Bill Text: NY S08153 | 2015-2016 | General Assembly | Introduced
Bill Title: Relates to the registration and regulation of interactive fantasy sports contests.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-06-17 - SUBSTITUTED BY A10736 [S08153 Detail]
Download: New_York-2015-S08153-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 8153 IN SENATE June 14, 2016 ___________ Introduced by Sen. BONACIC -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the racing, pari-mutuel wagering and breeding law, in relation to the registration and regulation of interactive fantasy sports contests The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The racing, pari-mutuel wagering and breeding law is 2 amended by adding a new article 14 to read as follows: 3 ARTICLE 14 4 INTERACTIVE FANTASY SPORTS 5 Section 1400. Legislative findings and purpose. 6 1401. Definitions. 7 1402. Registration. 8 1403. Scope of registration review. 9 1404. Required safeguards, minimum standards. 10 1405. Powers and duties of the commission. 11 1406. Annual report. 12 1407. State tax. 13 1408. Additional regulatory costs. 14 1409. Disposition of taxes. 15 1410. Determination of tax liability. 16 1411. Contests authorized. 17 1412. Contests prohibited. 18 § 1400. Legislative findings and purpose. 1. The legislature hereby 19 finds and declares that: 20 (a) Interactive fantasy sports are not games of chance because they 21 consist of fantasy or simulation sports games or contests in which the 22 fantasy or simulation sports teams are selected based upon the skill and 23 knowledge of the participants and not based on the current membership of 24 an actual team that is a member of an amateur or professional sports 25 organization; 26 (b) Interactive fantasy sports contests are not wagers on future 27 contingent events not under the contestants' control or influence EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15896-03-6S. 8153 2 1 because contestants have control over which players they choose and the 2 outcome of each contest is not dependent upon the performance of any one 3 player or any one actual team. The outcome of any fantasy sports contest 4 does not correspond to the outcome of any one sporting event. Instead, 5 the outcome depends on how the performances of participants' fantasy 6 roster choices compare to the performance of others' roster choices. 7 2. Based on the findings in subdivision one of this section, the 8 legislature declares that interactive fantasy sports do not constitute 9 gambling in New York state as defined in article two hundred twenty-five 10 of the penal law. 11 3. The legislature further finds that as the internet has become an 12 integral part of society, and interactive fantasy sports a major form of 13 entertainment for many consumers, any interactive fantasy sports 14 enforcement and regulatory structure must begin from the bedrock premise 15 that participation in a lawful and licensed interactive fantasy sports 16 industry is a privilege and not a right, and that regulatory oversight 17 is intended to safeguard the integrity of the games and participants and 18 to ensure accountability and the public trust. 19 § 1401. Definitions. As used in this article, the following terms 20 shall have the following meanings: 21 1. "Authorized player" shall mean an individual located in New York 22 state, who is not a prohibited player, that participates in an interac- 23 tive fantasy sports contest offered by a registrant. 24 2. "Collegiate sport or athletic event" shall mean a sport or athletic 25 event offered or sponsored by or played in connection with a public or 26 private institution that offers education services beyond the secondary 27 level. 28 3. "Commission" shall mean the New York state gaming commission. 29 4. "Entry fee" shall mean cash or cash equivalent that is paid by an 30 authorized player to an operator or registrant to participate in an 31 interactive fantasy sports contest offered by such operator or regis- 32 trant. 33 5. "High school sport or athletic event" shall mean a sport or athlet- 34 ic event offered or sponsored by or played in connection with a public 35 or private institution that offers education services at the secondary 36 level. 37 6. "Highly experienced player" shall mean an authorized player who 38 has: 39 (a) entered more than one thousand contests offered by a single opera- 40 tor or registrant; or 41 (b) won more than three prizes valued at one thousand dollars each or 42 more from a single operator or registrant. 43 7. "Horse racing event" shall mean any sport or athletic event 44 conducted in New York state subject to the provisions of articles two, 45 three, four, five, six, nine, ten and eleven of this chapter, or any 46 sport or athletic event conducted outside of New York state, which if 47 conducted in New York state would be subject to the provisions of this 48 chapter. 