Bill Text: AZ HB2772 | 2021 | Fifty-fifth Legislature 1st Regular | Introduced
Bill Title: Fantasy sports betting; event wagering.
Spectrum: Slight Partisan Bill (Republican 7-4)
Status: (Passed) 2021-04-15 - Chapter 234 [HB2772 Detail]
Download: Arizona-2021-HB2772-Introduced.html
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REFERENCE TITLE: fantasy sports betting; event wagering. |
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State of Arizona House of Representatives Fifty-fifth Legislature First Regular Session 2021
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HB 2772 |
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Introduced by Representatives Weninger: Bolick, Chávez, Cook, Hernandez A, Hernandez D, Jermaine, Nutt, Toma, Senators Borrelli, Shope
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AN ACT
amending section 5-554, Arizona Revised Statutes; amending title 5, chapter 6, article 1, Arizona Revised Statutes, by adding section 5-605; amending title 5, arizona revised statutes, by adding chapters 10 and 11; amending sections 13-3301 and 13-3305, arizona revised statutes; relating to amusements and sports.
(TEXT OF BILL BEGINS ON NEXT PAGE)
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 5-554, Arizona Revised Statutes, is amended to read:
5-554. Commission; director; powers and duties; definitions
A. The commission shall meet with the director not less than once each quarter to make recommendations and set policy, receive reports from the director and transact other business properly brought before the commission.
B. The commission shall oversee a state lottery to produce the maximum amount of net revenue consonant with the dignity of the state. To achieve these ends, the commission shall authorize the director to adopt rules in accordance with title 41, chapter 6. Rules adopted by the director may include the following:
1. Subject to the approval of the commission, the types of lottery games and the types of game play-styles to be conducted.
2. The method of selecting the winning tickets or shares for noncomputerized online games, except that no a method may not be used that, in whole or in part, depends on the results of a dog race, a horse race, any gaming activity conducted pursuant to the 2021 tribal-state gaming compact amendments or any sporting sports event or other event.
3. The manner of payment of prizes to the holders of winning tickets or shares, including providing for payment by the purchase of annuities in the case of prizes payable in installments, except that the commission staff shall examine claims and may not pay any prize based on altered, stolen or counterfeit tickets or based on any tickets that fail to meet established validation requirements, including rules stated on the ticket or in the published game rules, and confidential validation tests applied consistently by the commission staff. No particular prize in a lottery game may be paid more than once, and in the event of a binding determination that more than one person is entitled to a particular prize, the sole remedy of the claimants is the award to each of them of an equal portion of the single prize.
4. The method to be used in selling tickets or shares, except that no elected official's name may be printed on the tickets or shares. The overall estimated odds of winning some prize or some cash prize, as appropriate, in a given game shall be printed on each ticket or share.
5. The licensing of agents to sell tickets or shares, except that a person who is under eighteen years of age shall not be licensed as an agent.
6. The manner and amount of compensation to be paid licensed sales agents necessary to provide for the adequate availability of tickets or shares to prospective buyers and for the convenience of the public, including provision for variable compensation based on sales volume.
7. Matters necessary or desirable for the efficient and economical operation and administration of the lottery and for the convenience of the purchasers of tickets or shares and the holders of winning tickets or shares.
8. the licensing of authorized keno locations, including the persons that control the business or other activity conducted at an authorized keno location.
C. The commission shall authorize the director to issue orders and shall approve orders issued by the director for the necessary operation of the lottery. Orders issued under this subsection may include the following:
1. The prices of tickets or shares in lottery games.
2. The themes, game play-styles, and names of lottery games and definitions of symbols and other characters used in lottery games, except that each ticket or share in a lottery game shall bear a unique distinguishable serial number.
3. The sale of tickets or shares at a discount for promotional purposes.
4. The prize structure of lottery games, including the number and size of prizes available. Available prizes may include free tickets in lottery games and merchandise prizes.
5. The frequency of drawings, if any, or other selections of winning tickets or shares, except that:
(a) All drawings shall be open to the public.
(b) The actual selection of winning tickets or shares may not be performed by an employee or member of the commission.
(c) Noncomputerized online game drawings shall be witnessed by an independent observer.
6. Requirements for eligibility for participation in grand drawings or other runoff drawings, including requirements for the submission of evidence of eligibility within a shorter period than that provided for claims by section 5-568.
7. Incentive and bonus programs designed to increase sales of lottery tickets or shares and to produce the maximum amount of net revenue for this state.
8. The method used for the validation of a ticket, which may be by physical or electronic presentation of a ticket.
D. Notwithstanding title 41, chapter 6 and subsection B of this section, the director, subject to the approval of the commission, may establish a policy, procedure or practice that relates to an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery or may modify an existing rule for an existing online game or a new online game that is the same type and has the same type of game play-style as an online game currently being conducted by the lottery, including establishing or modifying the matrix for an online game by giving notice of the establishment or modification at least thirty days before the effective date of the establishment or modification.
E. The commission shall maintain and make the following information available for public inspection at its offices during regular business hours:
1. A detailed listing of the estimated number of prizes of each particular denomination expected to be awarded in any instant game currently on sale.
2. After the end of the claim period prescribed by section 5-568, a listing of the total number of tickets or shares sold and the number of prizes of each particular denomination awarded in each lottery game.
3. Definitions of all play symbols and other characters used in each lottery game and instructions on how to play and how to win each lottery game.
F. Any information that is maintained by the commission and that would assist a person in locating or identifying a winning ticket or share or that would otherwise compromise the integrity of any lottery game is deemed confidential and is not subject to public inspection.
G. The commission, in addition to other games authorized by this article, may establish multijurisdictional lottery games to be conducted concurrently with other lottery games authorized under subsection B of this section. The monies for prizes, for operating expenses and for payment to the state general fund shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. The monies shall be derived from the revenues of multijurisdictional lottery games.
H. The commission, in addition to other games authorized by this article, shall establish special instant ticket games with play areas protected by paper tabs designated for use by charitable organizations. The monies for prizes and for operating expenses shall be accounted for separately as nearly as practicable in the lottery commission's general accounting system. Monies saved from the revenues of the special games, by reason of operating efficiencies, shall become other revenue of the lottery commission and revert to the state general fund, except that the commission shall transfer the proceeds from any games that are sold from a vending machine in an age-restricted area to the state treasurer for deposit in the following amounts:
1. Nine hundred thousand dollars each fiscal year in the internet crimes against children enforcement fund established by section 41-199.
2. One hundred thousand dollars each fiscal year in the victims' rights enforcement fund established by section 41-1727.
3. Any monies in excess of the amounts listed in paragraphs 1 and 2 of this subsection, in the state lottery fund established by section 5-571.
I. The commission or director shall not establish or operate any online or electronic keno game or any game played on the internet, except for the electronic keno game and the mobile draw game authorized in subsection j of this section.
j. From and after the date on which the conditions prescribed in sections 5-1213 and 5-1321 are met, the commission or director, in addition to any other game authorized in this section, may establish and operate a single electronic keno game and a single mobile draw game on a centralized computer system controlled by the lottery that allows a player to place wagers, view the outcome of a game and receive winnings over the internet, including on personal electronic devices.
k. an electronic keno game conducted pursuant to subsection j of this section may be operated only within an authorized keno location. if the electronic keno game is authorized to be played on personal electronic devices, players shall be geographically restricted by means of geofencing to authorized keno locations. Electronic keno game draws may not be conducted more frequently than once every four minutes. The number of authorized keno locations may not exceed the number published annually by the director, which is equal to the total number of establishments licensed by the department of gaming to allow wagering on live horse races and simulcast wagering pursuant to section 5-107, plus the total number of class 14 liquor licenses that the department of liquor licenses and control issued to fraternal organizations or veterans' organizations as of January 1, 2021. the total number of authorized keno locations shall be automatically increased by two percent every two years.
l. a mobile draw game conducted pursuant to subsection j of this section may offer players multiple game play styles and wagering options. Players of the mobile draw game may not play or win a prize more frequently than once per hour.
M. an electronic keno game or mobile draw game conducted PURSUANT to this section may not present the player with a user interface depicting spinning reels or that replicates a slot machine, blackjack, poker, roulette, craps or any other casino-style game other than traditional keno or a traditional lottery draw game.
J. N. Except as provided in subsections J, K, L and M of this section, the commission or director shall not establish or operate any lottery game or any type of game play-style, either individually or in combination, that uses gaming devices or video lottery terminals as those terms are used in section 5-601.02, including monitor games that produce or display outcomes or results more than once per hour.
K. O. The director shall print, in a prominent location on each lottery ticket or share, a statement that help is available if a person has a problem with gambling and a toll-free telephone number where problem gambling assistance is available. The director shall require all licensed agents to post a sign with the statement that help is available if a person has a problem with gambling and the toll-free telephone number at the point of sale as prescribed and supplied by the director.
L. P. For the purposes of this section:
1. "Additional wagering facility" has the same meaning prescribed in section 5-101.
2. "authorized keno location" means a physical facility located at least five miles from an indian gaming facility that is licensed by the director in the same manner as licenses issued pursuant to section 5-562 but only to a fraternal organization or veterans' organization or to a racetrack enclosure or additional wagering facility where pari-mutuel wagering on horse races is conducted.
1. 3. "Charitable organization" means any nonprofit organization, including not more than one auxiliary of that organization, that has operated for charitable purposes in this state for at least two years before submitting a license application under this article.
4. "electronic keno game" means a house banking game in which:
(a) A player selects from one to twenty numbers on a card that contains the numbers one through eighty.
(b) The lottery randomly draws twenty numbers.
(c) Players win if the numbers they select correspond to the numbers drawn by the lottery.
(d) The lottery pays all winners, if any, and collects from all losers.
5. "fraternal organization" has the same meaning prescribed in section 5-401.
2. 6. "Game play-style" means the process or procedure that a player must follow to determine if a lottery ticket or share is a winning ticket or share.
3. 7. "Matrix" means the odds of winning a prize and the prize payout amounts in a given game.
8. "mobile draw game" conducted pursuant to subsection j of this section, means a lottery draw game offered to players over the internet, including on mobile devices, in which:
(a) a combination of numbers, symbols or characters is selected.
(b) a computer system authorized by the lottery randomly selects a winning combination of numbers, symbols or characters.
(c) a computer system validates any prize awarded to the players.
9. "other event" has the same meaning prescribed in section 5-1301.
10. "Sports event" has the same meaning prescribed in section 5-1301.
11. "veterans' organization" has the same meaning prescribed in section 5-401.
