Bill Text: MI SB0190 | 2019-2020 | 100th Legislature | Introduced
Bill Title: Gaming: other; fantasy contests consumer protection act; create. Creates new act.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-03-07 - Referred To Committee On Regulatory Reform [SB0190 Detail]
Download: Michigan-2019-SB0190-Introduced.html
SENATE BILL No. 190
March 7, 2019, Introduced by Senator SCHMIDT and referred to the Committee on Regulatory Reform.
A bill to regulate the conduct of fantasy contests; to protect
Michigan participants in fantasy contests; to require licensing of
the operators of fantasy contests; to impose fees on the operators
of fantasy contests; to provide for the powers and duties of
certain state governmental officers and entities; to prohibit
violations of this act; to prescribe civil sanctions; and to
prescribe penalties.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"fantasy contests consumer protection act".
Sec. 2. As used in this act:
(a) "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, as to which each participant is
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.
(b) "Board" means the Michigan gaming control board created
under section 4 of the Michigan gaming control and revenue act,
1996 IL 1, MCL 432.204.
(c) "Entry fee" means a cash or cash equivalent amount that a
fantasy contest operator requires to be paid by a fantasy contest
player to participate in a fantasy contest.
(d) "Fantasy contest" means a simulated game or contest with
an entry fee that meets all of the following conditions:
(i) No fantasy contest team is composed of the entire roster
of a real world sports team.
(ii) No fantasy contest team is composed entirely of
individual athletes who are members of the same real world sports
team.
(iii) Each prize and award or the value of all prizes and
awards offered to winning fantasy contest players is made known to
the fantasy contest players in advance of the fantasy contest.
(iv) Each winning outcome reflects the relative knowledge and
skill of the fantasy contest players and are determined by the
aggregated statistical results of the performance of multiple
individual athletes selected by the fantasy contest player to form
the fantasy contest team, whose individual performances in the
fantasy contest directly correspond with the actual performance of
those athletes in the athletic event in which those individual
athletes participated.
(v) 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.
(vi) The fantasy contest does not constitute or involve and is
not based on any of the following:
(A) Racing involving animals.
(B) 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 involving horses or that are played
with cards or dice.
(C) A slot machine or other mechanical, electromechanical, or
electronic device, equipment, or machine, including computers and
other cashless wagering systems.
(D) 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, Panguingui, roulette, or other banking or
percentage games.
(E) Any other game or device authorized by the board under the
Michigan gaming control and revenue act, 1996 IL 1, MCL 432.201 to
432.226.
(vii) A fantasy contest must not be based on a high school or
youth sporting event or any event that is not an athletic event.
(viii) A fantasy contest must not be conducted in a manner
that involves or results in betting on a race, game, contest, or on
sports.
(e) "Fantasy contest operator" means a person that operates,
carries on, conducts, maintains, exposes, or offers for play
fantasy contests and awards prizes of value.
(f) "Fantasy contest platform" means any digital or online
method through which a fantasy contest operator provides access to
a fantasy contest.
(g) "Fantasy contest player" means an individual who
participates in a fantasy contest offered by a fantasy contest
operator.
(h) "Fantasy 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 contest player selects to compete
in a fantasy contest.
(i) "Highly experienced player" means a fantasy contest player
who has done at least 1 of the following:
(i) Entered more than 1,000 fantasy contests offered by a
single fantasy contest operator.
(ii) Won more than 3 prizes valued at $1,000.00 each or more
from a single fantasy contest operator.
(j) "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:
(i) Holds an ownership interest of 5% or more, as determined
by the board, in a fantasy contest operator.
(ii) Holds voting rights with the power to vote 5% or more of
the outstanding voting rights of a fantasy contest operator.
(k) "Key employee" means an employee of a fantasy contest
operator who has the power to exercise significant influence over
decisions concerning the fantasy contest operator.
(l) "Licensed fantasy contest operator" means a fantasy
contest operator that is licensed by the board under this act.
(m) "Management company" means a person retained by a fantasy
contest operator to manage a fantasy contest platform and provide
general administration and other operational services.
(n) "Person" means an individual, partnership, corporation,
association, or other legal entity. Person includes a sovereign
tribal government and its business entities.
(o) "Protected information" means information related to the
playing of fantasy contests by fantasy contest players that is
obtained by a fantasy contest operator.
(p) "Script" means a list of commands that a fantasy-contest-
related computer program can execute and that is created by a
fantasy contest player, or by a third party for a fantasy contest
player, to automate processes on a fantasy contest platform.
Sec. 3. (1) Except as otherwise provided in this section, a
person shall not offer fantasy contests in this state unless the
person is a licensed fantasy contest operator.
