Bill Text: NY S08128 | 2015-2016 | General Assembly | Introduced
Bill Title: Relates to the registration and regulation of interactive fantasy sports contests; requires all operators to register in New York state.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2016-06-13 - REFERRED TO RULES [S08128 Detail]
Download: New_York-2015-S08128-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 8128 IN SENATE June 13, 2016 ___________ Introduced by Sen. BONACIC -- read twice and ordered printed, and when printed to be committed to the Committee on Rules AN ACT to amend the racing, pari-mutuel wagering and breeding law, in relation to the registration and regulation of interactive fantasy sports contests The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. The racing, pari-mutuel wagering and breeding law is 2 amended by adding a new article 14 to read as follows: 3 ARTICLE 14 4 INTERACTIVE FANTASY SPORTS 5 Section 1400. Legislative findings and purpose. 6 1401. Definitions. 7 1402. Registration. 8 1403. Scope of registration review. 9 1404. Required safeguards, minimum standards. 10 1405. Powers and duties of the commission. 11 1406. Annual report. 12 1407. State tax. 13 § 1400. Legislative findings and purpose. 1. The legislature hereby 14 finds and declares that: 15 (a) Under the New York penal law a person engages in gambling when he 16 or she stakes or risks something of value upon the outcome of a contest 17 of chance or a future contingent event not under his or her control or 18 influence, upon an agreement or understanding that he or she will 19 receive something of value in the event of a certain outcome; 20 (b) Interactive fantasy sports in many instances have been defined as 21 a game of skill and were exempted from the definition of unlawful inter- 22 net gambling under the Unlawful Internet Gambling Enforcement Act of 23 2006 (31 U.S.C. § 5362); 24 (c) Interactive fantasy sports are a game of skill because they 25 consist of fantasy or simulation sports games or contests in which the 26 fantasy or simulation sports teams are selected based upon the skill and 27 knowledge of the participants and not based on the current membership of EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD15598-06-6S. 8128 2 1 an actual team that is a member of an amateur or professional sports 2 organization; 3 (d) Interactive fantasy sports contests do not constitute a wager on a 4 future contingent event not under the contestant's control or influence. 5 Participants have control over which players they choose and the outcome 6 of each contest is not dependent upon the performance of any one player 7 or any one actual team. The outcome of any fantasy sports contest does 8 not correspond to the outcome of any one sporting event. Instead, the 9 outcome depends on how the performances of participants' fantasy roster 10 choices compare to the performance of others' roster choices. 11 2. Based on the findings in subdivision one of this section, the 12 legislature declares that interactive fantasy sports do not constitute 13 gambling and therefore are not prohibited by the penal law. Specif- 14 ically, as games of skill, and given the influence that participants 15 have over the outcome, interactive fantasy sports contests do not fall 16 under the definition of gambling in section 225.00 of the penal law. 17 3. The legislature further finds that as the internet has become an 18 integral part of society, and interactive fantasy sports a major form of 19 entertainment for many consumers, any interactive fantasy sports 20 enforcement and regulatory structure must begin from the bedrock premise 21 that participation in a lawful and licensed interactive fantasy sports 22 industry is a privilege and not a right, and that regulatory oversight 23 is intended to safeguard the integrity of the games and participants and 24 to ensure accountability and the public trust. 25 § 1401. Definitions. As used in this article, the following terms 26 shall have the following meanings: 27 1. "Authorized player" shall mean an individual located in New York 28 state, who is not a prohibited player, that participates in an interac- 29 tive fantasy sports contest offered by a registrant. 30 2. "Collegiate sport or athletic event" shall mean a sport or athletic 31 event offered or sponsored by or played in connection with a public or 32 private institution that offers education services beyond the secondary 33 level. 34 3. "Commission" shall mean the New York state gaming commission. 35 4. "Entry fee" shall mean cash or cash equivalent that is paid by an 36 authorized player to an operator or registrant to participate in an 37 interactive fantasy sports contest offered by such operator or regis- 38 trant. 