A10473 Summary:

BILL NOA10473A
 
SAME ASSAME AS S08128
 
SPONSORPretlow
 
COSPNSRDinowitz, Zebrowski, Ceretto, Montesano, Crouch, Murray
 
MLTSPNSRBraunstein, Cook, Gjonaj, Lawrence, Ortiz
 
Add Art 14 1400 - 1407, amd 104, RWB L
 
Relates to the registration and regulation of interactive fantasy sports contests; requires all operators to register in New York state.
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A10473 Actions:

BILL NOA10473A
 
05/27/2016referred to racing and wagering
06/02/2016reported referred to codes
06/06/2016reported referred to ways and means
06/13/2016amend and recommit to ways and means
06/13/2016print number 10473a
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A10473 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10473A
 
SPONSOR: Pretlow (MS)
  TITLE OF BILL: An act to amend the racing, pari-mutuel wagering and breeding law, in relation to the registration and regulation of interactive fantasy sports contests   PURPOSE OR GENERAL IDEA OF BILL: To provide for the registration, regulation, and taxation of interactive fantasy sports contests in New York State.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill would amend the Racing, Pari-Mutuel Wagering and Breeding Law by adding a new Article 14 which would register and regu- late interactive fantasy sports contests with an entry fee. Specif- ically: Section 1400 provides legislative findings and purpose. Section 1401 provides definitions. Section 1402 authorizes the registration of interactive fantasy sports operators to conduct interactive fantasy sports contests in New York State. Any operator that was offering contests to New York state resi- dents prior to November 10, 2015 would be able to continue operating until their application for registration has been approved or denied, provided that such operator files an application for registration with the New York State Gaming Commission ("the Commission") within ninety days of the promulgation of regulations to effectuate this article. Each approved registrant would be required to pay an initial registra- tion fee equal to the lesser of $150,000 or 1.5% of their interactive fantasy sports revenue generated in the preceding fiscal year. Registra- tions would remain in effect for three years. Section 1403 establishes the scope of information required from an interactive fantasy sports operator upon submission of an application for registration to the Commission. Section 1404 establishes required safeguards and minimum standards in order to provide players with important consumer protections, including: *limiting players to one active and continuously used account; *prohibiting persons under the age of 18 from participating in any contest; *ensuring that accurate representations concerning the chances of winning, and the number of winners, are depicted in all advertisements; *ensuring that, unless otherwise approved by the Commission, online fantasy or simulation sports games or contests with an entry fee are not being directly or indirectly promoted or advertised during the conduct of any online fantasy or simulation sports games or contests without an entry fee; *enabling players to exclude themselves from contests and permanently close their accounts at any time; *offering introductory procedures for players, and identifying highly experienced players; *disclosing the number of entries a player may submit to each contest, and the number of total entries allowed for each contest; *measures to protect the privacy and online security of players and their accounts; *ensuring players' funds are protected upon deposit and segregated from the operating funds of the operator or registrant; and *information concerning assistance for compulsive play in New York State. This section would also limit the number of entries that can be submit- ted by a player to any contest, prohibit any contest based on a collegi- ate or high school sport or athletic event, prohibit any contest based on a horse racing event, prohibit the use of third-party scripts or scripting programs, and ensure that advertisements for contests and prizes do not target prohibited participants, minors, or self-excluded persons. Section 1405 authorizes the Commission to promulgate regulations to implement the provisions of this article. This section also assigned the Commission with all powers necessary and proper to fully and effectively execute this article, including the ability to accept and investigate complaints from players and investigate alleged violations of this arti- cle. Section 1406 requires each registrant to submit an annual report to the Commission no later than June 30 of each year. The Commission would be authorized to conduct a financial audit of any registrant, at any time, to ensure compliance with this article. The Commission would also be required to publish a report based on the aggregate information provided by all registrants' reports, which would be published on the Commis- sion's website. Section 1407 imposes a 15% State tax on each registrant's interactive fantasy sports revenue for the privilege of conducting interactive fantasy sports contests in New York State. Section 2 of the bill would establish an immediate effective date.   JUSTIFICATION: On October 6, 2015, the New York State Attorney General's office launched an investigation into whether employees of the two biggest daily fantasy sports companies, DraftKings and FanDuel, were able to gain an unfair financial advantage in daily fantasy football contests by exploiting access to non-public data. On November 10, the Attorney General's office issued a notice to DraftKings and FanDuel demanding that they stop accepting wagers in New York. After months of additional litigation, DraftKings and FanDuel reached an agreement with the Attor- ney General to stop taking bets from New York customers on March 21, 2016. The agreements outlined the process the companies and the Attorney General would follow in the event that the State Legislature does or does not take action to legalize and regulate daily fantasy sports contests, as well as establish a statutory framework to protect consum- ers, on or before June 30, 2016. Bearing in mind that daily interactive fantasy sports contests have the potential to produce unfair advantages for certain players, target minors, and increase compulsive play, this bill seeks to regulate such contests that also accept entry fees from players. This bill offers important consumer protections to ensure that all contests are safe and fair. Requirements such as limiting players to one active and continuously used account, offering introductory procedures for players, identifying highly experienced players, and depicting accu- rate representations concerning the chances of winning in all advertise- ments will help to provide transparency and fairness across all plat- forms. Measures to protect the privacy and online security of players and their accounts, and requiring registrants to protect players' funds upon deposit, as well as segregate such funds from the companies' oper- ating funds, would provide players with important safety and security protections online. In addition, requirements would be in place to ensure that players can exclude themselves from contests and permanently close their accounts at any time if they feel that they are becoming compulsive players. For this reason, registrants will also be required to provide information on their websites concerning assistance for compulsive play in New York State. Because of the risks associated with compulsive play, no person under the age of 18 would be permitted to participate in an interactive fantasy sports contest. By registering and taxing interactive fantasy sports contests, this bill will also bring about a new and abundant source of revenue for New York State.   LEGISLATIVE HISTORY: This is new legislation.   FISCAL IMPLICATION: To be determined.   EFFECTIVE DATE: This act would take effect immediately.
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A10473 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                        10473--A
 