49 8. "Interactive fantasy sports contest" or "contest" shall mean a game 50 of skill wherein one or more contestants compete against each other by 51 using their knowledge and understanding of athletic events and athletes 52 to select and manage rosters of simulated players whose performance 53 directly corresponds with the actual performance of human competitors on 54 sports teams and in sports events. 55 9. "Interactive fantasy sports gross revenue" shall mean the amount 56 equal to the total of all entry fees not attributable to New York stateS. 8153 3 1 prohibited sports events that a registrant collects from all players, 2 less the total of all sums not attributable to New York state prohibited 3 sports events paid out as winnings to all players, multiplied by the 4 resident percentage for New York state; provided, however, that the 5 total of all sums paid out as winnings to players shall not include the 6 cash equivalent value of any merchandise or thing of value awarded as a 7 prize. 8 10. "Interactive fantasy sports operator" or "operator" shall mean any 9 person or entity that offers any interactive fantasy sports contest to 10 any authorized player through any interactive fantasy sports platform. 11 11. "Interactive fantasy sports platform" or "platform" shall mean the 12 combination of hardware, software, and data networks used to manage, 13 administer, or control contests and any associated entry fees. 14 12. "Interactive fantasy sports registrant" or "registrant" shall mean 15 an operator that is registered by the commission. A registrant may 16 utilize multiple interactive fantasy sports platforms and offer multiple 17 contests, provided that each platform and each contest has been reviewed 18 and approved by the commission. 19 13. "Minor" shall mean any person under the age of eighteen years. 20 14. "Prohibited player" shall mean: 21 (a) any member, officer, employee or agent of an operator or regis- 22 trant; 23 (b) any spouse, child, brother, sister or parent residing as a member 24 of the same household in the principal place of abode of any member, 25 officer, employee or agent of an operator or registrant; 26 (c) any individual with access to non-public confidential information 27 about contests; 28 (d) any amateur or professional athlete whose performance may be used 29 to determine the outcome of a contest; 30 (e) any sports agent, team employee, referee, or league official asso- 31 ciated with any sport or athletic event on which contests are based; 32 (f) any individual located in a state where the conduct of contests is 33 expressly prohibited; or 34 (g) any minor. 35 15. "Prohibited sports event" shall mean any collegiate sport or 36 athletic event, any high school sport or athletic event or any horse 37 racing event. 38 16. "Resident percentage" shall mean, for each interactive fantasy 39 sports contest, the percentage, rounded to the nearest tenth of a 40 percent, of the total entry fees collected from players located in New 41 York state, divided by the total entry fees collected from all players 42 in interactive fantasy sports contests not prohibited in New York state. 43 17. "Sports event" shall mean any amateur or professional sport or 44 athletic event, except a prohibited sports event. 45 § 1402. Registration. 1. (a) No operator shall administer, manage, or 46 otherwise make available an interactive fantasy sports platform to 47 persons located in New York state unless registered with the commission 48 pursuant to section fourteen hundred three of this article. A registrant 49 may use multiple interactive fantasy sports platforms and offer multiple 50 types of contests, provided that each platform and each type of contest 51 has been reviewed and approved by the commission. This article, and any 52 and all rules and regulations adopted under the authority of this arti- 53 cle, shall apply only to interactive fantasy sports contests for which 54 an authorized player pays an entry fee. 55 (b) Any operator that was offering contests to persons located in New 56 York state prior to the tenth of November, two thousand fifteen, mayS. 8153 4 1 continue to offer contests to persons located in New York state until 2 such operator's application for registration has been approved or denied 3 in accordance with section fourteen hundred three of this article, 4 provided that such operator receives a temporary permit pursuant to 5 subdivision two of this section and files an application for registra- 6 tion with the commission within ninety days of the promulgation of regu- 7 lations to effectuate this article. 8 2. The commission shall provide a temporary permit to each operator 9 that was offering contests pursuant to paragraph (b) of subdivision one 10 of this section to allow such operator to continue to offer such 11 contests, on a provisional basis, until such operator's application for 12 registration has been approved or denied in accordance with section 13 fourteen hundred three of this article, provided that such operator 14 meets all the requirements in section fourteen hundred four of this 15 article. 16 3. Registrations issued by the commission shall remain in effect for 17 three years. The commission shall establish a process for renewal. 