Title 9 Part 5122

In accordance with the act, each video lottery gaming agent shall maintain a segregated capital investments account. The funds from such account shall be used exclusively for capital project investments to improve the facilities of the video lottery gaming agent that promote or encourage increased attendance at the video lottery gaming facility, including, without limitation, hotels, other lodging facilities, entertainment facilities, retail facilities, dining facilities, events arenas, parking garages and other improvements that enhance the facility amenities; provided that such capital investments shall be subject to approval by the commission and that such video lottery gaming agent demonstrates that such capital expenditures will increase patronage at such agent’s facilities and increase the amount of revenue generated to support State education programs.

Any agent that has received a vendor’s capital award or has withdrawn funds from its capital investments account that divests the capital improvement toward which the award or withdrawn funds was applied, prior to the full depreciation of the capital improvement, in accordance with generally accepted accounting principles, or ceases to use such asset for gaming purposes or transfers such asset to a related party, shall deposit into the capital investments account amounts equal to the total of any such awards or withdrawals from the capital investments account or the fair market value of such asset, as Tax Law section 1612(b)(1-a)(iii) may require.

All such capital improvement and expenditures shall be subject to the overall supervision of the commission.

Each video gaming agent shall be responsible to deposit the portion of its vendor fee set forth in Tax Law section 1612(b)(1) daily into a segregated capital investments account restricted for the collection and authorized use of such funds.

Each agent shall provide monthly bank statements for the segregated capital investments account to the commission for independent verification of deposits and withdrawals from the account.

The commission is not responsible for the loss or theft of any money in any account to which capital investments funds are deposited.

Prior to the commencement of each capital improvement project, the agent shall submit to the commission a request for project approval in a standard format as prescribed by the commission. Such request shall:

The commission shall approve withdrawals from the capital investments account only for capital project construction or improvements commenced on or after April 1, 2008, or the portion of a project completed after April 1, 2008 for projects, or phases of projects, commenced before April 1, 2008.

Not later than 15 days from receipt of a capital project request for approval, the commission shall review the request and provide the commission’s approval or denial of the project. Each project shall qualify as an approved use of the funds from the capital investments account if such project meets the following guidelines:

Commission approval of a capital project shall entitle the video lottery gaming agent to withdraw the amount of associated costs of such approved project from such video lottery gaming agent’s the capital investments account, for which the video lottery gaming agent obtains substantiation that the costs are reasonable within the industry for the size and scope of the project. Competitive bidding shall be required for all single-component project costs in excess of $50,000, provided, however, that certain sole-source and professional services, such as architectural and engineering services and construction manager services where the construction manager does not perform construction work itself, may be excluded from the competitive bid requirements. Any firm exempt from competitive bidding must be at arm’s length from the video lottery gaming agent.

In the event the commission does not approve a capital project request, the video lottery gaming agent shall be so notified in writing and any costs incurred for the project shall be the sole responsibility of such video lottery gaming agent and shall not be withdrawn from the capital investments account.

Upon receiving the commission’s approval of a capital project, a video lottery gaming agent may at any time submit requests to withdraw the amounts associated with the approved project. Any such request shall be submitted in writing to the commission and shall be accompanied by supporting documentation in the form of invoices and cancelled checks, or other documents as may be required to show proof of payment for capital expenditures associated with the approved project. Upon receiving the commission’s approval, a video lottery gaming agent shall be authorized to withdraw the approved funds from the segregated capital investments account.

The commission or the commission’s representative may, at the discretion of the commission, review the books and records of a video lottery gaming agent to determine additional needs for assurance in regard to use of the capital award. Each agent shall maintain sufficient documentation and a clear audit trail to support the expenditures from the segregated capital investments account.

The failure of a video lottery gaming agent to submit any report required by this Part shall be a violation of such video lottery gaming agent’s license, the act and this Part.

Exceptions, discrepancies, or questionable spending the commission identifies must be explained by the video lottery gaming agent in a timely manner to the satisfaction of the commission, but in no event later than 30 days from the date of the commission inquiry. A failure by the video lottery gaming agent to adequately respond to any inquiry of the commission shall be a violation of this Part.

The agent shall prepare each report in a professional manner, detailing the use of funds from the of capital investments account. Appropriate penalties may be applied if the commission determines that a video lottery gaming agent has submitted expenses that do not qualify as a capital expense.

In the event an expenditure or discrepancy the commission raises cannot be adequately explained by the video lottery gaming agent, or in the event any violation of this Part remains uncured for a period of up to 30 days, the commission, in addition to any other remedy permitted by this Subtitle, may take any or all of the following actions:

In the event any expense reports are deemed insufficient at the commission’s sole discretion, the commission may require an agent to provide the following information:

Each agent shall maintain sufficient documentation to support the withdrawals made from such agent’s capital investments account.