Arizona Provides Ancillary Suppliers with New Short Form Application

By: Sara Dalsheim

On the afternoon of Friday August 20, 2021, nearly three weeks prior to launch of legal event wagering in the state, the Arizona Department of Gaming (“Department”) announced the release of a new short form licensing application for ancillary suppliers.  The form may be used by affiliates, geofence providers, identity verification service providers, independent test laboratories, integrity monitoring providers, marketing affiliates, and any other person as determined by the Department.  However, bookmakers, payment processors, event wagering platform providers, fantasy sports contest platform providers, identity verification service providers and fantasy sports geofence providers remain required to complete the supplier application.

The change in application format was in response to customer feedback that the licensing process for ancillary suppliers was far too burdensome; especially, in comparison to other state’s ancillary suppliers or equivalents’ license applications.   The feedback was reasonable as the original application asks for information relating to tax liability, past or current litigation with details, company loans, and cash in bank. When completing this applications suppliers must also supply their Articles of Incorporation, Bylaws, certificates of good standing in their registered states, detailed internal and external organizational charts, audited financial documents (i.e., annual reports, income statements, balance sheets, statement of cash flows, and notes to financial statements) for the last three years, tax returns for the last three years, and a list of past and current SEC violations for publicly traded companies.  In order to complete the short form applications suppliers only need to provide the Department with contact information, Federal Tax ID Number, entity type, and information relating to their operator partner and contract.

The most onerous part of the original supplier application was the requirements for qualified individuals to fill out individual applications.  Originally the Department required suppliers’ CEO, CFO, COO, and applicable owners to complete the detailed individual application.  This application required those individuals to release to the Department their criminal history, fingerprint cards, their federal and state individual tax returns for the last three years, a detailed credit report retrieved within the last six months, along with information relating to their marriage(s) and children, full educational background, military information, arrests/detentions/litigations, residences for the past ten years, employment for the past ten years, character references, professional licenses/certifications, and history/associations in the gaming industry.  As opposed to the short form application which only requires these same individuals to provide their name, position, residential address, social security number, and date of birth.  The individuals remain required to provide their fingerprints but now are only required to sign criminal history disclosure forms, and initial a noncriminal justice applicant’s privacy rights one pager.

The Department’s rapid and hurried process to a September 9^th full launch has been hectic for all organizations looking to be ready by that date.  Prior to the release of the short form application many ancillary suppliers were choosing to either sit out or wait it out in the state.  Those that chose to wait were smart as their road to licensure will be exponentially easier than originally demanded by the Department.  The short form application removes a barrier to entry for the relevant ancillary suppliers and will provide a better event wagering industry in Arizona.

For questions or concerns with the Arizona licensure process please contact Sara Dalsheim at sdalsheim@nullifrahlaw.com.