Sec. 2. Title 5, chapter 6, article 1, Arizona Revised Statutes, is amended by adding section 5-605, to read:
5-605. Tribal-state compacts; 2021 compact trust fund; annual report; definition
A. THE 2021 COMPACT TRUST FUND IS ESTABLISHED FOR THE EXCLUSIVE PURPOSES OF MITIGATING IMPACTS TO INDIAN TRIBES FROM GAMING AUTHORIZED BY THE 2021 GAMING COMPACT AMENDMENT AND PROVIDING ECONOMIC BENEFITS TO BENEFICIARY TRIBES, INCLUDING THOSE WITH AN EFFECTIVE GAMING COMPACT THAT INCLUDES THE 2021 AMENDMENTS AND DO NOT ENGAGE IN GAMING. THE TRUST FUND CONSISTS OF CONTRIBUTIONS FROM INDIAN TRIBES DESIGNATED IN THE 2021 GAMING COMPACT AMENDMENTS. THE TRUST FUND shall not include TRIBAL CONTRIBUTIONS MADE pursuant to section 5-601.02, subsection H.
b. THE DEPARTMENT OF GAMING SHALL ADMINISTER THE 2021 COMPACT TRUST FUND AS TRUSTEE IN ACCORDANCE WITH THE TERMS OF SECTION 12.1 OF THE 2021 GAMING COMPACT AMENDMENT. THE STATE TREASURER SHALL ACCEPT, SEPARATELY ACCOUNT FOR AND HOLD IN TRUST ANY MONIES DEPOSITED IN THE STATE TREASURY, WHICH ARE CONSIDERED TO BE TRUST MONIES AS DEFINED BY SECTION 35-310 AND WHICH SHALL NOT BE COMMINGLED WITH ANY OTHER MONIES IN THE STATE TREASURY EXCEPT FOR INVESTMENT PURPOSES. ON NOTICE FROM THE DIRECTOR, THE STATE TREASURER SHALL INVEST AND DIVEST ANY TRUST FUND MONIES DEPOSITED IN THE STATE TREASURY AS PROVIDED BY SECTIONs 35-313 and 35-314.03, AND MONIES EARNED FROM THE INVESTMENT SHALL BE CREDITED TO THE TRUST FUND.
c. THE BENEFICIARIES OF THE TRUST FUND ARE FEDERALLY RECOGNIZED INDIAN TRIBES WITH A 2021 GAMING COMPACT AMENDMENT that ARE ELIGIBLE TO RECEIVE PAYMENTS FROM THE TRUST FUND ACCORDING TO THE TERMS OF THE 2021 GAMING COMPACT AMENDMENT.
d. MONIES IN THE TRUST FUND SHALL BE DISBURSED EXCLUSIVELY FOR THE PURPOSES PRESCRIBED IN THIS ARTICLE AND IN ACCORDANCE WITH THE 2021 GAMING COMPACT AMENDMENT. SURPLUS MONIES, INCLUDING ANY UNEXPEndED AND UNENCUMBERED BALANCE AT THE END OF THE FISCAL YEAR, SHALL BE CARRIED FORWARD TO THE FOLLOWING YEAR AND SHALL NOT REVERT OR BE TRANSFERRED TO ANY OTHER FUND, INCLUDING THE STATE GENERAL FUND. MONIES IN THE TRUST FUND ARE EXEMPT FROM THE PROVISIONS OF SECTION 35-190 RELATING TO LAPSING OF APPROPRIATIONS.
e. On or before September 30 of each year, THE DEPARTMENT OF GAMING SHALL REPORT TO THE GOVERNOR, THE PRESIDENT OF THE SENATE, THE SPEAKER OF THE HOUSE OF REPRESENTATIVES AND EACH TRIBE that HAS EXECUTED A 2021 GAMING COMPACT AMENDMENT that discloses ALL MONIES DEPOSITED IN AND DISBURSED FROM THE TRUST FUND DURING THE PRIOR FISCAL YEAR.
f. FOR the PURPOSES OF THIS SECTION, "2021 GAMING COMPACT AMENDMENT" MEANS A TRIBAL-STATE GAMING COMPACT AMENDMENT that BECOMES EFFECTIVE AFTER JANUARY 1, 2021.
Sec. 3. Title 5, Arizona Revised Statutes, is amended by adding chapter 10, to read:
CHAPTER 10
FANTASY SPORTS CONTESTS
ARTICLE 1. GENERAL PROVISIONS
5-1201. Definitions
In this chapter, unless the context otherwise requires:
1. "Applicant" means any person THAT has applied for a license as a Fantasy Sports Contest Operator or THAT HAS BEEN APPROVED for any act related to fantasy sports contests.
2. "Application" means a request to issue a license as a fantasy sports contest operator or to approve any act related to fantasy sports contests.
3. "Athletic event" means a real-world professional, collegiate or nationally recognized sports game, contest or competition that involves the physical exertion and skill of the participating individual athletes who are each physically present at the location in which the sports game, contest or competition occurs, and the outcome of the sports game, contest or competition is directly dependent on the performance of the participating athletes.
4. "Department" means the Department of Gaming.
5. "Entry fee" means cash or cash equivalent that is paid by a participant to a fantasy sports contest operator to participate in a fantasy sports contest.
6. "Fantasy sports contest" means a simulated game or contest offered to the public with an entry fee that meets all of the following conditions:
(a) No fantasy sports contest team is composed of the entire roster of a real-world sports team.
(b) No fantasy sports contest team is composed entirely of individual athletes who are members of the same REAL-WORLD sports team.
(c) Each prize or award or the value of all prizes or awards offered to winning fantasy sports contest players is made known to the fantasy sports contest players in advance of the fantasy sports contest.
(d) Each winning outcome reflects the relative knowledge and skill of the fantasy sports contest players and is determined by the aggregated statistical results of the performance of multiple individual athletes selected by the fantasy sports contest player to form the fantasy sports contest team, whose individual performances in the fantasy sports contest directly correspond with the actual performance of those athletes in the athletic events in which those individual athletes participated.
(e) A winning outcome is not based on randomized or historical events or on the score, point spread or performance in an athletic event of a single real-world sports team, a single athlete or any combination of REAL-WORLD sports teams.
(f) The fantasy sports contest does not constitute or involve and is not based on any of the following:
(i) Racing that involves animals.
(ii) A game or contest ordinarily offered by a horse track or casino for money, credit or any representative of value, including any races, games or contests that involve horses or that are played with cards or dice.
(iii) A slot machine or other mechanical, electromechanical or electronic device, equipment or machine, including computers and other cashless wagering systems.
(iv) Poker, blackjack, faro, monte, keno, bingo, fan-tan, TWENTY-ONE, seven and a half, Klondike, craps, chuck-a-luck, Chinese chuck-a-luck, Wheel of Fortune, Chemin de Fer, Baccarat, Pai Gow, Beat the Banker, Panguingue, roulette or other banking or percentage games.
(v) Any other game or device that is authorized or that is not authorized by this state.
(vi) A high school or youth sporting event or any event that is not an athletic event.
(vii) A contest that involves or results in betting on a race, a game, a contest or sports that constitute event wagering as defined in section 5-1301.
7. "Fantasy sports contest adjusted revenues" means the amount equal to the total of all entry fees that a fantasy sports contest operator collects from all fantasy sports contest players minus the total of all sums paid out as prizes or awards to all fantasy sports contest players, multiplied by the in-state percentage.
8. "Fantasy sports contest operator" or "operator" means a person that is engaged in the business of professionally conducting paid fantasy sports contests for cash or other prizes or awards for members of the general public that requires cash or cash equivalent as an entry fee to be paid by a member of the general public who participates in a paid fantasy sports contest.
9. "Fantasy sports contest platform" or "platform" means the hardware, software, firmware, communications technology or other equipment, including operator procedures implemented to allow player participation in digital or online fantasy sports contests, and if supported, the corresponding equipment related to the display of the outcomes, and other similar information necessary to facilitate player participation in which a player is provided with the means to establish a Player Account and the fantasy sports contest operator is provided with the means to review Player Accounts, suspend fantasy sports contests, generate various financial transaction and account reports, input outcomes for fantasy sports contests and set any configurable parameters.
10. "Fantasy sports contest player" or "player" means an individual who participates in a fantasy sports contest offered by a fantasy sports contest operator.
11. "Fantasy sports contest team" means the simulated team composed of multiple individual athletes, each of whom is a member of a real-world sports team that a fantasy sports contest player selects to compete in a fantasy sports contest.
12. "Highly experienced player" means a fantasy sports contest player who has done at least one of the following:
(a) Entered more than one thousand fantasy sports contests offered by a single fantasy sports contest operator.
(b) Won more than three prizes or awards valued at $1,000 each or more from a single fantasy sports contest operator.
13. "Holding company" means a corporation, firm, partnership, limited partnership, limited liability company, trust or other form of business organization that is not an individual and that directly or indirectly does either of the following:
(a) Holds an ownership interest of ten percent or more, as determined by the holding company's board, in a fantasy sports contest operator.
(b) Holds voting rights with the power to vote ten percent or more of the outstanding voting rights of a fantasy sports contest operator.
14. "In-state percentage" means for each fantasy sports contest, the percentage, rounded to the nearest tenth of a percent, equal to the total entry fees collected from all in-state participants divided by the total entry fees collected from all participants in the fantasy sports contest, unless otherwise prescribed by the Department.
15. "Key employee" means an employee of a fantasy sports contest operator who has the power to exercise significant influence over decisions concerning the fantasy sports contest operator.
16. "License" means an approval that is issued by the Department to any Person or entity to be involved in a Fantasy Sports Operation.
17. "Management company" means a person retained by a fantasy sports contest operator to manage a fantasy sports contest platform and provide general administration and other operational services.
18. "Person" means an individual, partnership, corporation, association, limited liability company, federally recognized Indian tribe or other legal entity.
19. "Player Account" means an account that is established by a patron for the purpose of participating in fantasy sports contests, including deposits, withdrawals, entry fees and payouts.
20. "Prize or award" means anything of value or any amount of cash or cash equivalents.
21. "Protected information" means information related to playing fantasy sports contests by a fantasy sports contest player that is not readily available to the general public and that is obtained as a result of a person's employment in relation to a fantasy sports contest.
22. "Script" means a list of commands that a fantasy-contest-related computer program can execute and that is created by a fantasy sports contest player or by a third party for a fantasy sports contest player to automate processes on a fantasy sports contest platform.
5-1202. Fantasy sports contests; exceptions; rules; licensure
a. Except as otherwise provided in this section, a person may not offer fantasy sports contests in this state unless the person is licensed by the Department as a fantasy sports contest operator.
b. An individual may offer one or more fantasy sports contests if all of the following apply:
1. The fantasy sports contests are not made available to the general public.
2. Each of the fantasy sports contests is limited to not more than fifteen total fantasy sports contest players.
3. The individual collects not more than $10,000 in total entry fees for all fantasy sports contests offered in a calendar year, at least ninety-five percent of which are awarded to the fantasy sports contest players.
c. An Indian tribe that lawfully conducts class III gaming pursuant to a Tribal-State Gaming Compact with this state, directly or through a third-party operator, may offer and conduct fantasy sports contests without applying for or holding a license pursuant to this section if all activities of the fantasy sports contest occur within the boundary of its Indian Lands and the Indian tribe complies with any regulations that are included in the Compact or its appendices regarding fantasy sports contests.
d. To ensure the integrity of fantasy sports contests, the Department has jurisdiction over each person involved in conducting a fantasy sports contest. The Department may adopt rules related to conducting fantasy sports contests, including rules prescribing penalties for violating this chapter or any rules adopted under this chapter.
e. Every Applicant for licensure shall submit a completed Application, along with any required information, to the Department. The Department shall determine the form and content of the Application. Each Application shall be accompanied by the Applicant's current photograph and the fee required by the Department. The applicant must also submit a full set of fingerprints to the department for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public Law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation.
f. The information required by the department shall include documentation of all of the following:
1. The name of the applicant.
2. The location of the applicant's principal place of business.
3. The applicant's telephone number.
4. The applicant's Social Security number or, if applicable, the applicant's federal tax identification number.
5. The name and address of each individual that holds a ten percent or more ownership interest in the applicant or in shares of the applicant.
6. The applicant's criminal record, if any, or if the applicant is a business entity, any criminal record of an individual who is a director, officer or key employee of, or any individual who has a ten percent or more ownership interest in, the applicant.