                   IN ASSEMBLY
 
                                      May 27, 2016
                                       ___________
 
        Introduced by M. of A. PRETLOW, DINOWITZ, ZEBROWSKI, CERETTO, MONTESANO,
          CROUCH  --  Multi-Sponsored  by  -- M. of A. BRAUNSTEIN, COOK, GJONAJ,
          LAWRENCE, MURRAY, ORTIZ -- read once and referred to the Committee  on
          Racing and Wagering -- reported and referred to the Committee on Codes
          -- reported and referred to the Committee on Ways and Means -- commit-
          tee  discharged, bill amended, ordered reprinted as amended and recom-
          mitted to said committee
 
        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-
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15598-05-6

        A. 10473--A                         2
 
     1  net gambling under the Unlawful Internet  Gambling  Enforcement  Act  of
     2  2006 (31 U.S.C. § 5362);
     3    (c)  Interactive  fantasy  sports  are  a  game  of skill because they
     4  consist of fantasy or simulation sports games or contests in  which  the
     5  fantasy or simulation sports teams are selected based upon the skill and
     6  knowledge of the participants and not based on the current membership of
     7  an  actual  team  that  is a member of an amateur or professional sports
     8  organization;
     9    (d) Interactive fantasy sports contests do not constitute a wager on a
    10  future contingent event not under the contestant's control or influence.
    11  Participants have control over which players they choose and the outcome
    12  of each contest is not dependent upon the performance of any one  player
    13  or  any  one actual team. The outcome of any fantasy sports contest does
    14  not correspond to the outcome of any one sporting  event.  Instead,  the
    15  outcome  depends on how the performances of participants' fantasy roster
    16  choices compare to the performance of others' roster choices.
    17    2. Based on the findings in  subdivision  one  of  this  section,  the
    18  legislature  declares  that interactive fantasy sports do not constitute
    19  gambling and therefore are not prohibited  by  the  penal  law.  Specif-
    20  ically,  as  games  of  skill, and given the influence that participants
    21  have over the outcome, interactive fantasy sports contests do  not  fall
    22  under the definition of gambling in section 225.00 of the penal law.
    23    3.  The  legislature  further finds that as the internet has become an
    24  integral part of society, and interactive fantasy sports a major form of
    25  entertainment  for  many  consumers,  any  interactive  fantasy   sports
    26  enforcement and regulatory structure must begin from the bedrock premise
    27  that  participation  in a lawful and licensed interactive fantasy sports
    28  industry is a privilege and not a right, and that  regulatory  oversight
    29  is intended to safeguard the integrity of the games and participants and
    30  to ensure accountability and the public trust.
    31    §  1401.  Definitions.  As  used  in this article, the following terms
    32  shall have the following meanings:
    33    1. "Authorized player" shall mean an individual located  in  New  York
    34  state,  who is not a prohibited player, that participates in an interac-
    35  tive fantasy sports contest offered by a registrant.
    36    2. "Collegiate sport or athletic event" shall mean a sport or athletic
    37  event offered or sponsored by or played in connection with a  public  or
    38  private  institution that offers education services beyond the secondary
    39  level.
    40    3. "Commission" shall mean the New York state gaming commission.
    41    4. "Entry fee" shall mean cash or cash equivalent that is paid  by  an
    42  authorized  player  to  an  operator  or registrant to participate in an
    43  interactive fantasy sports contest offered by such  operator  or  regis-
    44  trant.
    45    5. "High school sport or athletic event" shall mean a sport or athlet-
    46  ic  event  offered or sponsored by or played in connection with a public
    47  or private institution that offers education services at  the  secondary
    48  level.
    49    6.  "Highly  experienced  player"  shall mean an authorized player who
    50  has:
    51    (a) entered more than one thousand contests offered by a single opera-