(2) An individual may offer, solely from his or her private
residence, 1 or more fantasy contests, if none of the contests are
made available to the general public, each of the contests is
limited to no more than 15 total fantasy contest players, and the
individual collects no more than $10,000.00 in total entry fees for
all fantasy contests offered in a calendar year, at least 95% of
which entry fees are awarded to the fantasy contest players.
(3) A person that met the definition of fantasy contest
operator in this state on May 1, 2017 may continue offering fantasy
contests until the fantasy contest operator is issued or denied a
license under this act if the person applies for a license within
60 days after the date the application for the license is made
available by the board.
(4) A casino licensee licensed by the board under the Michigan
gaming control and revenue act, 1996 IL 1, MCL 432.201 to 432.226,
may offer and conduct fantasy contests without applying for or
holding a license under this act.
(5) To ensure the integrity of fantasy contests, the board has
jurisdiction over each person involved in the conduct of a fantasy
contest. The board may promulgate rules related to the conduct of
fantasy contests, including rules setting forth penalties for
violations of this act or any rules promulgated under this act.
(6) A person seeking to be licensed as a fantasy contest
operator shall submit an application, with the applicable fee, to
the board. The applicant shall provide sufficient documentation to
the board to ensure that the applicant meets the requirements for
licensure as determined by the board, 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 applicant's telephone number.
(d) The applicant's Social Security number or, if applicable,
the applicant's federal tax identification number.
(e) The name and address of each person that holds a 5% or
greater ownership interest in the applicant or in shares of the
applicant.
(f) 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 who
has a 5% or greater ownership interest in, the applicant.
(g) Any ownership interest that a director, officer, key
employee, or individual owner of 5% or greater of the applicant
holds in a person that is or was a fantasy contest operator or
similar entity in any jurisdiction.
(h) 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 5% or greater, has an equity interest of 5% or more.
(i) Whether an applicant, director, officer, key employee, or
individual owner of 5% or greater has ever applied for or been
granted any license, registration, or certificate issued by a
licensing authority in this state or any other jurisdiction.
(j) Whether an applicant, director, officer, key employee, or
individual owner of 5% or greater 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, the type of tax, the taxing agency, and the
time periods involved.
(k) 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.
(l) Information sufficient to show, as determined by the
board, that the applicant can meet the requirements of procedures
submitted by the applicant under this act and under any rules
promulgated under this act.
(7) The board may require licensure of a holding company,
management company, or any other person it considers sufficiently
connected to the fantasy contest operator if that licensure is
necessary to preserve the integrity of fantasy contests and protect
fantasy contest players.
(8) A license issued under this section is valid for 1 year.
The board shall renew a license each year if the applicant
demonstrates continued eligibility for licensure under this act and
pays the renewal fee. Notwithstanding this subsection, the board
may investigate a licensee at any time the board determines it is
necessary to ensure that the licensee remains in compliance with
this act and the rules promulgated under this act.
(9) The initial license fee is $50,000.00. The annual license
renewal fee is $20,000.00. The board may assess investigative costs
if the cost of a licensure investigation exceeds the amount of the
license or renewal fee.
Sec. 4. (1) As a condition of licensure, a fantasy contest
operator must submit to, and receive approval from, the board
commercially reasonable procedures and internal controls intended
to accomplish all of the following:
(a) Prevent the fantasy contest operator, its owners,
directors, officers, and employees, and any relative of any of
these individuals living in the same household, from participating
in a fantasy contest other than a fantasy contest offered by the
fantasy contest operator for which participation is limited to the
persons described in this subdivision.
(b) Prevent the employees or agents of the fantasy contest
operator from sharing protected information with third parties
unless the protected information is otherwise made publicly
available.
(c) Prevent participants and officials in an athletic event
from participating in a fantasy contest that is based on the
athletic event.
(d) Establish the number of entries a single fantasy contest
player may enter in a single fantasy contest and take reasonable
steps to prevent fantasy contest players from submitting more than
the allowable number of entries.
(e) Identify each highly experienced fantasy contest player by
a symbol attached to the highly experienced fantasy contest
player's username.
(f) Offer some fantasy contests that are open only to players
other than highly experienced fantasy contest players.
(g) Either of the following:
(i) Segregate the deposits in the fantasy contest players'
accounts from operational money.
(ii) Maintain a reserve in the form of cash, cash equivalents,
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 contest players' accounts, and which
reserve must not be used for operational activities.
(h) Ensure compliance with the applicable state and federal
requirements to protect the privacy and online security of a
fantasy contest player and the fantasy contest player's account.
(i) Otherwise ensure the integrity of fantasy contests.
(2) A licensed fantasy contest operator shall comply with the
procedures and internal controls that are submitted to the board
under subsection (1) and approved by the board. A licensed fantasy
contest operator may make technical adjustments to its procedures
and internal controls if the adjustments are not material and it
notifies the board in advance and continues to meet or exceed the
standards required by this act and any rules promulgated by the
board.
