Original Section(s)

11 VAC 5-80-100 Security of Funds

GLI Recommendations

11 VAC 5-80-100.C.

1. Funds in a player account shall be held either in trust for the player in a segregated account or in a special-purpose segregated account that is maintained and controlled by a properly constituted corporate entity that is not the permit holder and whose governing board includes one or more corporate directors who are independent of the permit holder and of any corporation related to or controlled by the permit holder. A corporate entity that maintains a special purpose segregated account shall:
   1. Require a unanimous vote of all corporate directors to file bankruptcy and have articles of incorporation that prohibit commingling of funds with those of the permit holder except as necessary to reconcile the accounts of sports bettors with sums owed by those sports bettors to the permit holder;
   2. Be restricted from incurring debt other than to sports bettors pursuant to the rules that govern their user accounts;
   3. Be restricted from taking on obligations of the permit holder other than obligations to sports bettors pursuant to the rules that govern their user accounts; and
   4. Be prohibited from dissolving, merging, or consolidating with another company, other than a special-purpose corporate entity established by another permit holder that meets the requirements of this section, while there are unsatisfied obligations to sports bettors.

GLI recommends grouping of requirements from 11 VAC 5-80-100.C, 11 VAC 5-80-100.E, 11 VAC 5-70-160.J, and 11 VAC 5-70-160.K into a single section for Security of Funds

GLI also recommends changes to 11 VAC 5-80-100.E’s text as while as these are common internal controls, they are not something which is explicitly displayed on the actual platform.

11 VAC 5-80-100.E

2. A permit holder shall implement and prominently publish the following on its platform policies that:

1. Policies that Prevent unauthorized withdrawals from a player’s account by a permit holder or others;
2. Notices that Make clear that the funds in the segregated account do not belong to the permit holder and are not available to creditors other than the player whose funds are being held;
3. Policies that Prevent commingling of funds in the segregated account with other funds, including funds of the permit holder;

11 VAC 5-70-160.J.

3. A permit holder shall maintain an operating account with a financial institution that is federally insured by the FDIC and licensed to transact business in the Commonwealth of Virginia.

11 VAC 5-70-160.K.

4. A permit holder shall maintain an escrow account, designating the Department as its sole beneficiary, with a financial institution federally insured by the FDIC and licensed to transact business in the Commonwealth of Virginia. This escrow account shall be separate from all other operating accounts of the permit holder to ensure the security of funds due to the Commonwealth of Virginia.