    52  tor or registrant; or
    53    (b) won more than three prizes valued at one thousand dollars or  more
    54  from a single operator or registrant; and
    55    (c)  once  an  authorized player is classified as a highly experienced
    56  player, such player shall remain classified as such.

        A. 10473--A                         3
 
     1    7. "Horse racing  event"  shall  mean  any  sport  or  athletic  event
     2  conducted  in  New York state subject to the provisions of this chapter,
     3  or any sport or athletic event conducted  outside  of  New  York  state,
     4  which  if conducted in New York state would be subject to the provisions
     5  of this chapter.
     6    8.  "Interactive  fantasy  sports contest" or "contest" shall mean any
     7  online fantasy or simulation sports game or contest offered by an opera-
     8  tor or registrant in which an authorized player pays an  entry  fee  and
     9  manages a fantasy or simulation sports team composed of athletes from an
    10  amateur  or professional sports organization and which meets the follow-
    11  ing conditions:
    12    (a) the value of any prizes and awards offered to  authorized  players
    13  shall  be  established  and made known to such players in advance of the
    14  contest, and such value shall not be determined by the number of author-
    15  ized players or the amount of any entry fees paid by such players;
    16    (b) all winning outcomes reflect the relative knowledge and  skill  of
    17  the  authorized players and shall be determined predominantly by accumu-
    18  lated statistical results of the performance of  individuals,  including
    19  athletes in the case of sports events;
    20    (c)  no  winning outcome shall be based on the score, point spread, or
    21  performance of a single sports team, or any combination of such teams;
    22    (d) no winning outcome shall be based solely on any single performance
    23  of an individual athlete in a single sport or athletic event; and
    24    (e) no game or contest shall be based on a prohibited sports event.
    25    9. "Interactive fantasy sports revenue" shall mean the amount equal to
    26  the total of all entry fees that a registrant collects from all players,
    27  less the total of all sums paid out as winnings to all  players,  multi-
    28  plied  by the resident percentage for New York state; provided, however,
    29  that the total of all sums paid out as winnings  to  players  shall  not
    30  include  the  cash equivalent value of any merchandise or thing of value
    31  awarded as a prize. The issuance to or participation by authorized play-
    32  ers of an interactive fantasy sports contest of any  promotional  gaming
    33  credit  shall not be taxable for the purposes of determining interactive
    34  fantasy sports revenue.
    35    10. "Interactive fantasy sports operator" or "operator" shall mean any
    36  person or entity that offers any interactive fantasy sports  contest  to
    37  any authorized player through any interactive fantasy sports platform.
    38    11. "Interactive fantasy sports platform" or "platform" shall mean the
    39  combination  of  hardware,  software,  and data networks used to manage,
    40  administer, or control contests and any associated entry fees.
    41    12. "Interactive fantasy sports registrant" or "registrant" shall mean
    42  an operator that is registered  by  the  commission.  A  registrant  may
    43  utilize multiple interactive fantasy sports platforms and offer multiple
    44  contests, provided that each platform and each contest has been reviewed
    45  and approved by the commission.
    46    13. "Minor" shall mean any person under the age of eighteen years.
    47    14. "Prohibited player" shall mean:
    48    (a)  any  member,  officer, employee or agent of an operator or regis-
    49  trant;
    50    (b) any spouse, child, brother, sister or parent residing as a  member
    51  of  the  same  household  in the principal place of abode of any member,
    52  officer, employee or agent of an operator or registrant;
    53    (c) any individual with access to non-public confidential  information
    54  about contests;
    55    (d)  any amateur or professional athlete whose performance may be used
    56  to determine the outcome of a contest;