18 4. Interactive fantasy sports contests offered by a registrant in 19 accordance with the provisions of this article shall not constitute 20 gambling as defined in article two hundred twenty-five of the penal law. 21 5. The commission shall publish a list of all operators registered in 22 New York state pursuant to this section on the commission's website for 23 public use. 24 6. The commission shall promulgate regulations to implement the 25 provisions of this article, including the development of the initial 26 form of the application for registration. Such regulations shall 27 provide for the registration and operation of contests in New York state 28 and shall include, but not be limited to, responsible protections with 29 regard to compulsive play and safeguards for fair play. 30 § 1403. Scope of registration review. 1. The commission shall 31 prescribe the initial form of the application for registration which 32 shall require, but not be limited to: 33 (a) the full name and principal address of the operator; 34 (b) if a corporation, the name of the state in which incorporated and 35 the full names and addresses of any partner, officer, director, share- 36 holder holding ten percent or more equity, and ultimate equitable 37 owners; 38 (c) if a business entity other than a corporation, the full names and 39 addresses of the principals, partners, shareholders holding five percent 40 or more equity, and ultimate equitable owners; 41 (d) whether such corporation or entity files information and reports 42 with the United States Securities and Exchange Commission as required by 43 section thirteen of the Securities Exchange Act of 1934, 15 U.S.C. §§ 44 78a-78kk; or whether the securities of the corporation or entity are 45 regularly traded on an established securities market in the United 46 States; 47 (e) the type and estimated number of contests to be conducted annual- 48 ly; 49 (f) a statement of the assets and liabilities of the operator. 50 2. The commission may require the full names and addresses of the 51 officers and directors of any creditor of the operator, and of those 52 stockholders who hold more than ten percent of the stock of the credi- 53 tor. 54 3. Upon receipt of an application for registration for each individual 55 listed on such application as an officer or director, the commission 56 shall submit to the division of criminal justice services a set of fing-S. 8153 5 1 erprints, and the division of criminal justice services processing fee 2 imposed pursuant to subdivision eight-a of section eight hundred thir- 3 ty-seven of the executive law and any fee imposed by the federal bureau 4 of investigation. Upon receipt of the fingerprints, the division of 5 criminal justice services shall promptly forward a set of the individ- 6 ual's fingerprints to the federal bureau of investigation for the 7 purpose of a nationwide criminal history record check to determine 8 whether such individual has been convicted of a criminal offense in any 9 state other than New York or in a federal jurisdiction. The division of 10 criminal justice services shall promptly provide the requested criminal 11 history information to the commission. For the purposes of this section, 12 the term "criminal history information" shall mean a record of all 13 convictions of crimes and any pending criminal charges maintained on an 14 individual by the division of criminal justice services and the federal 15 bureau of investigation. All such criminal history information sent to 16 the commission pursuant to this subdivision shall be confidential and 17 shall not be published or in any way disclosed to persons other than the 18 commission, unless otherwise authorized by law. 19 4. Upon receipt of criminal history information pursuant to subdivi- 20 sion three of this section, the commission shall make a determination to 21 approve or deny an application for registration; provided, however, that 22 before making a determination on such application, the commission shall 23 provide the subject of the record with a copy of such criminal history 24 information and a copy of article twenty-three-A of the correction law 25 and inform such prospective applicant seeking to be credentialed of his 26 or her right to seek correction of any incorrect information contained 27 in such criminal history information pursuant to the regulations and 28 procedures established by the division of criminal justice services. 29 The commission shall deny any application for registration, or suspend, 30 refuse to renew, or revoke any existing registration issued pursuant to 31 this article, upon the finding that the operator or registrant, or any 32 partner, officer, director, or shareholder: 33 (a) has knowingly made a false statement of material fact or has 34 deliberately failed to disclose any information required by the commis- 35 sion; 36 (b) has had a registration or license to offer or conduct contests 37 denied, suspended, or revoked in any other state or country for just 38 cause; 39 (c) has legally defaulted in the payment of any obligation or debt due 40 to any state or political subdivision; or 41 (d) has at any time knowingly failed to comply with any requirement 42 outlined in section fourteen hundred four of this article, any other 43 provision of this article, any regulations promulgated by the commission 44 or any additional requirements of the commission. 