39 5. "High school sport or athletic event" shall mean a sport or athlet- 40 ic event offered or sponsored by or played in connection with a public 41 or private institution that offers education services at the secondary 42 level. 43 6. "Highly experienced player" shall mean an authorized player who 44 has: 45 (a) entered more than one thousand contests offered by a single opera- 46 tor or registrant; or 47 (b) won more than three prizes valued at one thousand dollars or more 48 from a single operator or registrant; and 49 (c) once an authorized player is classified as a highly experienced 50 player, such player shall remain classified as such. 51 7. "Horse racing event" shall mean any sport or athletic event 52 conducted in New York state subject to the provisions of this chapter, 53 or any sport or athletic event conducted outside of New York state, 54 which if conducted in New York state would be subject to the provisions 55 of this chapter.S. 8128 3 1 8. "Interactive fantasy sports contest" or "contest" shall mean any 2 online fantasy or simulation sports game or contest offered by an opera- 3 tor or registrant in which an authorized player pays an entry fee and 4 manages a fantasy or simulation sports team composed of athletes from an 5 amateur or professional sports organization and which meets the follow- 6 ing conditions: 7 (a) the value of any prizes and awards offered to authorized players 8 shall be established and made known to such players in advance of the 9 contest, and such value shall not be determined by the number of author- 10 ized players or the amount of any entry fees paid by such players; 11 (b) all winning outcomes reflect the relative knowledge and skill of 12 the authorized players and shall be determined predominantly by accumu- 13 lated statistical results of the performance of individuals, including 14 athletes in the case of sports events; 15 (c) no winning outcome shall be based on the score, point spread, or 16 performance of a single sports team, or any combination of such teams; 17 (d) no winning outcome shall be based solely on any single performance 18 of an individual athlete in a single sport or athletic event; and 19 (e) no game or contest shall be based on a prohibited sports event. 20 9. "Interactive fantasy sports revenue" shall mean the amount equal to 21 the total of all entry fees that a registrant collects from all players, 22 less the total of all sums paid out as winnings to all players, multi- 23 plied by the resident percentage for New York state; provided, however, 24 that the total of all sums paid out as winnings to players shall not 25 include the cash equivalent value of any merchandise or thing of value 26 awarded as a prize. The issuance to or participation by authorized play- 27 ers of an interactive fantasy sports contest of any promotional gaming 28 credit shall not be taxable for the purposes of determining interactive 29 fantasy sports revenue. 30 10. "Interactive fantasy sports operator" or "operator" shall mean any 31 person or entity that offers any interactive fantasy sports contest to 32 any authorized player through any interactive fantasy sports platform. 33 11. "Interactive fantasy sports platform" or "platform" shall mean the 34 combination of hardware, software, and data networks used to manage, 35 administer, or control contests and any associated entry fees. 36 12. "Interactive fantasy sports registrant" or "registrant" shall mean 37 an operator that is registered by the commission. A registrant may 38 utilize multiple interactive fantasy sports platforms and offer multiple 39 contests, provided that each platform and each contest has been reviewed 40 and approved by the commission. 41 13. "Minor" shall mean any person under the age of eighteen years. 42 14. "Prohibited player" shall mean: 43 (a) any member, officer, employee or agent of an operator or regis- 44 trant; 45 (b) any spouse, child, brother, sister or parent residing as a member 46 of the same household in the principal place of abode of any member, 47 officer, employee or agent of an operator or registrant; 48 (c) any individual with access to non-public confidential information 49 about contests; 50 (d) any amateur or professional athlete whose performance may be used 51 to determine the outcome of a contest; 52 (e) any sports agent, team employee, referee, or league official asso- 53 ciated with any sport or athletic event on which contests are based; 54 (f) any individual located in a state where the conduct of contests is 55 expressly prohibited; or 56 (g) any minor.S. 8128 4 1 15. "Prohibited sports event" shall mean any collegiate sport or 2 athletic event, any high school sport or athletic event, or any horse 3 racing event. 4 16. "Resident percentage" shall mean, for each interactive fantasy 5 sports contest, the percentage, rounded to the nearest tenth of a 6 percent, of the total entry fees collected from players located in New 7 York state, divided by the total entry fees collected from all players 8 in the interactive fantasy sports contest. 