        A. 10473--A                         4
 
     1    (e) any sports agent, team employee, referee, or league official asso-
     2  ciated with any sport or athletic event on which contests are based;
     3    (f) any individual located in a state where the conduct of contests is
     4  expressly prohibited; or
     5    (g) any minor.
     6    15.  "Prohibited  sports  event"  shall  mean  any collegiate sport or
     7  athletic event, any high school sport or athletic event,  or  any  horse
     8  racing event.
     9    16.  "Resident  percentage"  shall  mean, for each interactive fantasy
    10  sports contest, the percentage,  rounded  to  the  nearest  tenth  of  a
    11  percent,  of  the total entry fees collected from players located in New
    12  York state, divided by the total entry fees collected from  all  players
    13  in the interactive fantasy sports contest.
    14    17.  "Season-long interactive fantasy sports contest" means any inter-
    15  active fantasy sports contest offered by an operator or registrant  that
    16  is  conducted over an entire sports season where any entry fees are paid
    17  prior to the start of the season.
    18    18. "Sports event" shall mean any amateur  or  professional  sport  or
    19  athletic event, except a prohibited sports event.
    20    §  1402. Registration. 1. (a) No operator shall administer, manage, or
    21  otherwise make available  an  interactive  fantasy  sports  platform  to
    22  persons  located in New York state unless registered with the commission
    23  pursuant to section fourteen hundred three of this article. A registrant
    24  may utilize multiple interactive  fantasy  sports  platforms  and  offer
    25  multiple types of contests, provided that each platform and each type of
    26  contest has been reviewed and approved by the commission.  This article,
    27  and  any  and  all  rules and regulations adopted under the authority of
    28  this article, shall only apply to interactive  fantasy  sports  contests
    29  for which an authorized player pays an entry fee, and shall not apply to
    30  season-long interactive fantasy sports contests.
    31    (b)  Any operator that was offering contests to persons located in New
    32  York state prior to the tenth of November,  two  thousand  fifteen,  may
    33  continue  to  offer  contests to persons located in New York state until
    34  such operator's application for registration has been approved or denied
    35  in accordance with section  fourteen  hundred  three  of  this  article,
    36  provided  that  such operator files an application for registration with
    37  the commission within ninety days of the promulgation of regulations  to
    38  effectuate this article.
    39    2.  The  commission  shall provide a temporary permit to each operator
    40  that was offering contests pursuant to paragraph (b) of subdivision  one
    41  of  this  section  to  allow  such  operator  to  continue to offer such
    42  contests, on a provisional basis, until such operator's application  for
    43  registration  has  been  approved  or  denied in accordance with section
    44  fourteen hundred three of this  article,  provided  that  such  operator
    45  continues  to meet all the requirements in section fourteen hundred four
    46  of this article.
    47    3. The commission shall require each approved  registrant  to  pay  an
    48  initial  registration fee equal to the lesser of one hundred fifty thou-
    49  sand dollars or one and one-half  percent  of  the  interactive  fantasy
    50  sports  revenue  generated  by  such  registrant in the preceding fiscal
    51  year; provided, however, if such approved registrant  did  not  generate
    52  any  interactive  fantasy  sports  revenue in the preceding fiscal year,
    53  such registrant shall not be required to pay an initial registration fee
    54  pursuant to this subdivision.
    55    4. Registrations issued by the commission shall remain in  effect  for
    56  three  years.  The commission shall establish a process for renewal, and