45 5. All determinations to approve or deny an application pursuant to 46 this article shall be performed in a manner consistent with subdivision 47 sixteen of section two hundred ninety-six of the executive law and arti- 48 cle twenty-three-A of the correction law. When the commission denies an 49 application, the operator shall be afforded notice and the right to be 50 heard and offer proof in opposition to such determination in accordance 51 with the regulations of the commission. 52 § 1404. Required safeguards, minimum standards. 1. As a condition of 53 registration in New York state, each operator and registrant shall 54 implement the following measures:S. 8153 6 1 (a) limit each authorized player to one active and continuously used 2 account, and prevent prohibited players from maintaining accounts or 3 participating in any contest offered by such operator or registrant; 4 (b) prohibit minors from participating in any contest, which includes: 5 (i) if a registrant becomes or is made aware that a minor has partic- 6 ipated in one of its contests, such registrant shall promptly, within no 7 more than two business days, refund any deposit received from the minor, 8 whether or not the minor has engaged in or attempted to engage in a 9 contest; provided, however, that any refund may be offset by any prizes 10 already awarded; 11 (ii) each registrant shall publish and facilitate parental control 12 procedures to allow parents or guardians to exclude minors from access 13 to any contest or platform. Such procedures shall include a toll-free 14 number to call for help in establishing such parental controls; and 15 (iii) each registrant shall take appropriate steps to confirm that an 16 individual opening an account is not a minor. 17 (c) when referencing the chances or likelihood of winning in adver- 18 tisements or upon contest entry, make clear and conspicuous statements 19 that are not inaccurate or misleading concerning the chances of winning 20 and the number of winners; 21 (d) enable authorized players to exclude themselves from contests and 22 take reasonable steps to prevent such players from entering a contest 23 from which they have excluded themselves; 24 (e) permit any authorized player to permanently close an account 25 registered to such player, on any and all platforms supported by such 26 operator or registrant, at any time and for any reason; 27 (f) offer introductory procedures for authorized players, that shall 28 be prominently displayed on the main page of such operator or regis- 29 trant's platform, that explain contest play and how to identify a highly 30 experienced player; 31 (g) identify all highly experienced players in any contest by a symbol 32 attached to such players' usernames, or by other easily visible means, 33 on all platforms supported by such operator or registrant; 34 (h) disclose the number of entries a single authorized player may 35 submit to each contest; 36 (i) disclose the maximum number of total entries allowed for each 37 contest; 38 (j) implement measures to protect the privacy and online security of 39 authorized players and their accounts; 40 (k) offer all authorized players access to his or her account history 41 and account details; 42 (l) ensure authorized players' funds are protected upon deposit and 43 segregated from the operating funds of such operator or registrant and 44 otherwise protected from corporate insolvency, financial risk, or crimi- 45 nal or civil actions against such operator or registrant; 46 (m) list on each website, in a prominent place, information concerning 47 assistance for compulsive play in New York state, including a toll-free 48 number directing callers to reputable resources containing further 49 information, which shall be free of charge; 50 (n) ensure the value of any prizes and awards offered to authorized 51 players shall be established and made known to such players in advance 52 of the contest, and such value shall not be determined by the number of 53 authorized players or the amount of any entry fees paid by such players; 54 (o) ensure all winning outcomes reflect the relative knowledge and 55 skill of the authorized players and shall be determined predominantly byS. 8153 7 1 accumulated statistical results of the performance of individuals in 2 sports events; 3 (p) ensure no winning outcome shall be based on the score, point 4 spread, or performance of a single sports team, or any combination of 5 such teams; 6 (q) ensure no winning outcome shall be based solely on any single 7 performance of an individual athlete in a single sport or athletic 8 event; and 9 (r) ensure no game or contest shall be based on a prohibited sports 10 event. 