7. Any ownership interest that a director, officer, key employee or individual owner of ten percent or more of the applicant holds in a person that is or was a fantasy sports contest operator or similar entity in any jurisdiction.
8. An identification of any business, including, if applicable, the state of incorporation or registration, in which an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant, has an equity interest of five percent or more.
9. Whether an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant has ever applied for or been granted any license, registration or certificate issued by a licensing authority in this state or any other jurisdiction for a gaming activity.
10. Whether an applicant, director, officer, key employee or individual owner of ten percent or more of the applicant has filed or been served with a complaint or other notice filed by a public body regarding the delinquency in payment of or dispute over filings concerning the payment of any tax required under federal, state or local law, including the amount of tax, the type of tax, the taxing agency and the time periods involved.
11. A description of any physical facility operated by the applicant in this state, the employees who work at the facility and the nature of the business conducted at the facility.
12. Information sufficient to show, as determined by the department, that the applicant can meet the requirements of procedures submitted by the applicant under section 5-1203 and under any rules adopted under this chapter.
G. The department may require licensure of a holding company, a Management Company or any other person it considers sufficiently connected to the fantasy sports contest operator if that licensure is necessary to preserve the integrity of fantasy sports contests and protect fantasy sports contest players.
H. A license issued under this section is valid for two years. The department shall renew a license biennially if the applicant demonstrates continued eligibility for licensure under this chapter and pays the renewal fee. Notwithstanding this subsection, the department may investigate a licensee at any time the department determines it is necessary to ensure that the licensee remains in compliance with this chapter and the rules adopted pursuant to this chapter.
I. The department shall establish The initial license fee and The license renewal fee. The department may assess investigative costs if the cost of a licensure investigation exceeds the amount of the initial license or renewal fee.
J. On receipt of a completed Application and the required fee, the Department shall conduct the necessary background investigation to determine if the Applicant meets the qualifications for licensure. On completion of the necessary background investigation, the Department shall either issue a license or deny the Application. If the Application for licensure is denied, a statement setting forth the grounds for denial shall be forwarded to the applicant together with all other documents relied on by the Department, to the extent allowed by law.
5-1203. Prohibited employees; procedures and controls
A. The Fantasy Sports Contest Operator may not employ an individual and, if already employed, shall terminate an employee if it is determined through regulations issued by the department that the individual meets any of the following criteria:
1. has been convicted of any gaming offense.
2. has been convicted of a felony in the seven years before submission of the employment application unless that felony has been set aside.
3. has ever been convicted of a felony related to extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery, fraud, murder, voluntary manslaughter or a sexual offense that requires the individual to register pursuant to section 13-3821.
4. has knowingly and wilfully provided materially important false statements or information or omitted materially important information on the individual's employment Application or background questionnaire.
5. is an individual whose prior activities, criminal record, if any, or reputation, habits and associations pose a threat to the public interest or to the effective regulation and control of gaming or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in conducting gaming or carrying on the business and financial arrangements incidental to gaming.
B. As a condition of licensure, a fantasy sports contest operator must submit to, and receive approval from the department for, commercially reasonable procedures and internal controls intended to do all of the following:
1. Prevent the fantasy sports contest operator or its owners, directors, officers and employees and any relative of any of these individuals living in the same household from participating in a fantasy sports contest offered to the public.
2. Prevent the employees or agents of the fantasy sports contest operator from sharing protected information with third parties unless the protected information is otherwise made publicly available.
3. Prevent participants and officials in an athletic event from participating in a fantasy sports contest that is based on the athletic event.
4. Establish the number of entries a single fantasy sports contest player may enter in a single fantasy sports contest and take reasonable steps to prevent fantasy sports contest players from submitting more than the allowable number of entries.
5. Identify each highly experienced player by a symbol attached to the highly experienced player's username.
6. Offer some fantasy sports contests that are open only to players other than highly experienced players.
7. Either of the following:
(a) Segregate the deposits in the fantasy sports contest players' accounts from operational money.
(b) Maintain a reserve in the form of cash, cash equivalents, payment processor reserves, payment processor receivables, an irrevocable letter of credit, a bond or a combination of these, the aggregate amount of which exceeds the total dollar value amount of deposits in the fantasy sports contest players' accounts. the reserve may not be used for operational activities.
8. Ensure compliance with the applicable state and federal requirements to protect the privacy and online security of a fantasy sports contest player and the fantasy sports contest player's account.
9. Otherwise ensure the integrity of fantasy sports contests.
C. A licensed fantasy sports contest operator shall comply with the procedures and internal controls that are submitted to and approved by the department under subsection B of this section. A licensed fantasy sports contest operator may make technical adjustments to its procedures and internal controls if the adjustments are not material and it notifies the department within twenty-one days of the changes becoming effective and continues to meet or exceed the standards required by this chapter and any rules adopted by the department.
D. Procedures submitted to the department under subsection B of this section are confidential and privileged and are not subject to disclosure under title 39, chapter 1, article 2.
5-1204. Financial responsibility
On or before July 1 of each year, a licensed fantasy sports contest operator shall contract with a certified public accountant to perform an independent audit in accordance with generally accepted accounting principles of the financial condition of the licensed fantasy sports contest operator's total operation for the previous fiscal year and to ensure compliance with this chapter and for any other purpose as prescribed by rule. not later than one hundred eighty days after the end of the fantasy sports contest operator's fiscal year, A licensed fantasy sports contest operator shall submit the audit results under this section to the department. The results of an audit submitted to the department under this section are confidential and privileged and are not subject to disclosure as provided in title 39, chapter 1, article 2.
5-1205. Prohibitions; exception
A. A fantasy sports contest operator shall prohibit an individual who is under twenty-one years of age from participating in a fantasy sports contest.
B. A licensed fantasy sports contest operator may not do any of the following:
1. Allow the use of a script that provides a fantasy sports contest player with an unfair competitive advantage. A script made readily available to all fantasy sports contest players does not provide a fantasy sports contest player with an unfair competitive advantage and may not be determined otherwise.
2. Use false, deceptive or misleading advertising or advertising that is not based on fact.
3. Target, in advertising or promotions, either of the following:
(a) Individuals who have restricted themselves from entering a fantasy sports contest under the procedures established by the department pursuant to section 5-1206.
(b) Individuals who are under twenty-one years of age.
C. A fantasy sports contest may not be offered on, at or from any of the following:
1. A kiosk or machine open to public use and physically located in a retail business location, bar, restaurant or other commercial establishment.
2. A kiosk or machine open to public use and physically located in a place of public accommodation, except that a fraternal organization or VETERANS' organization as defined in section 5-401 or a licensed racetrack may operate up to two kiosks for the sole purpose of offering fantasy sports.
d. This section does not apply to a federally recognized Indian tribe operating under its Tribal-State Gaming Compact and any amendments.
5-1206. Problem gambling; self-exclusion list; program; liabilities
A. A Fantasy Sports Contest Operator shall develop a procedure to inform fantasy sports contest players that help is available if an individual has a problem with gambling and, at a minimum, provide the statewide toll-free helpline telephone number, text message and website information established by the Department.
B. The Department and the Fantasy Sports Contest Operator shall comply with the following requirements to allow problem gamblers to voluntarily exclude themselves from Fantasy Sports Contests statewide:
1. The Department shall establish a list of Persons who acknowledge, in a manner to be established by rule, that they have a compulsive play problem and voluntarily seek to exclude themselves from Fantasy Sports Contests statewide. The Department shall establish procedures for the placement on and removal from the list of self-excluded Persons. Only a Person seeking voluntary self-exclusion shall be allowed to include the Person's name on the self-exclusion list of the Department.
2. The Fantasy Sports Contest Operator shall establish procedures for advising Persons who inquire about self-exclusion and offer self-exclusion application forms provided by the Department to those Persons when requested.
3. The Department shall compile identifying information concerning self-excluded Persons. Such information shall contain, at a minimum, the full name and any aliases of the Person, a photograph of the Person, the social security or driver's license number of the Person and the current physical and electronic contact information, including mailing address, of the Person.
4. The Department, on a weekly basis, shall provide the compiled information to Fantasy Sports Contest Operators. Fantasy Sports Contest Operators shall treat the information received from the Department under this Section as confidential, and the information may not be disclosed except to vendors approved by the Department for purposes of complying with this Section, appropriate law enforcement agencies if needed in conducting an official investigation, or unless ordered by a court of competent jurisdiction.
5. A Fantasy Sports Contest Operator shall check the most recent self-excluded Persons list provided by the Department before creating a Player Account for any self-excluded Person. A Fantasy Sports Contest Operator shall revoke a Player Account and remove all self-excluded Persons from all marketing lists of the Fantasy Sports Contest Operator.
6. A Fantasy Sports Contest Operator shall take reasonable steps to ensure that Persons on the Department's list of self-excluded Persons are denied access to all Fantasy Sports Contests.
7. A Fantasy Sports Contest Operator shall take reasonable steps to identify self-excluded Persons.
8. If a self-excluded person participates in a fantasy sports contest, the Fantasy Sports Contest Operator shall report to the Department, at a minimum, the name of the self-excluded person, the date of participation, the amount or value of any monies, prizes or awards forfeited, if any, and any other action taken. The report shall be provided to the Department within twenty-four hours of discovery.
C. A Fantasy Sports Contest Operator may not pay any prize or award to a Person who is on the Department's self-exclusion list. Any prize or award won by a Person on the self-exclusion list shall be forfeited and shall be donated by the Fantasy Sports Contest Operator to the Department's Division of Problem Gambling on a quarterly basis by the twenty-fifth day of the following month.
D. Notwithstanding any other provision of this chapter, the Department's list of self-excluded Persons is not open to public inspection.
E. A Fantasy Sports Contest Operator shall develop and maintain a program to mitigate compulsive play and curtail compulsive play, which may be in conjunction with the Department.
5-1207. Department of gaming; authority
The department shall adopt rules to implement this chapter as provided in Title 41, Chapter 6, including rules that do all of the following:
1. Require a fantasy sports contest operator to implement commercially reasonable procedures to prohibit access to both of the following:
(a) Individuals who request to restrict themselves from playing fantasy sports contests.
(b) Individuals who are under twenty-one years of age.
2. Prescribe requirements related to beginning players and highly experienced players.
3. Suspend the account of a fantasy sports contest player who violates this chapter or a rule adopted under this chapter.
4. Provide a fantasy sports contest player with access to information on playing responsibly and how to ask for assistance for compulsive play behavior.
5. Require an applicant for a fantasy sports contest operator license to designate at least one key employee as a condition of obtaining a license.
6. Include any other rule the department determines is necessary to ensure the integrity of fantasy sports contests.
5-1208. Requirements
A. After a Fantasy Sports Contest Operator is licensed, the fantasy sports contest operator shall report any change to the information regarding ownership included in its application with the Department within thirty days after the change is effective. The Fantasy Sports Contest Operator's license shall remain valid unless the Department determines that the Fantasy Sports Contest Operator is no longer qualified to maintain the license due to the change.
B. A licensed fantasy sports contest operator shall retain and maintain in a place secure from theft, loss or destruction all of the records required to be maintained under this chapter and the rules adopted under this chapter for at least three years after the date the record is created.
C. A licensed fantasy sports contest operator shall organize all records under subsections A and B of this section in a manner that enables the licensed fantasy sports contest operator to provide the department with the records.
