Kentucky requires ADWs to post bonds

The Kentucky Horse Racing Commission on Tuesday approved new rules that will require account-wagering companies to post bonds as a condition of licensing beginning in 2017.

The rules, which passed unanimously, will require small account-wagering companies to post a $100,000 bond. Larger account-wagering companies will be required to post a $500,000 bond. The bond requirements will be set by a formula based on the the companies’ average weekly and daily handles.

Licensing bonds are normally required of businesses that retain their customers’ money, as is the case with account-wagering companies. The bonds are held by the state as a fail-safe in case the companies go bankrupt and jeopardize the money held in the accounts.

Steve May, the KHRC’s supervisor of pari-mutuel wagering and compliance, said that eight account-wagering companies are expected to be licensed in the state for the 2017 year.

Mark Simendinger, a KHRC commission member, asked May during the meeting if the account-wagering companies had been made aware that the bond language was being considered by the commission. May noted that the possibility of a bond was included in the language of rules approved in 2012 governing account wagering and also said that he had discussions with “several” account-wagering companies about the new rules.