11 2. Each registrant shall restrict the number of entries submitted by a 12 single authorized player for any contest to a maximum of one hundred 13 fifty entries per player per contest, or a maximum of three percent of 14 the total number of entries by all players for any contest, whichever is 15 less, or as determined by the commission. Registrants shall take reason- 16 able steps to prevent authorized players from submitting more than the 17 allowable number of entries per contest. The commission shall promul- 18 gate regulations to further effectuate this subdivision to ensure that 19 the number of entries submitted by a single authorized player for any 20 contest will lead to a fair and equitable distribution of number of 21 entries. 22 3. (a) Operators shall not directly or indirectly operate, promote, or 23 advertise any platform or contest to persons located in New York state 24 unless registered pursuant to this article. 25 (b) Unless otherwise approved by regulation of the commission, opera- 26 tors and registrants shall not directly or indirectly promote or adver- 27 tise any online fantasy or simulation sports games or contests with an 28 entry fee during the conduct of any online fantasy or simulation sports 29 games or contests without an entry fee. This paragraph shall not apply 30 to any operator or registrant that prohibits prohibited players from 31 participating in online fantasy or simulation sports games or contests 32 without an entry fee. 33 4. Registrants shall not offer any contest based on any prohibited 34 sports event. 35 5. Registrants shall not permit any minor or prohibited participant to 36 enter any contest. 37 6. Advertisements for contests and prizes offered by a registrant 38 shall not target prohibited participants, minors, or self-excluded 39 persons. Representations or implications about average winnings from 40 contests shall not be unfair or misleading. Such representations shall 41 include, at a minimum: 42 (a) the median and mean net winnings of all authorized players partic- 43 ipating in contests offered by such registrant; and 44 (b) the percentage of winnings awarded by the registrant to highly 45 experienced players participating in contests offered by such registrant 46 within the preceding calendar year. 47 7. Registrants shall prohibit the use of third-party scripts or 48 scripting programs for any contest and ensure that measures are in place 49 to deter, detect and, to the extent reasonably possible, prevent cheat- 50 ing, including collusion, and the use of cheating devices, including use 51 of software programs that submit entry fees or adjust the athletes 52 selected by an authorized player. 53 8. Operators and registrants shall develop and prominently display 54 procedures on the main page of such operator's or registrant's platform 55 for the filing of a complaint by the authorized player against such 56 registrant. An initial response shall be given by such registrant toS. 8153 8 1 such player filing the complaint within forty-eight hours. A complete 2 response shall be given by such registrant to such player filing the 3 complaint within ten business days. An authorized player may file a 4 complaint alleging a violation of the provisions of this article with 5 the commission. 6 9. Registrants shall maintain records of all accounts belonging to 7 authorized players and retain such records for five years from the date 8 an account was created. 9 § 1405. Powers and duties of the commission. 1. The commission shall 10 promulgate regulations to implement the provisions of and effectuate the 11 policy and objectives of this article as the commission may deem neces- 12 sary or advisable, including the development of the initial form of the 13 application for registration. Such regulations shall provide for the 14 registration and operation of contests in New York state and shall 15 include, without limitation, responsible protections with regard to 16 compulsive play and safeguards for fair play. Such regulations may regu- 17 late the conduct and operation of contests and platforms, protect 18 contestants and promote the fairness, honesty and integrity of contests. 19 2. The commission shall have the following powers and duties for 20 purposes of administering, regulating, and enforcing the provisions of 21 this article: 22 (a) all powers and duties assigned by this article, as well as all 23 powers necessary and proper to fully and effectively execute this arti- 24 cle; 25 (b) to approve and deny applications for registration to conduct 26 contests in New York state, and to suspend, refuse or renew, or revoke 27 any registration issued to a registrant under this article; 28 (c) to review and approve each platform and each contest offered by an 29 operator or registrant; 30 (d) to accept and investigate complaints of any kind from an author- 31 ized player and attempt to mediate such complaints where appropriate; 32 (e) to investigate alleged violations of this article; 33 (f) to initiate proper enforcement proceedings where such action is 34 deemed by the commission to be necessary or appropriate; and 35 (g) all powers and duties assigned by this chapter. 36 § 1406. Annual report. 