D. Information obtained under this section is confidential and privileged and is not subject to disclosure as provided in title 39, chapter 1, article 2.
E. Before paying a Person any prize or award, the Fantasy Sports Contest Operator shall determine if the Person is identified in the information provided to it on a weekly basis by the Arizona Supreme Court or in the information provided to it on a monthly basis by the Department of Economic Security division of Child Support Enforcement, Department of Economic Security supplemental nutrition assistance program and Assistance Overpayment and the Arizona Health Care Cost Containment System. Subsequent to statutory state and federal tax withholding, if the Person is identified, the Fantasy Sports Contest Operator shall withhold the full amount of the prize or award or such portion of the prize or award that satisfies the Person's past due, setoff obligation and forward those monies to the identifying agency. The Fantasy Sports Contest Operator shall disburse to the Person only that portion of the prize or award, if any, remaining after the Person's identified obligations have been satisfied. If the identified Person is also self-excluded, tax liabilities and setoff obligations shall be satisfied before any monies are donated to the Department's Division of Problem Gambling pursuant to section 15-1206. If the identified Person has multiple liabilities, those liabilities shall be satisfied in the following order:
1. Child Support Enforcement.
2. The supplemental nutrition assistance program and Assistance Overpayment.
3. The Arizona Supreme Court.
5-1209. Revocation, suspension or denial of license; grounds; definitions
A. The Department may revoke, suspend or deny a license if an Applicant or licensee meets any of the following criteria:
1. Violates, fails or refuses to comply with the provisions, requirements, conditions, limitations or duties imposed by law or rule, or if any such violation occurs on any Fantasy Sports contest Platform operated by any such Person or over which the person has substantial control.
2. Knowingly causes, aids, abets or conspires with another to cause any Person to violate any of the laws of this State or the rules of the Department.
3. Obtains a license by fraud, misrepresentation, concealment or through inadvertence or mistake.
4. is convicted or forfeited bond on a charge of or pleads guilty to:
(a) forgery, larceny, extortion or conspiracy to defraud.
(b) wilful failure to make required payment or reports to any tribal, state or federal governmental agency, filing false reports with any tribal, state or federal governmental agency or any similar offense or offenses.
(c) bribing or otherwise unlawfully influencing a public official of this state or any other state or jurisdiction.
(d) any crime, whether a felony or misdemeanor, involving any gaming activity, physical harm to an individual or moral turpitude.
5. Makes a misrepresentation of or fails to disclose a material fact to the Department.
6. Fails to prove, by clear and convincing evidence, that the person is qualified for licensure.
7. Is subject to current prosecution or pending charges or a conviction that is under appeal for any of the offenses included in this subsection. At the request of an Applicant for an original license, the Department may defer decision on the Application during the pendency of the prosecution or appeal.
8. Has had a gaming license issued by any jurisdiction in the United States revoked or denied.
9. Demonstrates a wilful disregard for compliance with gaming regulatory authority in any jurisdiction, including suspension of, revocation of, denial of Application for or forfeiture of a license.
10. Has pursued or is pursuing economic gain in an occupational manner or context in violation of the criminal laws of any state if the pursuit creates probable cause to believe that the person's participation in gaming or related activities would be detrimental to the proper operation of authorized gaming or a related activity in this State.
11. Is a career offender or a member of a career offender organization or an associate of a career offender or career offender organization thereby establishing probable cause to believe that the association is of such a nature as to be detrimental to the proper operation of authorized gaming or related activities in this State.
12. Is a Person whose prior activities, criminal record, if any, reputation, habits and associations pose a threat to the public interest of this State or to the effective regulation and control of Fantasy Sports contests, or creates or enhances the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of Fantasy Sports contests, or the carrying on of the business and financial arrangements incidental thereto.
13. Fails to provide any information requested by the Department within seven days of the request for the information.
B. The Department, pursuant to the laws of this State, may summarily suspend a license issued pursuant to this chapter if the continued licensure of a Person constitutes an immediate threat to the public health, safety or welfare.
C. Any Applicant for licensure agrees by making such Application to be subject to State jurisdiction to the extent necessary to determine the Applicant's qualification to hold such license, including all necessary administrative procedures, hearings and appeals pursuant to Title 41, chapter 6 and the Department's rules.
D. An Applicant for licensure may not withdraw an Application without the department's written permission. The Department may not unreasonably withhold permission to withdraw an Application.
e. For the purposes of this section:
1. "career offender" means any individual who behaves in an occupational manner or context for the purposes of economic gain by violating federal law or the laws and public policy of this state.
2. "career offender organization" means any group of individuals who operate together as career offenders.
3. "occupational manner or context" means the systematic planning, administration, management or execution of an activity for financial gain.
5-1210. Violations; classification; penalties
A. A person may not do any of the following:
1. Except as otherwise provided in this chapter, offer a fantasy sports contest in this state unless the person is licensed by the department.
2. Knowingly make a false statement on an application for a license under this chapter.
3. Knowingly provide false testimony to the department or any authorized representative of the department.
B. The department may not issue a license under this chapter to a person that violates subsection A of this section.
C. A person that violates subsection A, paragraph 1 of this section is guilty of a crime as follows:
1. For the first or second violation, the person is guilty of a class 3 misdemeanor.
2. For a third or subsequent violation, the person is guilty of a class 1 misdemeanor.
D. The department may issue a cease and desist order and obtain injunctive relief against a person that violates this chapter.
E. The Department may impose a civil penalty of not more than $10,000 for a violation of this chapter, a rule adopted under this chapter or an order of the Department. A civil penalty imposed under this section is payable to this State and may be collected in a civil action brought by the Department.
f. The department may suspend, revoke or restrict the license of a fantasy sports contest operator that violates this chapter, a rule adopted under this chapter or an order of the department.
5-1211. Fees
A. The department shall establish a fee for the privilege of operating fantasy sports contests that is not less than the highest percentage of revenue share that an Indian tribe pays to this state pursuant to the tribal-state gaming compacts and any amendments. A fantasy sports contest operator shall report to the department and pay from its monthly fantasy sports contest adjusted revenues, on a form and in the manner prescribed by the department. This subsection does not apply to an individual who offers a fantasy sports contest under section 5-1202, subsection b.
B. The fee established pursuant to subsection A of this section is due and payable to the department by the twenty-fifth day of each month and shall be based on monthly fantasy sports contest adjusted revenue derived during the previous month.
C. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected pursuant to this section in the fantasy sports contest fund established by section 5-1212.
D. A licensed fantasy sports contest operator who fails to remit to the department the fees required under this section is liable, in addition to any sanction or penalty imposed under this chapter, for the payment of a penalty of five percent per month up to a maximum of twenty-five percent of the amounts ultimately found to be due, to be recovered by the department. Penalties imposed and collected by the department under this subsection must be deposited in the fantasy sports contest fund established by section 5-1212.
5-1212. Fantasy sports contest fund
A. The fantasy sports contest fund is established consisting of monies deposited pursuant to section 5-1211 or from any other source. The department shall administer the fund. Monies in the fund are subject to legislative appropriation.
B. ON notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.
C. The department may spend not more than ten percent of monies on the department's annual costs of regulating and enforcing this chapter. The department shall transfer any remaining monies in the fund to the state general fund.
5-1213. Conditional enactment; notice
A. This chapter does not become effective unless and before each Indian tribe with a gaming facility in Pima county and in the Phoenix metropolitan area, as defined in the 2021 compact amendment, has entered into a 2021 gaming compact amendment and notice of the United States secretary of the interior's approval or approval by operation of law has been published in the federal register.
B. The department shall notify the director of the Arizona legislative council in writing of the date on which the condition was met.
Sec. 4. Title 5, Arizona Revised Statutes, is amended by adding chapter 11, to read:
CHAPTER 11
EVENT WAGERING
ARTICLE 1. GENERAL PROVISIONS
5-1301. Definitions
in this chapter, unless the context otherwise requires:
1. "Adjusted gross event wagering receipts" means an event wagering operator's gross wagering receipts, excluding voided bets minus federal excise tax, entry fees or other compensation received by the event wagering operator for event wagering tournaments and prizes paid to winning players as a result of event wagering tournaments, and winnings paid to participants in sports events or other events.
2. "Department" means the Department of Gaming.
3. "E-sport" means an organized, multiplayer video game competition, particularly between professional players, individually or as teams.
4. "Event wagering":
(a) Means accepting wagers on sports events or other events, portions of sports events or other events, the individual performance statistics of athletes in a sports event or combination of sports events or the individual performance of individuals in other events or a combination of other events by any system or method of wagering, including in person or over the Internet through websites and on mobile devices.
(b) Does not include a fantasy sports contest as defined in section 5-1201.
5. "Event wagering employee" means an employee of an event wagering operator, sports facility, management services provider or limited event wagering operator who is directly involved in the operation, management or control of the conduct of event wagering under this chapter in this state.
6. "Event wagering facility" means a facility at which event wagering is conducted under this chapter.
7. "event wagering operator" means an owner or operator of an arizona professional sports team or franchise, an operator of a sports facility in this state that hosts an annual tournament on the pga tour or a promoter of a professional sports event based in this state, or the promoter's designee, who is licensed to offer event wagering under this chapter.
8. "limited event wagering operator" means a racetrack enclosure or additional wagering facility that holds a permit issued by the division of racing to offer wagers on horseracing and that is licensed under this chapter.
9. "Official league data" means statistics, results, outcomes and other data related to a sports event or other event obtained pursuant to an agreement with the relevant sports governing body or an entity expressly authorized by the sports governing body to provide such information to licensees that authorizes the use of such data for determining the outcome of sports wagers on sports events or other events.
10. "Licensee" means a person that holds an event wagering operator license, limited event wagering license, supplier license or management services provider license.
11. "MANAGEMENT SERVICES PROVIDER" MEANS A PERSON THAT OPERATES, MANAGES OR CONTROLS EVENT WAGERING AUTHORIZED BY THIS CHAPTER ON BEHALF OF AN EVENT WAGERING OPERATOR OR LIMITED EVENT WAGERING OPERATOR, INCLUDING developing OR operating EVENT WAGERING PLATFORMS AND providing ODDS, LINES AND GLOBAL RISK MANAGEMENT, and may PROVIDE SERVICES TO MORE THAN ONE licensed EVENT WAGERING OPERATOR OR licensed LIMITED EVENT WAGERING OPERATOR.
12. "Other event" means an event or competition of relative skill authorized by the Department under this chapter.
13. "Person" means an individual, partnership, committee, association, corporation, Indian tribe or an entity fully owned by an Indian tribe, or any other organization or group of persons.
14. "Professional sport" means a sport conducted at the highest level league or organizational play for its respective sport and includes baseball, basketball, football, golf, hockey, soccer and motorsports.
15. "Prohibited conduct" includes any statement, action or other communication intended to unlawfully influence, manipulate or control a betting outcome of a sports event or other event of any individual occurrence or performance in a sports event or other event in exchange for financial gain or to avoid financial or physical harm.
16. "Prohibited participant" means:
(a) Any individual whose participation may undermine the integrity of the wagering, the sports event or the other event.
(b) Any individual who is prohibited from placing a wager as an agent, proxy or because of self-exclusion.
(c) Any individual who is an athlete, coach, referee, player, trainer or personnel of a sports organization in any sports event or other event overseen by that individual's sports organization who, based on information that is not publicly available, has the ability to determine or to unlawfully influence the outcome of a wager.