(3) Procedures submitted to the board 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. 5. By July 1 of each year, a licensed fantasy 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 contest operator's total operations for the previous fiscal
year and to ensure compliance with section 4(1)(g) and for any
other purpose the board considers appropriate. A licensed fantasy
contest operator shall submit the audit results under this section
to the board not later than 180 days after the end of the fantasy
contest operator's fiscal year. The results of an audit submitted
to the board 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. 6. A fantasy contest operator shall prohibit an
individual who is less than 18 years of age from participating in a
fantasy contest.
Sec. 7. A licensed fantasy contest operator shall not do any
of the following:
(a) Allow the use of a script unless the script is made
readily available to all fantasy contest players.
(b) Employ false, deceptive, or misleading advertising, or
advertising that is not based on fact.
(c) Target, in advertising or promotions, either of the
following:
(i) Individuals who have restricted themselves from entering a
fantasy contest under the procedures established by the board.
(ii) Individuals who are less than 18 years of age.
Sec. 8. (1) A fantasy contest must not be offered on, at, or
from any of the following:
(a) A kiosk or machine physically located in a retail business
location, bar, restaurant, or other commercial establishment.
(b) A place of public accommodation.
(c) A facility owned, operated, or occupied by a private club,
association, or similar membership-based organization.
(2) This section does not apply to a casino licensee licensed
by the board under the Michigan gaming control and revenue act,
1996 IL 1, 432.201 to 432.226.
Sec. 9. (1) A licensed fantasy contest operator shall make
available on the licensed fantasy contest operator's website
information about resources relating to compulsive gaming behavior
including a telephone number or link to information on compulsive
gaming behavior and where to seek assistance for compulsive gaming
behavior.
(2) A licensed fantasy contest 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 contest and to select the length of time the
restriction will be in effect.
(3) A licensed fantasy contest operator shall offer a fantasy
contest player access to the fantasy contest player's playing
history, including a summary of entry fees expended, games played,
previous lineups, and prizes awarded.
Sec. 10. The board shall promulgate rules to implement this
act under the administrative procedures act of 1969, 1969 PA 306,
MCL 24.201 to 24.328, including, but not limited to, rules that
address all of the following:
(a) Requiring a fantasy contest operator to implement
commercially reasonable procedures to prohibit access to both of
the following:
(i) Individuals who request to restrict themselves from
playing fantasy contests.
(ii) Individuals who are less than 18 years of age.
(b) Prescribing requirements related to beginning players and
highly experienced players.
(c) Suspending the account of a fantasy contest player who
violates this act or a rule promulgated under this act.
(d) Providing a fantasy contest player with access to
information on playing responsibly and how to ask for assistance
for compulsive gaming behavior.
(e) Requiring an applicant for a fantasy contest operator
license to designate at least 1 key employee as a condition for
obtaining a license.
(f) Any other rule the board determines is necessary to ensure
the integrity of fantasy contests.
Sec. 11. (1) A licensed fantasy 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 act and the
rules promulgated under this act for at least 3 years after the
date of the record's creation.
(2) A licensed fantasy contest operator shall organize all
records under subsection (1) in a manner that enables the licensed
fantasy contest operator to provide the board with the records.
(3) Information obtained 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 as
evidence in a private civil action.
Sec. 12. (1) The board may suspend, revoke, or restrict the
license of a fantasy contest operator that violates this act, a
rule promulgated under this act, or an order of the board.
(2) The board may impose a civil fine of not more than
$20,000.00 for a violation of this act, a rule promulgated under
this act, or an order of the board.
(3) A fine imposed under this section is payable to this state
and may be recovered in a civil action brought by the board.
Sec. 13. (1) A person shall not do any of the following:
(a) Except as otherwise provided in section 4, offer a fantasy
contest in this state unless the person is licensed by the board.
(b) Knowingly make a false statement on an application for a
license to be issued under this act.
(c) Knowingly provide false testimony to the board or any
authorized representative of the board while under oath.
(2) The board shall not issue a license under this act to a
person that violates subsection (1).
(3) A person that violates subsection (1)(a) is guilty of a
crime as follows:
(a) For the first or second violation, the person is guilty of
a misdemeanor punishable by imprisonment for not more than 1 year
or a fine of not more than $10,000.00, or both.
(b) For a third or subsequent violation, the person is guilty
of a felony punishable by imprisonment for not more than 5 years or
a fine of not more than $50,000.00, or both.
(4) The board may issue a cease and desist order and obtain
injunctive relief against a person that violates this act.
Sec. 14. A fantasy contest conducted under this act does not
violate the Michigan penal code, 1931 PA 328, MCL 750.1 to 750.568.
This act does not create an exemption to a violation of chapter
XLIV of the Michigan penal code, 1931 PA 328, MCL 750.301 to
750.315a.
Enacting section 1. This act takes effect 90 days after the
date it is enacted into law.