1. Each registrant shall annually submit a 37 report to the commission no later than the thirtieth of June of each 38 year, which shall include the following information as it shall apply to 39 accounts held by authorized players located in New York state: 40 (a) the number of accounts held by authorized players on all platforms 41 offered by the registrant, and the number of accounts held by highly 42 experienced players on all platforms offered by the registrant; 43 (b) the total number of new accounts established in the preceding 44 year, as well as the total number of accounts permanently closed in the 45 preceding year; 46 (c) the total amount of entry fees received from authorized players; 47 (d) the total amount of prizes awarded to authorized players; 48 (e) the total amount of interactive fantasy sports revenue received by 49 the registrant; 50 (f) the total number of authorized players that requested to exclude 51 themselves from contests; 52 (g) any additional information that the commission deems necessary to 53 carry out the provisions of this article. 54 2. Upon the submission of such annual report, to such extent that the 55 commission deems it to be in the public interest, the commission shallS. 8153 9 1 be authorized to conduct a financial audit of any registrant, at any 2 time, to ensure compliance with this article. 3 3. The commission shall annually publish a report based on the aggre- 4 gate information provided by all registrants pursuant to subdivision one 5 of this section, which shall be published on the commission's website no 6 later than one hundred eighty days after the deadline for the submission 7 of individual reports as specified in subdivision one of this section. 8 § 1407. State tax. For the privilege of conducting interactive fanta- 9 sy sports contests in the state, registrants shall pay a tax equivalent 10 to fifteen percent of their interactive fantasy sports gross revenue 11 generated within the state; in addition, registrants shall pay a tax 12 equal to one-half of one percent, but not to exceed fifty thousand 13 dollars annually. 14 § 1408. Additional regulatory costs. The commission may assess annual- 15 ly, in arrears, on each registrant proportional to the interactive 16 fantasy sports gross revenue of such registrant in the preceding year 17 compared to the aggregate interactive fantasy sports gross revenue of 18 all registrants in the preceding year actual costs necessary to regulate 19 in accordance with the provisions of this article. Such assessments 20 shall be made only within amounts appropriated therefor. 21 § 1409. Disposition of taxes. 1. The commission shall pay into the 22 state lottery fund all taxes imposed by this article; any interest and 23 penalties imposed by the commission relating to those taxes; all penal- 24 ties levied and collected by the commission; and the appropriate funds, 25 cash or prizes forfeited from interactive fantasy sports. 26 2. The commission shall require at least monthly deposits by the 27 interactive fantasy sports operator of any payments pursuant to section 28 fourteen hundred seven of this article, at such times, under such condi- 29 tions, and in such depositories as shall be prescribed by the state 30 comptroller. The deposits shall be deposited to the credit of the state 31 lottery fund. The commission shall require a monthly report and recon- 32 ciliation statement to be filed with it on or before the tenth day of 33 each month, with respect to gross revenues and deposits received and 34 made, respectively, during the preceding month. 35 § 1410. Determination of tax liability. The commission may perform 36 audits of the books and records of an interactive fantasy sports opera- 37 tor with a permit or registrant, at such times and intervals as it deems 38 appropriate, for the purpose of determining the sufficiency of tax 39 payments. If a return required with regard to obligations imposed is not 40 filed, or if a return when filed or is determined by the commission to 41 be incorrect or insufficient with or without an audit, the amount of tax 42 due shall be determined by the commission. Notice of such determination 43 shall be given to the interactive fantasy sports operator liable for the 44 payment of the tax. Such determination shall finally and irrevocably fix 45 the tax unless the person against whom it is assessed, within thirty 46 days after receiving notice of such determination, shall apply to the 47 commission for a hearing in accordance with the regulations of the 48 commission. 49 § 1411. Contests authorized. Interactive fantasy sports contests 50 registered and conducted pursuant to the provisions of this chapter are 51 hereby authorized. 52 § 1412. Contests prohibited. The conduct of unregistered interactive 53 fantasy sports contests is prohibited. 54 § 2. Section 104 of the racing, pari-mutuel wagering and breeding law 55 is amended by adding a new subdivision 23 to read as follows:S. 8153 10 1 23. To register and regulate interactive fantasy sports in New York 2 state. 3 § 3. This act shall take effect immediately.