(d) An individual who holds a position of authority or influence sufficient to exert influence over the participants in a sporting contest, including coaches, managers, handlers and athletic trainers, such that their actions can affect the outcome of a wager.
(e) An individual with access to exclusive information on any sports event or other event overseen by that individual's sports governing body that is not publicly available information or any individual identified by any lists provided by the sports governing body to the Department.
17. "Sports event" means a professional sport or athletic event, a collegiate sport or athletic event, a motor race event, an e-sport event or an olympic event.
18. "Sports facility" means a facility that is owned by a commercial, state or local government or quasi-governmental entity that hosts professional sports events and that holds a seating capacity of more than ten thousand persons at its primary facility, one location in this state that hosts an annual PGA golf tournament on the PGA tour or one location that holds an outdoor motorsports facility that hosts a national association for stock car auto racing national tour race.
19. "Sports governing body" means an organization that prescribes final rules and enforces codes of conduct with respect to a sports event and participants in a sports event.
20. "tier one sports wager" means a sports wager that is determined solely by the final score or final outcome of the sports event and that is placed before the sports event has begun.
21. "tier two sports wager" means a sports wager that is not a tier one sports wager.
22. "Supplier" means a person that manufactures, distributes or supplies event wagering equipment or software, including event wagering systems.
23. "Wager":
(a) Means a sum of money or thing of value risked on an uncertain occurrence.
(b) Includes tier one and tier two sports wagers, single-game bets, teaser bets, parlays, over-under bets, moneyline bets, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, straight bets and other wagers approved by the Department.
5-1302. Department of gaming; powers; duties
A. The department shall enforce this chapter and supervise compliance with laws and rules relating to regulating and controlling event wagering in this state.
B. The department may adopt rules in accordance with this chapter and Title 41, Chapter 6.
C. The department shall evaluate all applicants to determine suitability for issuing all event wagering operator licenses, LIMITED event wagering operator licenses, supplier licenses and management SERVICES provider licenses and license renewals and shall charge and collect all fees pursuant to this chapter.
D. The department may deny, revoke or suspend licenses or renewals or deny an applicant's request to withdraw a license application.
E. The department shall conduct background checks of event wagering operators, limited event wagering operators, management services providers and event wagering suppliers and may monitor and conduct periodic audits of event wagering operations and providers.
F. Hearings shall be conducted pursuant to title 41, chapter 6, article 10. Except as provided in section 41-1092.08, subsection H, any party aggrieved by a final order or decision of the department may seek judicial review pursuant to title 12, chapter 7, article 6.
G. The department shall oversee event wagering and develop standards and procedures and engage in other duties as the director of the department prescribes to further the purposes of this Chapter, including establishing and enforcing standards and procedures for:
1. Collecting, depositing and disbursing all applicable license fees and payments as required by this Chapter.
2. Operating event wagering and maintaining, testing, inspecting, approving and auditing event wagering accounts, platforms, hardware, software and data, including player, financial, accounting and wagering data.
3. Operating event wagering facilities, including location, security and surveillance, departmental access, inspections and approvals.
4. Licensing and contracting for the use of geolocation services to reasonably ensure persons engaging in event wagering are located in this State or another departmentally authorized location allowed by this Chapter at the time of event wagering.
5. Approving other events on which wagers may be taken consistent with this Chapter.
6. Establishing mechanisms designed to detect and prevent the unauthorized use of player accounts and to detect and prevent fraud, money laundering and collusion, including a requirement that event wagering operations contract with a departmentally licensed integrity monitoring provider.
7. Paying winning wagers, reporting taxes and collecting debt setoffs from any winning prize, including overdue child support payments, State tax debt and debts as established by the Department of Economic Security.
H. THE DEPARTMENT MAY adopt RULES AUTHORIZING EVENT WAGERING OPERATORS TO OFFSET LOSS AND MANAGE RISK, DIRECTLY OR WITH A THIRD PARTY APPROVED BY THE DEPARTMENT, THROUGH THE USE OF A LIQUIDITY POOL IN this state OR ANOTHER JURISDICTION, if the EVENT WAGERING OPERATOR, ITS DESIGNEE OR ITS MANAGEMENT SERVICES PROVIDER IS LICENSED BY SUCH JURISDICTION TO OPERATE AN EVENT WAGERING OR SPORTS BETTING BUSINESS. AN EVENT WAGERING OPERATOR'S USE OF A LIQUIDITY POOL DOES NOT ELIMINATE ITS DUTY TO ENSURE THAT IT HAS SUFFICIENT monieS AVAILABLE TO PAY BETTORS.
5-1303. Event wagering; license required; exception
A. Event wagering may be conducted only to the extent that it is conducted in accordance with this chapter. A person may not offer any activity in connection with event wagering in this State unless all necessary licenses have been obtained in accordance with federal and state law and any applicable rules of the Department.
B. A wager placed by a participant in this state and received by an event wagering operator or its management services provider in this state is considered to be gambling or gaming that is conducted in this state.
C. A law that is inconsistent with this chapter does not apply to event wagering as provided for by this chapter.
D. This chapter does not apply to event wagering conducted exclusively on Indian lands as that term is defined in the Indian gaming regulatory act (P.L. 100-497; 102 Stat. 2467) by an Indian tribe operated in accordance with a Tribal-State Gaming Compact and any AMENDMENTS. For purposes of this chapter, event wagering is conducted exclusively on Indian lands only if the individual who places the wager is physically present on Indian lands when the wager is initiated, received or otherwise made on equipment that is physically located on Indian lands, and the wager is initiated, received or otherwise made in conformity with the safe harbor requirements as provided in 31 United States Code section 5362(10)(C). An event wagering operator may not accept any wager if the individual who places the wager is physically present on Indian lands when the wager is initiated.
E. A person may not provide or make available event wagering devices in a place of public accommodation in this state, including a club or other association, to enable individuals to place wagers except as provided by this chapter. This subsection does not apply to an event wagering operator aggregating, providing or making available event wagering devices within its own event wagering facility.
F. For purposes of this chapter, the intermediate routing of electronic data in connection with event wagering, including routing across state lines, does not determine the location or locations in which the wager is initiated, received or otherwise made.
G. An event wagering operator may use more than one event wagering platform to offer, conduct or operate event wagering. Only an event wagering operator or its event wagering platform provider may process, accept, offer or solicit wagers. The event wagering operator must clearly display its own brand or that of an affiliate on the event wagering platform that it uses. The event wagering operator, in its sole discretion, may also elect to have the brand of the event wagering platform that it uses be the name and logos of an event wagering platform provider if the event wagering platform also clearly displays the event wagering operator's own trademarks and logos or those of an affiliate.
5-1304. Licensure; application
A. The department may issue not more than ten event wagering operator licenses to applicants other than an Indian Tribe. The department may issue not more than ten event wagering operator licenses to Indian Tribes in this state if the Indian tribe receiving a license has signed the most recent Tribal-State Gaming Compact and any applicable appendices or amendments. The department shall issue event wagering operator licenses only to applicants that are either of the following in compliance with this chapter:
1. An owner of an Arizona professional sports team or franchise, operator of a sports facility that host an annual tournament on the Pga tour, promoter of a sanctioned national touring motorsports racing event conducted in this state or their designee, contracted to operate event wagering for both retail event wagering at a sports facility or its complex as prescribed in subsection D of this section and mobile event wagering throughout the state. If a designee is used, the designee shall be considered the applicant and subject to any requirements of the application process rather than the owner, operator or promoter of a professional sports team event or franchise.
2. An Indian Tribe, or an entity fully owned by an Indian tribe, or its designee contracted to operate only mobile event wagering outside the boundaries of its Indian lands and throughout the state if it has signed the most recent tribal-state gaming compact and any applicable appendices or amendments.
B. An applicant for an event wagering license shall submit an application in a form prescribed by the Department, including all of the following:
1. The identification of the applicant's principal owners that own more than five percent of the company, the partners, the members of its board of directors and the officers, the identification of any holding company, including its Principals, engaged by the applicant to assist in the management or operation of Event Wagering, if applicable, and information to verify that the applicant is qualified to hold a license under subsection A of this section.
2. A full set of fingerprints for the purpose of obtaining a state and federal criminal records check pursuant to section 41-1750 and Public law 92-544. The department of public safety may exchange this fingerprint data with the federal bureau of investigation. The fingerprints shall be furnished by the applicant's officers and directors, if a corporation, members, if a limited liability company and partners, if a partnership. An applicant convicted of a disqualifying offense may not be licensed.
3. Information, documentation and assurances as may be reasonably required to establish by clear and convincing evidence the applicant's good character, honesty and integrity, including information that pertains to family connections, criminal and arrest records, business activities, financial affairs and business, professional and personal associates covering at least the ten-year period immediately preceding the filing of the application.
4. A Notice and description of civil judgments obtained against the applicant pertaining to antitrust or security regulation laws of the federal government, of this state or of any other state, jurisdiction, province or country.
5. If the applicant has conducted gaming operations in a jurisdiction that allows such activity, letters of compliance from the regulatory body that regulates event wagering, sports wagering or any other gaming activity that the applicant is licensed for, conducts or operates under jurisdiction of the regulatory body.
6. Information, documentation and assurances concerning financial background and resources of the applicant or its management services provider as may be required to establish by clear and convincing evidence the financial stability, integrity and responsibility of the applicant or its management services provider, including bank references, business and personal income and disbursement schedules, tax returns and other reports filed with governmental agencies, and business and personal accounting and check records and ledgers. Each applicant, or its management services provider in writing, shall authorize the examination of all bank accounts and records as may be deemed necessary by the Department. The Department may consider any relevant evidence of financial stability. The applicant is presumed to be financially stable if the applicant or its management services provider establishes by clear and convincing evidence that it meets each of the following standards:
(a) The ability to ensure the financial integrity of event wagering operations by MAINTAINING a bankroll or equivalent provisions adequate to pay winning wagers to bettors when due. An applicant is presumed to have met this standard if the applicant or its management services provider maintains, on a daily basis, a bankroll or equivalent provisions in an amount that is at least equal to the average daily minimum bankroll or equivalent provisions, calculated on a monthly basis, for the corresponding month in the previous year.
(b) The ability to meet ongoing operating expenses that are essential to maintaining continuous and stable event wagering operations.
(c) The ability to pay, as and when due, all state and federal taxes.
7. Information to establish by clear and convincing evidence that the applicant or its management services provider has sufficient business ability and gaming experience as to establish the likelihood of creating and maintaining a successful and stable event wagering operation.
8. Information regarding the financial standing of the applicant, including each person or entity that has provided loans or financing to the applicant or its management services provider.
9. Information on the amount of adjusted gross event wagering receipts and associated adjusted gross receipts than applicant expects to generate.
10. A nonrefundable application fee or annual licensing fee as prescribed by section 5-1310.
11. Any additional information required by the department to determine the financial and operational ability to fulfill its obligations as an event wagering operator.
C. Any Applicant for licensure agrees to be subject to State jurisdiction to the extent necessary to determine the Applicant's qualification to hold a license, including all necessary administrative procedures, hearings and appeals as provided in Title 41, chapter 6 and Department rules.
D. A license issued by the department pursuant to this section authorizes an event wagering operator identified in subsection A, paragraph 1 of this section to offer both:
1. event wagering in this state through an event wagering facility within a five-block radius of the event wagering operator's sports facility. An event wagering facility within one mile of a tribal gaming facility must be:
(a) Within a sports complex that includes retail centers that are adjacent to the sports facility.