9 17. "Season-long interactive fantasy sports contest" means any inter- 10 active fantasy sports contest offered by an operator or registrant that 11 is conducted over an entire sports season where any entry fees are paid 12 prior to the start of the season. 13 18. "Sports event" shall mean any amateur or professional sport or 14 athletic event, except a prohibited sports event. 15 § 1402. Registration. 1. (a) No operator shall administer, manage, or 16 otherwise make available an interactive fantasy sports platform to 17 persons located in New York state unless registered with the commission 18 pursuant to section fourteen hundred three of this article. A registrant 19 may utilize multiple interactive fantasy sports platforms and offer 20 multiple types of contests, provided that each platform and each type of 21 contest has been reviewed and approved by the commission. This article, 22 and any and all rules and regulations adopted under the authority of 23 this article, shall only apply to interactive fantasy sports contests 24 for which an authorized player pays an entry fee, and shall not apply to 25 season-long interactive fantasy sports contests. 26 (b) Any operator that was offering contests to persons located in New 27 York state prior to the tenth of November, two thousand fifteen, may 28 continue to offer contests to persons located in New York state until 29 such operator's application for registration has been approved or denied 30 in accordance with section fourteen hundred three of this article, 31 provided that such operator files an application for registration with 32 the commission within ninety days of the promulgation of regulations to 33 effectuate this article. 34 2. The commission shall provide a temporary permit to each operator 35 that was offering contests pursuant to paragraph (b) of subdivision one 36 of this section to allow such operator to continue to offer such 37 contests, on a provisional basis, until such operator's application for 38 registration has been approved or denied in accordance with section 39 fourteen hundred three of this article, provided that such operator 40 continues to meet all the requirements in section fourteen hundred four 41 of this article. 42 3. The commission shall require each approved registrant to pay an 43 initial registration fee equal to the lesser of one hundred fifty thou- 44 sand dollars or one and one-half percent of the interactive fantasy 45 sports revenue generated by such registrant in the preceding fiscal 46 year; provided, however, if such approved registrant did not generate 47 any interactive fantasy sports revenue in the preceding fiscal year, 48 such registrant shall not be required to pay an initial registration fee 49 pursuant to this subdivision. 50 4. Registrations issued by the commission shall remain in effect for 51 three years. The commission shall establish a process for renewal, and 52 each registrant shall pay a renewal fee equal to the lesser of one 53 hundred fifty thousand dollars or one and one-half percent of the inter- 54 active fantasy sports revenue generated by such registrant in the 55 preceding fiscal year; provided, however, if such approved registrant 56 did not generate any interactive fantasy sports revenue in the precedingS. 8128 5 1 fiscal year, such registrant shall not be required to pay a renewal fee 2 pursuant to this subdivision. 3 5. All registration and renewal fees received by the commission pursu- 4 ant to this section shall be deposited into the general fund. 5 6. The commission shall publish a list of all operators registered in 6 New York state pursuant to this section on the commission's website for 7 public use. 8 7. The commission shall promulgate regulations to implement the 9 provisions of this article, including the development of the initial 10 form of the application for registration. Such regulations shall 11 provide for the registration and operation of contests in New York state 12 and shall include, but not be limited to, responsible protections with 13 regard to compulsive play and safeguards for fair play. 14 § 1403. Scope of registration review. 1. The commission shall 15 prescribe the initial form of the application for registration which 16 shall require, but not be limited to: 17 (a) the full name and principal address of the operator; 18 (b) if a corporation, the name of the state in which incorporated and 19 the full names and addresses of any partner, officer, director, share- 20 holder holding ten percent or more equity, and ultimate equitable 21 owners; 22 (c) if a business entity other than a corporation, the full names and 23 addresses of the principals, partners, shareholders holding five percent 24 or more equity, and ultimate equitable owners; 25 (d) whether such corporation or entity files information and reports 26 with the United States Securities and Exchange Commission as required by 27 section thirteen of the Securities Exchange Act of 1934, 15 U.S.C. §§ 28 78a-78kk; or whether the securities of the corporation or entity are 29 regularly traded on an established securities market in the United 30 States; 31 (e) the type and estimated number of contests to be conducted annual- 32 ly; 33 (f) a statement of the assets and liabilities of the operator. 