        A. 10473--A                         5
 
     1  each registrant shall pay a renewal fee  equal  to  the  lesser  of  one
     2  hundred fifty thousand dollars or one and one-half percent of the inter-
     3  active  fantasy  sports  revenue  generated  by  such  registrant in the
     4  preceding  fiscal  year;  provided, however, if such approved registrant
     5  did not generate any interactive fantasy sports revenue in the preceding
     6  fiscal year, such registrant shall not be required to pay a renewal  fee
     7  pursuant to this subdivision.
     8    5. All registration and renewal fees received by the commission pursu-
     9  ant to this section shall be deposited into the general fund.
    10    6.  The commission shall publish a list of all operators registered in
    11  New York state pursuant to this section on the commission's website  for
    12  public use.
    13    7.  The  commission  shall  promulgate  regulations  to  implement the
    14  provisions of this article, including the  development  of  the  initial
    15  form  of  the  application  for  registration.    Such regulations shall
    16  provide for the registration and operation of contests in New York state
    17  and shall include, but not be limited to, responsible  protections  with
    18  regard to compulsive play and safeguards for fair play.
    19    §  1403.  Scope  of  registration  review.  1.  The  commission  shall
    20  prescribe the initial form of the  application  for  registration  which
    21  shall require, but not be limited to:
    22    (a) the full name and principal address of the operator;
    23    (b)  if a corporation, the name of the state in which incorporated and
    24  the full names and addresses of any partner, officer,  director,  share-
    25  holder  holding  ten  percent  or  more  equity,  and ultimate equitable
    26  owners;
    27    (c) if a business entity other than a corporation, the full names  and
    28  addresses of the principals, partners, shareholders holding five percent
    29  or more equity, and ultimate equitable owners;
    30    (d)  whether  such corporation or entity files information and reports
    31  with the United States Securities and Exchange Commission as required by
    32  section thirteen of the Securities Exchange Act of 1934,  15  U.S.C.  §§
    33  78a-78kk;  or  whether  the  securities of the corporation or entity are
    34  regularly traded on an  established  securities  market  in  the  United
    35  States;
    36    (e)  the type and estimated number of contests to be conducted annual-
    37  ly;
    38    (f) a statement of the assets and liabilities of the operator.
    39    2. The commission may require the full  names  and  addresses  of  the
    40  officers  and  directors  of  any creditor of the operator, and of those
    41  stockholders who hold more than ten percent of the stock of  the  credi-
    42  tor.
    43    3. Upon receipt of an application for registration for each individual
    44  listed  on  such  application  as an officer or director, the commission
    45  shall submit to the division of criminal justice services a set of fing-
    46  erprints, and the division of criminal justice services  processing  fee
    47  imposed  pursuant  to subdivision eight-a of section eight hundred thir-
    48  ty-seven of the executive law and any fee imposed by the federal  bureau
    49  of  investigation.  Upon  receipt  of  the fingerprints, the division of
    50  criminal justice services shall promptly forward a set of  the  individ-
    51  ual's  fingerprints  to  the  federal  bureau  of  investigation for the
    52  purpose of a nationwide  criminal  history  record  check  to  determine
    53  whether  such individual has been convicted of a criminal offense in any
    54  state other than New York or in a federal jurisdiction. The division  of
    55  criminal  justice services shall promptly provide the requested criminal
    56  history information to the commission. For the purposes of this section,