(b) Not more than one-fourth of a mile from a sports facility within the sports complex.
2. event wagering through a mobile platform as specified by the Department. A licensed event wagering operator or its designated management services provider may offer event wagering through an event wagering platform as specified by the department.
E. A license issued under this section is valid for five years if the licensee submits an annual license fee, maintains the qualifications to obtain a license under this section and substantially complies with this chapter and other laws and rules relating to event wagering. A licensee may renew its license by submitting an application in a form prescribed by Department rule and the application fee. A license may not be renewed if it is determined by the Department that the event wagering operator has not substantially complied with this chapter or any other law regulating its event wagering operations or other operations licensed by the Department. A licensee shall submit the nonrefundable annual license and application fees prescribed in section 5-1310 with its application for the renewal of its license.
F. A person may not apply for or obtain more than one event wagering operator license. A management services provider may offer services to more than one event wagering operator
5-1305. License review; approval; fees; material change; exemption; display; transferability
A. On receipt of a completed Application and the required fee, the Department shall conduct the necessary background investigation to ensure the Applicant is qualified for licensure. On completion of the necessary background investigation, the Department shall either issue a license or deny the Application. If the Application is denied, the Department shall forward a statement setting forth the grounds for denial to the applicant together with all other documents on which the department relied, to the extent allowed by law.
B. The Department may conduct additional background investigations of any Person required to be licensed at any time while the license remains valid. The issuance of a license does not create or imply a right of employment or continued employment. The Event Wagering operator or Limited Event Wagering Operator may not employ and, if already employed, shall terminate an event wagering employee if it is determined that the person meets any of the following criteria:
1. has been convicted of any gaming offense.
2. has been convicted of a felony in the seven years before submitting an application unless that felony has been set aside.
3. has ever been convicted of a felony related to extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery, fraud, murder, voluntary manslaughter, a sexual offense that requires the individual to register pursuant to section 13-3821 or kidnapping.
4. Knowingly and wilfully provides materially important false statements or information or omits materially important information on the person's employment Application or background questionnaire.
5. is a Person whose prior activities, criminal record, if any, or reputation, habits and associations pose a threat to the public interest or to the effective regulation and control of gaming or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming or the carrying on of the business and financial arrangements incidental thereto.
C. Within thirty days after receipt of a complete Application, the Department shall issue a license to the Applicant unless the background investigation undertaken by the Department discloses that the Applicant has a criminal history or unless other grounds sufficient to disqualify the Applicant are apparent on the face of the Application. The department shall review and approve or deny an application for a license as provided in title 41, chapter 6, article 10.
D. For each application for licensure or renewal of a license that is approved under this section, the amount of the application fee must be credited toward the licensee's license fee and the licensee shall remit the balance of the initial license fee to the Department on approval of a license. The fees collected from licensees under this section shall be deposited in the event wagering fund established by section 5-1318 and used by the Department to pay the actual operating and administrative expenses incurred for event wagering.
E. Each person licensed under this chapter shall give the Department written notice within thirty days after a material change is made to information provided in the licensee's application for a license or renewal.
F. Indian tribes within this State operating event wagering exclusively on Indian Lands are exempt from the licensure requirements of this section. Event wagering on Indian Lands is governed by the Tribal-State Gaming Compact, its Appendices, any amendments and the Indian Gaming Regulatory Act (P.L. 100-497; 102 stat. 2467).
G. Each licensee shall display its license conspicuously in the licensee's place of business or have the license available for inspection by an agent of the Department or a law enforcement agency. Each licensee that operates an event wagering platform shall conspicuously display a notice of the license on its platform's landing page.
H. the Department shall keep all information, records, interviews, reports, statements, memoranda or other data supplied to or used by the Department in the course of its review or investigation of an application for an event wagering operator license or renewal of a license confidential. The materials described in this subsection are exempt from disclosure pursuant to Title 39, Chapter 1, Article 2.
I. A license issued under this chapter may not be transferred to another person or entity without prior approval of the department. The department shall work with applicants and licensees to ensure there is no gap in the validity of the license.
5-1306. License revocation; suspension; denial; grounds; definitions
A. The Department may revoke, suspend or deny a license when an Applicant or licensee meets any of the following criteria:
1. Violates, fails or refuses to comply with the provisions, requirements, conditions, limitations or duties imposed by this chapter and other laws and rules, or if any such violation has occurred on any Event Wagering System operated by any such Person or over which the person has substantial control.
2. Knowingly causes, aids, abets or conspires with another to cause any Person to violate any of the laws of this State or the rules of the Department.
3. Obtains a license by fraud, misrepresentation, concealment or through inadvertence or mistake.
4. is convicted or forfeited bond on a charge of or pleads guilty to:
(a) forgery, larceny, extortion or conspiracy to defraud.
(b) wilful failure to make required payment or reports to any tribal, state or federal governmental agency, filing false reports with any tribal, state or federal governmental agency or any similar offense or offenses.
(c) bribing or otherwise unlawfully influencing a public official of this state or any other state or jurisdiction.
(d) any crime, whether a felony or misdemeanor, involving any gaming activity, physical harm to an individual or moral turpitude.
5. Misrepresents or fails to disclose a material fact to the Department.
6. Fails to prove, by clear and convincing evidence, that the person is qualified for licensure.
7. Is subject to current prosecution or pending charges or a conviction that is under appeal for any of the offenses included in this subsection. At the request of an Applicant for an original license, the Department may defer decision on the Application during the pendency of the prosecution or appeal.
8. Has had a gaming license issued by any jurisdiction in the United States revoked or denied.
9. Demonstrates a wilful disregard for compliance with gaming regulatory authority in any jurisdiction, including suspension, revocation, denial of Application or forfeiture of license.
10. Has pursued or is pursuing economic gain in an occupational manner or context in violation of the criminal laws of any state if the pursuit creates probable cause to believe that the person's participation in gaming or related activities would be detrimental to the proper operation of an authorized gaming or related activity in this State.
11. Is a career offender or a member of a career offender organization or an associate of a career offender or career offender organization thereby establishing probable cause to believe that the association is of such a nature as to be detrimental to the proper operation of the authorized gaming or related activities in this State.
12. Is a Person whose prior activities, criminal record, if any, reputation, habits and associations pose a threat to the public interest of this State or to the effective regulation and control of Event Wagering, creates or enhances the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of Event Wagering or the carrying on of the business and financial arrangements incidental thereto.
13. Fails to provide any information requested by the Department within seven days after the request for the information, except for good cause as determined by the department.
B. Any Applicant for licensure or holder of a license shall be entitled to a full hearing on any final action by the Department that may result in the revocation, suspension or denial of licensure. The hearing shall be conducted in accordance with the procedures as provided in Title 41, Chapter 6 and the Department's rules.
C. The Department may summarily suspend any license if the continued licensing of the Person constitutes an immediate threat to the public health, safety or welfare.
D. for the purposes of this section:
1. "career offender" means any individual who behaves in an occupational manner or context for the purposes of economic gain by violating federal law or the laws and public policy of this state.
2. "career offender organization" means any group of individuals who operate together as career offenders.
3. "occupational manner or context" means the systematic planning, administration, management or execution of an activity for financial gain.
5-1307. Limited event wagering operator licenses; definition
A. An event wagering operator may partner with a racetrack enclosure or additional wagering facility that holds a permit that is issued by the Division of Racing for obtaining a limited event wagering license for event wagering only at one specific physical location. On application, the department may issue a total of up to ten limited event wagering licenses to authorize event wagering at ten specific physical locations.
B. An entity seeking a limited event wagering license shall provide the following information to the department in its application:
1. A copy of its current approval by the Division of Racing to conduct racing meetings or approval as an additional wagering facility.
2. A letter from an event wagering operator of its partnership for the purposes of event wagering.
3. An attestation and map demonstrating that the specific physical location of the event wagering facility is located at least five miles from:
(a) a tribal gaming facility.
(b) the specific event wagering facility location operated by an event wagering operator.
(c) the specific event wagering facility location operated by another limited event wagering licensee.
C. The department shall issue a limited event wagering license if the following conditions are met:
1. The applicant is in compliance with all Division of Racing rules regarding its racing or additional wagering facility operations.
2. The applicant has a current license with the division of racing.
3. The applicant is not currently the subject of an investigation by the division of racing for a violation of division rules.
4. The applicant submits fees as required by the department.
D. A limited event wagering license allows the licensee to conduct event wagering only in accordance with this chapter and any applicable rules adopted by the department.
E. A limited event wagering licensee shall be licensed by the department before the commencement of operation and every two years thereafter. The license shall include each principal, primary management official and key employees.
F. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licenses under this section in the event wagering fund established by section 5-1318.
G. For the purposes of this section, "additional wagering facility" has the same meaning prescribed in section 5-101.
5-1308. Supplier license
A. The department may issue a supplier license to a person that manufactures, distributes, sells or leases event wagering equipment, systems or other gaming items to conduct event wagering and offers services related to the equipment or other gaming items and data to an event wagering operator or limited event wagering licensee while the license is active. The department may accept a license issued by another jurisdiction that the department determines to have similar licensure requirements as evidence the applicant meets supplier licensure requirements.
B. The department may adopt rules that establish additional requirements for a supplier and any system or other equipment used for event wagering.
C. An applicant for a supplier license shall demonstrate that the equipment, system or services that the applicant plans to offer to the event wagering operator conform to standards established by the department and applicable State law. The department may accept approval by another jurisdiction that the department determines has similar equipment standards as evidence the applicant meets the standards established by the department and applicable State law.
D. An applicant shall pay to the department a nonrefundable license and application fee as prescribed by section 5-1310. A license is valid for two years. The department shall grant a renewal of a supplier license if the renewal applicant has continued to comply with all applicable statutory and regulatory requirements, submits the renewal application on a Department-issued renewal form and pays the renewal fee prescribed by section 5-1310. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licensees under this subsection in the event wagering fund established by section 5-1318.
E. A supplier shall submit to the department a list of all event wagering equipment and services sold, delivered or offered to an event wagering operator in this State, as required by the department, all of which must be tested and approved by an independent testing laboratory approved by the department. An event wagering operator or limited event wagering licensee may continue to use supplies acquired from a licensed supplier, even if a supplier's license expires or is otherwise canceled, unless the department finds a defect in the supplies.
5-1309. Management services provider license
A. An event wagering operator may contract with an entity to conduct event wagering in accordance with the rules of the department and this chapter. The entity shall obtain a license from the department as a management services provider pursuant to this chapter and any rules adopted by the department before the execution of any such contract. A management services provider may provide services to more than one licensed event wagering operator or licensed limited event wagering operator under its license.
B. Each applicant for a management services provider license shall meet all requirements for licensure and pay a nonrefundable license and application fee as prescribed by section 5-1310. The department may adopt rules establishing additional requirements for a management services provider. The department may accept a license issued by another jurisdiction that the department determines to have similar licensure requirements as evidence the applicant meets management services provider licensure requirements. The department shall deposit, pursuant to sections 35-146 and 35-147, the fees collected from licenses under this subsection in the event wagering fund established by section 5-1318.
C. Management services provider licenses shall be renewed every two years to licensees who continue to be in compliance with all requirements and who pay the renewal fee.