34 2. The commission may require the full names and addresses of the 35 officers and directors of any creditor of the operator, and of those 36 stockholders who hold more than ten percent of the stock of the credi- 37 tor. 38 3. Upon receipt of an application for registration for each individual 39 listed on such application as an officer or director, the commission 40 shall submit to the division of criminal justice services a set of fing- 41 erprints, and the division of criminal justice services processing fee 42 imposed pursuant to subdivision eight-a of section eight hundred thir- 43 ty-seven of the executive law and any fee imposed by the federal bureau 44 of investigation. Upon receipt of the fingerprints, the division of 45 criminal justice services shall promptly forward a set of the individ- 46 ual's fingerprints to the federal bureau of investigation for the 47 purpose of a nationwide criminal history record check to determine 48 whether such individual has been convicted of a criminal offense in any 49 state other than New York or in a federal jurisdiction. The division of 50 criminal justice services shall promptly provide the requested criminal 51 history information to the commission. For the purposes of this section, 52 the term "criminal history information" shall mean a record of all 53 convictions of crimes and any pending criminal charges maintained on an 54 individual by the division of criminal justice services and the federal 55 bureau of investigation. All such criminal history information sent to 56 the commission pursuant to this subdivision shall be confidential andS. 8128 6 1 shall not be published or in any way disclosed to persons other than the 2 commission, unless otherwise authorized by law. 3 4. Upon receipt of criminal history information pursuant to subdivi- 4 sion three of this section, the commission shall make a determination to 5 approve or deny an application for registration; provided, however, that 6 before making a determination on such application, the commission shall 7 provide the subject of the record with a copy of such criminal history 8 information and a copy of article twenty-three-A of the correction law 9 and inform such prospective applicant seeking to be credentialed of his 10 or her right to seek correction of any incorrect information contained 11 in such criminal history information pursuant to the regulations and 12 procedures established by the division of criminal justice services. 13 The commission shall deny any application for registration, or suspend, 14 refuse to renew, or revoke any existing registration issued pursuant to 15 this article, upon the finding that the operator or registrant, or any 16 partner, officer, director, or shareholder: 17 (a) has knowingly made a false statement of material fact or has 18 deliberately failed to disclose any information required by the commis- 19 sion; 20 (b) has had a registration or license to offer or conduct contests 21 denied, suspended, or revoked in any other state or country for just 22 cause; 23 (c) has legally defaulted in the payment of any obligation or debt due 24 to any state or political subdivision; or 25 (d) has at any time knowingly failed to comply with any requirement 26 outlined in section fourteen hundred four of this article, any other 27 provision of this article, any regulations promulgated by the commission 28 to effectuate this article, or any additional requirements of the 29 commission. 30 5. All determinations to approve or deny an application pursuant to 31 this article shall be performed in a manner consistent with subdivision 32 sixteen of section two hundred ninety-six of the executive law and arti- 33 cle twenty-three-A of the correction law. When the commission denies an 34 application, the operator shall be afforded notice and the right to be 35 heard and offer proof in opposition to such determination in accordance 36 with the regulations of the commission. 37 § 1404. Required safeguards, minimum standards. 