provided in COMAR 36.11.02.19 would satisfy the ownership criteria provision as long as the persons who satisfy the net worth limitation, in the aggregate, have rights to participate in at least 5% of the applicant’s revenues or profits.  Any single person or entity receiving a participation percentage of 5% or more will be considered an “owner” under MLGCC’s regulations, and any such person or entity will be subject to a full background investigation by MLGCC.