Bill Text: MI HB4743 | 2017-2018 | 99th Legislature | Introduced
Bill Title: Gaming; other; fantasy contests act; create. Creates new act. TIE BAR WITH: HB 4742'17
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2017-06-13 - Printed Joint Resolution Filed 06/08/2017 [HB4743 Detail]
Download: Michigan-2017-HB4743-Introduced.html
HOUSE BILL No. 4743
June 8, 2017, Introduced by Reps. Miller, Iden, Kosowski, Tedder, Sheppard and Webber and referred to the Committee on Regulatory Reform.
A bill to regulate the conduct of fantasy sports games; to
protect Michigan participants in fantasy sports games; to require
licensing of the operators of fantasy sports games; to impose fees
on the operators of fantasy sports games; to provide for the powers
and duties of certain state governmental officers and entities; to
prohibit violations of this act; and to prescribe civil sanctions.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"fantasy sports games consumer protection act".
Sec. 2. As used in this act:
(a) "Department" means the department of licensing and
regulatory affairs.
(b) "Entry fee" means an amount that a game participant pays
to a game operator to compete in a fantasy sports game.
(c) "Fantasy sports game" means a fantasy or simulation sports
game or contest with an entry fee that meets all of the following
conditions:
(i) The value of all prizes and awards offered to winning game
participants is established and made known to the game participants
in advance of the game.
(ii) All winning outcomes reflect the relative knowledge and
skill of game participants and are determined predominantly by
accumulated statistical results of the performance of individuals,
including athletes.
(iii) A winning outcome is not based on the score, point
spread, or performance of a single team or combination of teams or
on any single performance of an individual athlete or player in a
single event.
(d) "Game operator" means a person that offers a software
platform for the playing of a fantasy sports game, administers 1 or
more fantasy sports games with an entry fee, and awards a prize of
value.
(e) "Game participant" means an individual who participates in
a fantasy sports game offered by a game operator.
(f) "Licensed game operator" means a game operator that is
licensed by the department under this act.
(g) "Person" means an individual, partnership, corporation,
association, or other legal entity other than a governmental
entity. Person includes a sovereign tribal government and its
business entities.
(h) "Protected information" means information related to the
playing of paid fantasy sports games by game participants that is
obtained solely as a result of an individual's employment with or
work as an agent for a game operator.
Sec. 3. (1) Fantasy sports games are authorized if they are
conducted in accordance with this act by a licensed game operator,
or if they are conducted by a game operator under subsection (3).
(2) Any other law that is inconsistent with this act does not
apply to fantasy sports games conducted by a licensed game operator
in accordance with this act or by a game operator under subsection
(3).
(3) A game operator that is conducting fantasy sports games in
this state on May 1, 2016 may continue operating fantasy sports
games until the game operator is issued or denied a license under
section 4.
Sec. 4. (1) A person shall not offer fantasy sports games in
this state unless the person is a licensed game operator.
(2) A person seeking to be a licensed game operator shall
submit an application, with the applicable fee under subsection
(4), to the department. The applicant shall provide sufficient
documentation to the department to assure that the applicant meets
the requirements for licensure, including, but not limited to,
documentation of all of the following:
(a) The name of the applicant.
(b) The location of the applicant's principal place of
business.
(c) The name and address of each person that holds a 15% or
greater ownership interest in the applicant or in shares of the
applicant.
(d) 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 or officer of or who has a 15% or
greater ownership interest in the applicant.
(e) Any ownership interest that a director, officer, policy-
making manager, or principal stockholder of the applicant holds in
a person that is or was a licensed fantasy sports operator or
similar entity.
(f) 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.
(g) 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.
(3) A license issued under this section is valid for 1 year.
The department shall renew a license each year if the applicant
demonstrates continued eligibility for licensure under subsection
(2).
(4) The initial license fee is $5,000.00. The annual license
renewal fee is $1,000.00. However, an initial license fee or annual
license renewal fee must not exceed 10% of the total amount of
entry fees collected by the applicant from the operation of fantasy
sports games in this state less the total amount of cash and value
of cash equivalents paid as prizes or awards to game participants.
Sec. 5. (1) A licensed game operator that offers paid fantasy
sports games in this state shall submit to the department
procedures that are intended to do all of the following:
(a) Prevent the game operator, its owners, directors,
officers, and employees, and any relative of any of these
individuals living in the same household, from competing in a
fantasy sports game.
(b) Prevent the employees or agents of the game operator from
sharing protected information that could affect fantasy sports game
play with third parties until the information is made publicly
available.
(c) Prevent participants and officials in a real-world
sporting event that has any effect on the outcome of a fantasy
sports game from participating in the fantasy sports game.
(d) Disclose the number of fantasy sports games a single game
participant may enter and take reasonable steps to prevent game
participants from entering more than the allowable number of
fantasy sports games.
(e) Either of the following:
(i) Segregate game participants' money from operational money.
(ii) Maintain a reserve in the form of cash, cash equivalents,
security deposits held by banks and processors, an irrevocable
letter of credit, a bond, or a combination of these in the total
amount of deposits in game participants' accounts for the benefit
and protection of authorized game participants' money held in
fantasy sports game accounts.
(2) A person shall not violate a procedure that is submitted
to the department under subsection (1) and approved by the
department.
(3) Procedures submitted to the department under subsection
(1) are confidential and privileged, are not subject to disclosure
under the freedom of information act, 1976 PA 442, MCL 15.231 to
15.246, are not subject to subpoena, and are not subject to
discovery or admissible in evidence in a private civil action.
Sec. 6. By July 1 of each year, a licensed game operator shall
submit to the department an audit of the financial condition of the
licensed game operator's total operations for the previous calendar
year. An audit under this section must be conducted by a certified
public accountant in accordance with generally accepted auditing
standards. An audit submitted to the department under this section
is confidential and privileged, is not subject to disclosure under
the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246,
is not subject to subpoena, and is not subject to discovery or
admissible in evidence in a private civil action.
Sec. 7. A game operator shall undertake commercially
reasonable procedures intended to ensure that an individual under
18 years of age does not participate in a fantasy sports game.
Sec. 8. A licensed game operator shall not conduct, operate,
or offer a fantasy sports game that is based on a university,
college, high school, or youth sporting event.
Sec. 9. (1) A licensed game operator shall make available on
the operator's website information about resources relating to
compulsive behavior including a telephone number or link to
information on compulsive behavior and where to seek assistance for
compulsive behavior.
(2) A licensed game operator shall make available, by website,
telephone, or online chat, a means to allow an individual to
irrevocably restrict the individual's ability to enter a fantasy
sports game and to select the length of time the restriction will
be in effect.
(3) A licensed game operator shall offer a game participant
access to the game participant's playing history, including a
summary of entry fees expended, games played, previous lineups, and
prizes awarded.
Sec. 10. The department shall promulgate rules to implement
this act under the administrative procedures act of 1969, 1969 PA
306, MCL 24.201 to 24.328.
Sec. 11. (1) The department may suspend, revoke, or restrict
the license of a game operator that violates this act, a rule
promulgated under this act, or an order of the department.
(2) The department may impose a civil fine of not more than
$1,000.00 for a violation of this act, a rule promulgated under
this act, or an order of the department.
(3) A fine imposed under this section is payable to this state
and may be recovered in a civil action brought by the department.
Enacting section 1. This act takes effect 90 days after the
date it is enacted into law.
Enacting section 2. This act does not take effect unless
Senate Bill No.____ or House Bill No. 4742 (request no. 01715'17) of
the 99th Legislature is enacted into law.