5-1310. License fees; bond
A. The department shall establish and collect fees for applications, initial licenses and renewals of the following:
1. Event Wagering Operator licenses.
2. Limited event wagering operator licenses.
3. Management services provider licenses.
4. Supplier licenses.
B. If actual costs incurred by the Department to investigate the background of an Applicant exceed the fees pursuant to subsection A of this section, those costs may be assessed to the Applicant during the investigation process. Payment in full to the Department shall be required before the department issues a license. The Department may require Event Wagering Operators, Limited Event Wagering Operators and Suppliers applying for licensure to post a bond sufficient to cover the actual costs that the Department anticipates will be incurred in conducting a background investigation of the applicant.
5-1311. License restrictions; prohibited licensees; violation; classification
A. The following persons or their immediate family members may not apply for or obtain a license under this chapter:
1. An employee of the Department.
2. An employee of any professional sports team.
3. A coach of or player for a collegiate, professional or Olympic sports team or sport.
4. An Individual who has been convicted of a crime related to sports or event wagering on a sports event or other event, cheating, extortion, burglary, larceny, bribery, embezzlement, robbery, racketeering, money laundering, forgery or fraud.
5. An Individual who has the ability to directly affect the outcome of a sports event or other event for which wagers are allowed.
6. Any other category of individuals that, if licensed, would negatively affect the integrity of event wagering in this state.
B. A licensee may not:
1. Allow a person under twenty-one years of age to place a wager.
2. Offer, accept or extend credit to a bettor.
3. Target minors in advertising or promotions.
4. Offer or accept a wager on any event, outcome or occurrence other than a sports event or other event, including a high school sports event offered, sponsored or played in connection with a public or private institution that offers education at the secondary level.
5. Accept a wager from a person who is on the department's list of self-excluded persons created and maintained by an Indian Tribe or the Department.
6. Accept a wager from a prohibited participant.
C. A violation of this section is:
1. For a first offense, a Class 3 misdemeanor.
2. For a second or subsequent offense, a Class 1 misdemeanor.
5-1312. Reporting
A. On or before September 30 of each year, the department shall prepare and submit an annual report to the governor, the president of the senate and the speaker of the house of representatives, and shall provide a copy to the secretary of state that contains the following information:
1. The number of active licensees by type.
2. The aggregate gross and net revenue of all licensees.
3. The number of investigations conducted to enforce this chapter.
4. The financial impact on this state of the event wagering industry in this state.
B. The report may be included with other information required to be submitted by the department annually. A report submitted under subsection a of this section may be submitted electronically.
5-1313. Escrow account; insurance; cash-on-hand; financial practices; audit; post-employment restrictions
A. The department shall establish:
1. The amount of a bond in escrow and the amount of cash that must be kept on hand to ensure that adequate reserves exist for payouts.
2. Any insurance requirements for a licensee.
3. Minimum requirements by which each licensee must exercise effective control over its internal fiscal affairs, including requirements for all of the following:
(a) Safeguarding assets and revenues, including evidence of indebtedness.
(b) Maintaining reliable records relating to accounts, transactions, profits and losses, operations and events.
(c) Risk management.
4. Requirements for internal and independent audits of licensees.
5. The manner in which periodic financial reports must be submitted to the Department from each licensee, including the financial information to be included in the reports.
6. The type of information deemed confidential financial or proprietary information that is not subject to any reporting requirements under this subsection.
7. Policies, procedures and processes designed to mitigate the risk of fraud, cheating or money laundering.
8. Any post-employment restrictions for department employees necessary to maintain the integrity of event wagering in this state.
B. The licensee may maintain the bond at any bank lawfully operating in this state or another entity as approved by the department, and the licensee must be the beneficiary of any interest accrued on the bond.
5-1314. Event wagering authorized
A. Notwithstanding any other law relating to wagering except for title 5, chapter 1 and title 13, chapter 33, the operation of event wagering is lawful only if the event wagering is conducted in accordance with this chapter and any other relevant laws and rules.
B. Notwithstanding section 5-112, wagers on racing meetings or simulcasted races may be made, offered or received through the means that other wagers allowed by this chapter are made, offered or received.
C. Each event wagering operator shall adopt and adhere to a written, comprehensive policy outlining the house rules governing the acceptance of wagers and payouts. The policy and rules must be approved by the department before the event wagering operator accepts wagers. The policy and rules must be readily available to a bettor at any event wagering facility location and on any event wagering platform.
D. The department shall adopt rules regarding:
1. The manner in which an event wagering operator accepts wagers from and issues payouts to bettors, including payouts in excess of $10,000.
2. Reporting requirements necessary to comply with the Bank Secrecy Act (P.L. 91-508; 84 Stat. 1114) and Patriot Act (P.L. 107-56; 115 Stat. 272) and for any other applicable laws and rules governing reporting suspicious wagers.
E. Each wager placed in accordance with this chapter is deemed to be an enforceable contract under law.
F. If the governing body of a sport or sports league, organization or association or other authorized entity that maintains official league data opts to provide official league data. for the purposes of event wagering, An event wagering operator shall exclusively use official league data for purposes of live betting unless the event wagering operator can demonstrate to the department that the governing body of a sport or sports league, organization or association or other authorized entity cannot provide a feed of official league data for live betting in accordance with commercially reasonable terms, as determined by the department.
5-1315. Prohibited wagers
A. A person may not wager on any of the following:
1. Injuries, penalties and other types or forms of event wagering under this chapter that are contrary to law.
2. Individual actions, events, occurrences or nonoccurrences to be determined during a collegiate sports event, including on the performance or nonperformance of a team or individual participant during a collegiate sports event. This paragraph does not prohibit wagers on the overall outcome of a collegiate sports event or seasonal awards based on a player's cumulative overall play.
B. An event wagering operator may offer only parlay and proposition bets of the type or category as prescribed by the department. The department shall prescribe the types and categories of parlay and proposition bets that may be offered in this state, if any.
C. An event wagering operator, professional sports team, league, association or institution of higher education may submit to the department in writing a request to prohibit a type or form of event wagering, or to prohibit a category of persons from event wagering, if the event wagering operator, team, league, association or institution believes that such event wagering by type, form or category is contrary to public policy, unfair to consumers or affects the integrity or perceived integrity of a particular sport or the sports betting industry. Such a REQUEST shall provide a reasonable amount of time for the department to conduct due DILIGENCE before decision-making, absent the need to proceed on an emergency basis.
D. The department shall review A request made pursuant to subsection C of this section to determine if good cause exists to grant the request. In making a determination under this section, the department shall seek input from licensees unless the emergency nature of the matter does not provide sufficient time for such due diligence. The department shall respond to the request concerning a particular event before the start of the event, or if it is not feasible to respond before the start of the event, as soon as practicable.
5-1316. Integrity; reporting prohibited or suspicious conduct; investigations
A. All licensees under this chapter shall immediately report to the department and the RELEVANT sports governing body that has requested to receive it any information relating to any of the following:
1. Abnormal betting activity or patterns that may indicate a concern with the integrity of a sports event or events, or any other conduct that corrupts a betting outcome of a sports event or events for purposes of financial gain, including match fixing.
2. Any potential breach of a sports governing body's internal rules and codes of conduct pertaining to event wagering.
3. Conduct that corrupts the betting outcome of event wagering for purposes of financial gain, including match fixing.
4. Suspicious or illegal event wagering activities, including cheating, the use of monies derived from illegal activity, wagers to conceal or launder monies derived from illegal activity, using agents to place wagers or using false identification.
B. Licensees shall report to the department, in real time and at the account level, information regarding a bettor, the amount and type of bet, the time the bet was placed, the location of the bet, including the internet protocol address if applicable, the outcome of the bet and records related to subsection A of this section. Information reported under this subsection must be submitted in the form and manner established by the department.
C. If a sports governing body has notified the Department that real-time information sharing for wagers placed on its sports events is necessary and desirable, licensees shall share the same information with the sports governing body or its designee with respect to wagers on its sports events. Such information may be provided in anonymized form and may be used by a sports governing body solely for integrity purposes.
d. the department and licensees shall make commercially reasonable efforts to cooperate with investigations conducted by sports governing bodies, including using commercially reasonable efforts to provide or facilitate the provision of betting INFORMATION for the purposes of investigations.
E. The department shall establish a hotline or other method of communication that allows any person to confidentially report to the department information about prohibited conduct.
F. The department shall investigate allegations and refer to prosecutorial entities prohibited conduct under this chapter.
G. The identity of any reporting person shall remain confidential unless that person authorizes disclosure of the person's identity or until such time as the allegation of prohibited conduct is referred to a prosecutorial entity.
H. If the department receives a complaint of prohibited conduct by an athlete, the Department shall notify the appropriate sports governing body to review the complaint for appropriate action.
I. NOTWITHSTANDING any CONFIDENTIALITY provisions of this chapter, the department may provide or facilitate access to information regarding account-level betting INFORMATION and data files relating to persons placing wagers on notification by a sports governing body of an official investigation being conducted into a person or persons who are prohibited by that body from participating in wagering or who are believed to have taken action that affects the integrity or perceived integrity of the sport it governs. any information obtained by a sports governing body shall be kept confidential unless the information has been made public through a criminal proceeding or by a court order.
5-1317. Sports governing body agreements
This chapter does not prohibit a sports governing body on whose events the department has authorized wagering from entering into agreements with licensees in which the sports governing body may share in the amount bet from sports wagering on the events of the sports governing body. a sports governing body is not required to obtain a license or any other approval from the department to lawfully accept such amounts.
5-1318. Fees; event wagering fund
A. The department shall establish a fee for the privilege of operating event wagering that is not less than the highest percentage of revenue share that an Indian tribe pays to this state pursuant to the tribal-state gaming compact. The event wagering operator or designee has the option to choose either the cash accrual or modified accrual basis method of accounting for purposes of calculating the amount of the fee owed by the event wagering operator or designee. The fees required pursuant to this section are due and payable to the department not later than the twenty-fifth day of the month following the calendar month in which the adjusted gross event wagering receipts were received and the obligation was accrued.
B. The Event Wagering Fund is established consisting of monies deposited pursuant to this chapter or from any other source. The department shall administer the fund. Except as otherwise provided in this chapter, the Department shall deposit, pursuant to sections 35-146 and 35-147, all monies collected under this chapter in the Event Wagering Fund. On the twenty-fifth of each month, any monies remaining in the Event Wagering Fund shall be transferred to the state general fund. On notice from the department, the state treasurer shall invest and divest monies in the fund as provided by section 35-313, and monies earned from investment shall be credited to the fund.
c. the DEPARTMENT may spend not more than ten percent of monies on the department's annual costs of regulating and enforcing this chapter, and any remaining monies in the fund revert to the state general fund.
5-1319. Financial responsibility
ON OR BEFORE JULY 1 OF EACH YEAR, A LICENSED EVENT WAGERING OPERATOR and management services provider SHALL CONTRACT WITH A CERTIFIED PUBLIC ACCOUNTANT TO PERFORM AN INDEPENDENT AUDIT, IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES published by the American institute of certified public accountants, THE FINANCIAL CONDITION OF THE LICENSED EVENT WAGERING OPERATOR'S or management services provider's TOTAL OPERATION FOR THE PREVIOUS FISCAL YEAR AND TO ENSURE COMPLIANCE WITH THIS CHAPTER AND FOR ANY OTHER PURPOSE AS PRESCRIBED BY RULE. NOT LATER THAN ONE HUNDRED EIGHTY DAYS AFTER THE END OF THE EVENT WAGERING OPERATOR'S or management services provider's FISCAL YEAR, A LICENSED EVENT WAGERING OPERATOR or management service provider SHALL SUBMIT THE AUDIT RESULTS UNDER THIS SECTION TO THE DEPARTMENT. THE RESULTS OF AN AUDIT SUBMITTED TO THE DEPARTMENT UNDER THIS SECTION ARE CONFIDENTIAL AND PRIVILEGED AND ARE NOT SUBJECT TO DISCLOSURE AS PROVIDED IN TITLE 39, CHAPTER 1, ARTICLE 2.