        A. 10473--A                         6
 
     1  the term "criminal history information"  shall  mean  a  record  of  all
     2  convictions  of crimes and any pending criminal charges maintained on an
     3  individual by the division of criminal justice services and the  federal
     4  bureau  of  investigation. All such criminal history information sent to
     5  the commission pursuant to this subdivision shall  be  confidential  and
     6  shall not be published or in any way disclosed to persons other than the
     7  commission, unless otherwise authorized by law.
     8    4.  Upon  receipt of criminal history information pursuant to subdivi-
     9  sion three of this section, the commission shall make a determination to
    10  approve or deny an application for registration; provided, however, that
    11  before making a determination on such application, the commission  shall
    12  provide  the  subject of the record with a copy of such criminal history
    13  information and a copy of article twenty-three-A of the  correction  law
    14  and  inform such prospective applicant seeking to be credentialed of his
    15  or her right to seek correction of any incorrect  information  contained
    16  in  such  criminal  history  information pursuant to the regulations and
    17  procedures established by the division  of  criminal  justice  services.
    18  The  commission shall deny any application for registration, or suspend,
    19  refuse to renew, or revoke any existing registration issued pursuant  to
    20  this  article,  upon the finding that the operator or registrant, or any
    21  partner, officer, director, or shareholder:
    22    (a) has knowingly made a false  statement  of  material  fact  or  has
    23  deliberately  failed to disclose any information required by the commis-
    24  sion;
    25    (b) has had a registration or license to  offer  or  conduct  contests
    26  denied,  suspended,  or  revoked  in any other state or country for just
    27  cause;
    28    (c) has legally defaulted in the payment of any obligation or debt due
    29  to any state or political subdivision; or
    30    (d) has at any time knowingly failed to comply  with  any  requirement
    31  outlined  in  section  fourteen  hundred four of this article, any other
    32  provision of this article, any regulations promulgated by the commission
    33  to effectuate this  article,  or  any  additional  requirements  of  the
    34  commission.
    35    5.  All  determinations  to approve or deny an application pursuant to
    36  this article shall be performed in a manner consistent with  subdivision
    37  sixteen of section two hundred ninety-six of the executive law and arti-
    38  cle  twenty-three-A of the correction law. When the commission denies an
    39  application, the operator shall be afforded notice and the right  to  be
    40  heard  and offer proof in opposition to such determination in accordance
    41  with the regulations of the commission.
    42    § 1404. Required safeguards, minimum standards. 1. As a  condition  of
    43  registration  in  New  York  state,  each  operator and registrant shall
    44  implement the following measures:
    45    (a) limit each authorized player to one active and  continuously  used
    46  account,  and  prevent  prohibited  players from maintaining accounts or
    47  participating in any contest offered by such operator or registrant;
    48    (b) prohibit minors from participating in any contest, which includes:
    49    (i) if a registrant becomes or is made aware that a minor has  partic-
    50  ipated in one of its contests, such registrant shall promptly, within no
    51  more than two business days, refund any deposit received from the minor,
    52  whether  or  not  the  minor  has engaged in or attempted to engage in a
    53  contest; provided, however, that any refund may be offset by any  prizes
    54  already awarded;
    55    (ii)  each  registrant  shall  publish and facilitate parental control
    56  procedures to allow parents or guardians to exclude minors  from  access