1. As a condition of 38 registration in New York state, each operator and registrant shall 39 implement the following measures: 40 (a) limit each authorized player to one active and continuously used 41 account, and prevent prohibited players from maintaining accounts or 42 participating in any contest offered by such operator or registrant; 43 (b) prohibit minors from participating in any contest, which includes: 44 (i) if a registrant becomes or is made aware that a minor has partic- 45 ipated in one of its contests, such registrant shall promptly, within no 46 more than two business days, refund any deposit received from the minor, 47 whether or not the minor has engaged in or attempted to engage in a 48 contest; provided, however, that any refund may be offset by any prizes 49 already awarded; 50 (ii) each registrant shall publish and facilitate parental control 51 procedures to allow parents or guardians to exclude minors from access 52 to any contest or platform. Such procedures shall include a toll-free 53 number to call for help in establishing such parental controls; and 54 (iii) each registrant shall take appropriate steps to confirm that an 55 individual opening an account is not a minor.S. 8128 7 1 (c) when referencing the chances or likelihood of winning in adver- 2 tisements or upon contest entry, make clear and conspicuous statements 3 that are not inaccurate or misleading concerning the chances of winning 4 and the number of winners; 5 (d) enable authorized players to exclude themselves from contests and 6 take reasonable steps to prevent such players from entering a contest 7 from which they have excluded themselves; 8 (e) permit any authorized player to permanently close an account 9 registered to such player, on any and all platforms supported by such 10 operator or registrant, at any time and for any reason; 11 (f) offer introductory procedures for authorized players, that shall 12 be prominently displayed on the main page of such operator or regis- 13 trant's platform, that explain contest play and how to identify a highly 14 experienced player; 15 (g) identify all highly experienced players in any contest by a symbol 16 attached to such players' usernames, or by other easily visible means, 17 on all platforms supported by such operator or registrant; 18 (h) disclose the number of entries a single authorized player may 19 submit to each contest; 20 (i) disclose the maximum number of total entries allowed for each 21 contest; 22 (j) implement measures to protect the privacy and online security of 23 authorized players and their accounts; 24 (k) offer all authorized players access to his or her account history 25 and account details; 26 (l) ensure authorized players' funds are protected upon deposit and 27 segregated from the operating funds of such operator or registrant and 28 otherwise protected from corporate insolvency, financial risk, or crimi- 29 nal or civil actions against such operator or registrant; 30 (m) list on each website, in a prominent place, information concerning 31 assistance for compulsive play in New York state, including a toll-free 32 number directing callers to reputable resources containing further 33 information, which shall be free of charge. 34 2. Each registrant shall restrict the number of entries submitted by a 35 single authorized player for any contest to a maximum of one hundred 36 fifty entries per player per contest, or a maximum of three percent of 37 the total number of entries by all players for any contest, whichever is 38 less. Registrants shall take reasonable steps to prevent authorized 39 players from submitting more than the allowable number of entries per 40 contest. 41 3. (a) Operators shall not directly or indirectly operate, promote, or 42 advertise any platform or contest to persons located in New York state 43 unless registered pursuant to this article. 44 (b) Unless otherwise approved by regulation of the commission, opera- 45 tors and registrants shall not directly or indirectly promote or adver- 46 tise any online fantasy or simulation sports games or contests with an 47 entry fee during the conduct of any online fantasy or simulation sports 48 games or contests without an entry fee. This paragraph shall not apply 49 to any operator or registrant that prohibits prohibited players from 50 participating in online fantasy or simulation sports games or contests 51 without an entry fee. 52 4. Registrants shall not offer any contest based on any prohibited 53 sports event. 54 5. Registrants shall not permit any minor or prohibited participant to 55 enter any contest.S. 8128 8 1 6. Advertisements for contests and prizes offered by a registrant 2 shall not target prohibited participants, minors, or self-excluded 3 persons. Representations or implications about average winnings from 4 contests shall not be unfair or misleading. Such representations shall 5 include, at a minimum: 6 (a) the median and mean net winnings of all authorized players partic- 7 ipating in contests offered by such registrant; and 8 (b) the percentage of winnings awarded by the registrant to highly 9 experienced players participating in contests offered by such registrant 10 within the preceding calendar year. 11 7. Registrants shall prohibit the use of third-party scripts or 12 scripting programs for any contest and ensure that measures are in place 13 to deter, detect and, to the extent reasonably possible, prevent cheat- 14 ing, including collusion, and the use of cheating devices, including use 15 of software programs that submit entry fees or adjust the athletes 16 selected by an authorized player. 