5-1320. Problem gambling; self-exclusion list; program; liabilities
A. A licensee shall develop a procedure to inform players that help is available if a Person has a problem with gambling and, at a minimum, provide the statewide toll-free helpline telephone number, text message and website information established by the Department.
B. The Department and licensees shall comply with the following requirements to allow problem gamblers to voluntarily exclude themselves from Event Wagering statewide:
1. The Department shall establish a list of Persons who, by acknowledging in a manner to be established by the Department that they are problem gamblers, voluntarily seek to exclude themselves from Event Wagering statewide. The Department shall establish procedures for the placement on and removal from the list of self-excluded Persons. A Person other than the Person seeking voluntary self-exclusion may not include that Person's name on the self-exclusion list of the Department.
2. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall establish procedures for advising Persons who inquire about self-exclusion and offer self-exclusion application forms provided by the Department to those Persons when requested.
3. The Department shall compile identifying information concerning self-excluded Persons. Such information shall contain, at a minimum, the full name and any aliases of the Person, a photograph of the Person, the social security or driver’s license number of the Person and the current physical and electronic contact information, including mailing address, of the Person.
4. The Department shall provide the compiled information to Event Wagering Operators, Commercial Sports License Holders and Limited Event Operators on a weekly basis. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall treat the information received from the Department under this Section as confidential, and the information shall not be disclosed except to vendors approved by the Department for purposes of complying with this Section, appropriate law enforcement agencies if needed in conducting an official investigation or unless ordered by a court of competent jurisdiction.
5. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall check the most recent self-excluded Persons list provided by the Department before creating a Player Account. The Event Wagering Operator, Commercial Sports License Holder or Limited Event wagering Operator shall revoke a Player Account and remove all self-excluded Persons from all mailing lists of the Event Wagering Operator, Commercial Sports License Holder or Limited Event wagering Operator.
6. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall take reasonable steps to ensure that Persons on the Department's list of self-excluded Persons are denied access to all Event Wagering.
7. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall take reasonable steps to identify self-excluded Persons. If a self-excluded person participates in Event Wagering, the Event Wagering Operator, Commercial Sports License Holder and Limited Event wagering Operator shall report to the Department, at a minimum, the name of the self-excluded person, the date of participation, the amount or value of any monies, prizes or awards forfeited, if any, and any other action taken. The report shall be provided to the Department within twenty-four hours of discovery.
C. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators may not pay any prize or award to a Person who is on the Department's self-exclusion list. Any prize or award won by a Person on the self-exclusion list shall be forfeited and shall be donated by the Event Wagering Operator, Commercial Sports License Holder or Limited Event wagering Operator to the Department's Division of Problem Gambling on a quarterly basis by the twenty-fifth day of the following month.
D. Notwithstanding any other provision of this chapter, the Department's list of self-excluded Persons is not open to public inspection.
E. Event Wagering Operators, Commercial Sports License Holders and Limited Event wagering Operators shall develop and maintain a program to mitigate problem gambling and curtail compulsive gambling, which may be in conjunction with the Department.
F. Before paying a Person any jackpot, prize or award where a Person's identification must be verified, the event wagering Facility Operator shall check to determine if the Person is identified as having a past-due, set-off obligation in the information provided to it on a weekly basis by the Arizona Supreme Court or in the information provided to it on a monthly basis by the Department of Economic Security division of Child Support Enforcement, Department of Economic Security supplemental nutrition assistance program and Assistance Overpayment and the Arizona Health Care Cost Containment System. Subsequent to statutory state and federal tax withholding, if a Person is identified, the event wagering Facility Operator shall withhold the full amount of the jackpot, prize or award or such portion of the jackpot, prize or award that satisfies the Person's past-due, set-off obligation and forward those monies to the identifying agency. The event wagering Facility Operator shall disburse to the Person only that portion of the prize, if any, remaining after the Person's identified obligations have been satisfied. If the identified Person is also self-excluded, tax liabilities and set-off obligations are to be satisfied before any monies are donated to the Department's Division of Problem Gambling. If the identified Person has multiple liabilities, they shall be satisfied in this order:
1. Child Support Enforcement.
2. Supplemental nutrition assistance program and Assistance Overpayment.
3. Arizona Supreme Court.
4. The Arizona Health Care Cost Containment System.
G. This Section does not waive an Indian Tribe's sovereign immunity from a suit by a Person listed and whose winnings are withheld for an identified obligation.
5-1321. Conditional enactment; notice
A. This chapter does not become effective unless and before each Indian tribe with a gaming facility in Pima county and in the Phoenix metropolitan area, as defined in the 2021 compact amendment, has entered into a 2021 gaming compact amendment and notice of the United States secretary of the interior's approval or approval by operation of law has been published in the federal register.
B. The department shall notify the director of the Arizona legislative council in writing of the date on which the condition was met.
Sec. 5. Section 13-3301, Arizona Revised Statutes, is amended to read:
13-3301. Definitions
In this chapter, unless the context otherwise requires:
1. "Amusement gambling" means gambling involving a device, game or contest which that is played for entertainment if all of the following apply:
(a) The player or players actively participate in the game or contest or with the device.
(b) The outcome is not in the control to any material degree of any person other than the player or players.
(c) The prizes are not offered as a lure to separate the player or players from their money.
(d) Any of the following:
(i) No benefit is given to the player or players other than an immediate and unrecorded right to replay, which is not exchangeable for value.
(ii) The gambling is an athletic event and no person other than the player or players derives a profit or chance of a profit from the money paid to gamble by the player or players.
(iii) The gambling is an intellectual contest or event, the money paid to gamble is part of an established purchase price for a product, no increment has been added to the price in connection with the gambling event and no drawing or lottery is held to determine the winner or winners.
(iv) Skill and not chance is clearly the predominant factor in the game and the odds of winning the game based upon on chance cannot be altered, provided the game complies with any licensing or regulatory requirements by the jurisdiction in which it is operated, no benefit for a single win is given to the player or players other than a merchandise prize which that has a wholesale fair market value of less than ten dollars $10 or coupons which that are redeemable only at the place of play and only for a merchandise prize which that has a fair market value of less than ten dollars $10 and, regardless of the number of wins, no aggregate of coupons may be redeemed for a merchandise prize with a wholesale fair market value of greater than five hundred fifty dollars $550.
2. "Conducted as a business" means gambling that is engaged in with the object of gain, benefit or advantage, either direct or indirect, realized or unrealized, but not when if incidental to a bona fide social relationship.
3. "Crane game" means an amusement machine which that is operated by player controlled buttons, control sticks or other means, or a combination of the buttons or controls, which is activated by coin insertion into the machine and where the player attempts to successfully retrieve prizes with a mechanical or electromechanical claw or device by positioning the claw or device over a prize.
4. "Event wagering" has the same meaning prescribed in section 5-1301.
5. "Fantasy sports contest" has the same meaning prescribed in section 5-1201.
4. 6. "Gambling", or "gamble" or "wager" means one act of risking or giving something of value for the opportunity to obtain a benefit from a game or contest of chance or skill or a future contingent event but does not include bona fide business transactions which that are valid under the law of contracts including contracts for the purchase or sale at a future date of securities or commodities, contracts of indemnity or guarantee, and life, health or accident insurance and fantasy sports contests as defined in section 5-1201 and conducted pursuant to title 5, chapter 10.
5. 7. "Player" means a natural person who participates in gambling.
6. 8. "Regulated gambling" means either:
(a) Gambling conducted in accordance with a tribal-state gaming compact or otherwise in accordance with the requirements of the Indian gaming regulatory act of 1988 (P.L. 100-497; 102 Stat. 2467; 25 United States Code sections 2701 through 2721 and 18 United States Code sections 1166 through 1168); or
(b) Gambling to which all of the following apply:
(i) It is operated and controlled in accordance with a statute, rule or order of this state or of the United States.
(ii) All federal, state or local taxes, fees and charges in lieu of taxes have been paid by the authorized person or entity on any activity arising out of or in connection with the gambling.
(iii) If conducted by an organization which is exempt from taxation of income under section 501 of the internal revenue code, the organization's records are open to public inspection.
(iv) Beginning on June 1, 2003, None of the players is under twenty-one years of age.
(c) Event wagering that is conducted pursuant to title 5, chapter 11.
7. 9. "Social gambling" means gambling that is not conducted as a business and that involves players who compete on equal terms with each other in a gamble if all of the following apply:
(a) No player receives, or becomes entitled to receive, any benefit, directly or indirectly, other than the player's winnings from the gamble.
(b) No other person receives or becomes entitled to receive any benefit, directly or indirectly, from the gambling activity, including benefits of proprietorship, management or unequal advantage or odds in a series of gambles.
(c) Until June 1, 2003, none of the players is below the age of majority. Beginning on June 1, 2003, None of the players is under twenty-one years of age.
(d) Players "compete on equal terms with each other in a gamble" when no player enjoys an advantage over any other player in the gamble under the conditions or rules of the game or contest.
Sec. 6. Section 13-3305, Arizona Revised Statutes, is amended to read:
13-3305. Betting and wagering; classification
A. Subject to the exceptions contained prescribed in section 5-112 title 5, chapter 11, no person may engage for a fee, property, salary or reward in the business of accepting, recording or registering any bet, purported bet, wager or purported wager or engage for a fee, property, salary or reward in the business of selling wagering pools or purported wagering pools with respect to the result or purported result of any race, sporting event, contest or other game of skill or chance or any other unknown or contingent future event or occurrence whatsoever.
B. Subject to the exceptions prescribed in title 5, chapter 11, a person shall not directly or indirectly knowingly accept for a fee, property, salary or reward anything of value from another to be transmitted or delivered for wagering or betting on the results of a race, sporting event, contest or other game of skill or chance or any other unknown or contingent future event or occurrence whatsoever conducted within or without this state or anything of value as reimbursement for the prior making of such a wager or bet on behalf of another person.
C. A person who violates this section is guilty of a class 1 misdemeanor.
Sec. 7. Exemption from rulemaking
For the purposes of this act, the department of gaming is exempt from the rulemaking requirements of title 41, chapter 6, Arizona Revised Statutes, for one year after the effective date of this act. The department of gaming shall initiate rulemaking and adopt rules to effectuate this act within sixty days after the effective date of this act.
Sec. 8. Legislative intent
The legislature recognizes the promotion of public safety is an important consideration for sports leagues, teams, players and fans at large. All persons who present sporting contests or other events where wagers are allowed are encouraged to take reasonable measures to ensure the safety and security of all involved or attending such events. Persons who present sporting contests or other events where wagers are allowed are encouraged to establish codes of conduct that forbid all person associated with the sporting contest from engaging in violent and unlawful behavior and to hire, train and equip safety and security personnel to enforce those codes of conduct. Persons who present sporting contests or other events where wagers are allowed are further encouraged to provide public notice of those codes of conduct.
Sec. 9. Emergency
This act is an emergency measure that is necessary to preserve the public peace, health or safety and is operative immediately as provided by law.