17 8. Operators and registrants shall develop and prominently display 18 procedures on the main page of such operator's or registrant's platform 19 for the filing of a complaint by the authorized player against such 20 registrant. An initial response shall be given by such registrant to 21 such player filing the complaint within forty-eight hours. A complete 22 response shall be given by such registrant to such player filing the 23 complaint within ten business days. An authorized player may file a 24 complaint alleging a violation of the provisions of this article with 25 the commission. 26 9. Registrants shall maintain records of all accounts belonging to 27 authorized players and retain such records for five years from the date 28 an account was created. 29 § 1405. Powers and duties of the commission. 1. The commission shall 30 promulgate regulations to implement the provisions of this article. Such 31 regulations shall provide for the registration and operation of contests 32 in New York state and shall include, but not be limited to, responsible 33 protections with regard to compulsive play and safeguards for fair play. 34 2. The commission shall have the following powers and duties for 35 purposes of administering, regulating, and enforcing the provisions of 36 this article: 37 (a) all powers and duties assigned by this article, as well as all 38 powers necessary and proper to fully and effectively execute this arti- 39 cle; 40 (b) to approve and deny applications for registration to conduct 41 contests in New York state, and to suspend, refuse or renew, or revoke 42 any registration issued to a registrant under this article; 43 (c) to review and approve each platform and each contest offered by an 44 operator or registrant; 45 (d) to accept and investigate complaints of any kind from an author- 46 ized player and attempt to mediate such complaints where appropriate; 47 (e) to investigate alleged violations of this article; 48 (f) to initiate proper enforcement proceedings where such action is 49 deemed by the commission to be necessary or appropriate; and 50 (g) all powers and duties assigned by this chapter. 51 § 1406. Annual report. 1. Each registrant shall annually submit a 52 report to the commission no later than the thirtieth of June of each 53 year, which shall include the following information as it shall apply to 54 accounts held by authorized players located in New York state:S. 8128 9 1 (a) the number of accounts held by authorized players on all platforms 2 offered by the registrant, and the number of accounts held by highly 3 experienced players on all platforms offered by the registrant; 4 (b) the total number of new accounts established in the preceding 5 year, as well as the total number of accounts permanently closed in the 6 preceding year; 7 (c) the total amount of entry fees received from authorized players; 8 (d) the total amount of prizes awarded to authorized players; 9 (e) the total amount of interactive fantasy sports revenue received by 10 the registrant; 11 (f) the total number of authorized players that requested to exclude 12 themselves from contests; 13 (g) any additional information that the commission deems necessary to 14 carry out the provisions of this article. 15 2. Upon the submission of such annual report, to such extent that the 16 commission deems it to be in the public interest, the commission shall 17 be authorized to conduct a financial audit of any registrant, at any 18 time, to ensure compliance with this article. 19 3. The commission shall annually publish a report based on the aggre- 20 gate information provided by all registrants pursuant to subdivision one 21 of this section, which shall be published on the commission's website no 22 later than one hundred eighty days after the deadline for the submission 23 of individual reports as specified in subdivision one of this section. 24 § 1407. State tax. For the privilege of conducting interactive fanta- 25 sy sports contests in the state, registrants shall pay a tax equivalent 26 to fifteen percent of their interactive fantasy sports gross revenue 27 generated within the state. 28 § 2. Section 104 of the racing, pari-mutuel wagering and breeding law 29 is amended by adding a new subdivision 23 to read as follows: 30 23. To register and regulate interactive fantasy sports in New York 31 state. 32 § 3. This act shall take effect immediately.