        A. 10473--A                         7
 
     1  to  any  contest or platform.  Such procedures shall include a toll-free
     2  number to call for help in establishing such parental controls; and
     3    (iii)  each registrant shall take appropriate steps to confirm that an
     4  individual opening an account is not a minor.
     5    (c) when referencing the chances or likelihood of  winning  in  adver-
     6  tisements  or  upon contest entry, make clear and conspicuous statements
     7  that are not inaccurate or misleading concerning the chances of  winning
     8  and the number of winners;
     9    (d)  enable authorized players to exclude themselves from contests and
    10  take reasonable steps to prevent such players from  entering  a  contest
    11  from which they have excluded themselves;
    12    (e)  permit  any  authorized  player  to  permanently close an account
    13  registered to such player, on any and all platforms  supported  by  such
    14  operator or registrant, at any time and for any reason;
    15    (f)  offer  introductory procedures for authorized players, that shall
    16  be prominently displayed on the main page of  such  operator  or  regis-
    17  trant's platform, that explain contest play and how to identify a highly
    18  experienced player;
    19    (g) identify all highly experienced players in any contest by a symbol
    20  attached  to  such players' usernames, or by other easily visible means,
    21  on all platforms supported by such operator or registrant;
    22    (h) disclose the number of entries  a  single  authorized  player  may
    23  submit to each contest;
    24    (i)  disclose  the  maximum  number  of total entries allowed for each
    25  contest;
    26    (j) implement measures to protect the privacy and online  security  of
    27  authorized players and their accounts;
    28    (k)  offer all authorized players access to his or her account history
    29  and account details;
    30    (l) ensure authorized players' funds are protected  upon  deposit  and
    31  segregated  from  the operating funds of such operator or registrant and
    32  otherwise protected from corporate insolvency, financial risk, or crimi-
    33  nal or civil actions against such operator or registrant;
    34    (m) list on each website, in a prominent place, information concerning
    35  assistance for compulsive play in New York state, including a  toll-free
    36  number  directing  callers  to  reputable  resources  containing further
    37  information, which shall be free of charge.
    38    2. Each registrant shall restrict the number of entries submitted by a
    39  single authorized player for any contest to a  maximum  of  one  hundred
    40  fifty  entries  per player per contest, or a maximum of three percent of
    41  the total number of entries by all players for any contest, whichever is
    42  less. Registrants shall take  reasonable  steps  to  prevent  authorized
    43  players  from  submitting  more than the allowable number of entries per
    44  contest.
    45    3. (a) Operators shall not directly or indirectly operate, promote, or
    46  advertise any platform or contest to persons located in New  York  state
    47  unless registered pursuant to this article.
    48    (b)  Unless otherwise approved by regulation of the commission, opera-
    49  tors and registrants shall not directly or indirectly promote or  adver-
    50  tise  any  online fantasy or simulation sports games or contests with an
    51  entry fee during the conduct of any online fantasy or simulation  sports
    52  games  or  contests without an entry fee. This paragraph shall not apply
    53  to any operator or registrant that  prohibits  prohibited  players  from
    54  participating  in  online fantasy or simulation sports games or contests
    55  without an entry fee.

        A. 10473--A                         8
 
     1    4. Registrants shall not offer any contest  based  on  any  prohibited
     2  sports event.
     3    5. Registrants shall not permit any minor or prohibited participant to
     4  enter any contest.
     5    6.  Advertisements  for  contests  and  prizes offered by a registrant
     6  shall not  target  prohibited  participants,  minors,  or  self-excluded
     7  persons.    Representations  or implications about average winnings from
     8  contests shall not be unfair or misleading. Such  representations  shall
     9  include, at a minimum:
    10    (a) the median and mean net winnings of all authorized players partic-
    11  ipating in contests offered by such registrant; and
    12    (b)  the  percentage  of  winnings awarded by the registrant to highly
    13  experienced players participating in contests offered by such registrant
    14  within the preceding calendar year.
    15    7. Registrants shall  prohibit  the  use  of  third-party  scripts  or
    16  scripting programs for any contest and ensure that measures are in place
    17  to  deter, detect and, to the extent reasonably possible, prevent cheat-
    18  ing, including collusion, and the use of cheating devices, including use
    19  of software programs that submit  entry  fees  or  adjust  the  athletes
    20  selected by an authorized player.
    21    8.  Operators  and  registrants  shall develop and prominently display
    22  procedures on the main page of such operator's or registrant's  platform
    23  for  the  filing  of  a  complaint by the authorized player against such
    24  registrant. An initial response shall be given  by  such  registrant  to
    25  such  player  filing  the complaint within forty-eight hours. A complete
    26  response shall be given by such registrant to  such  player  filing  the
    27  complaint  within  ten  business days.   An authorized player may file a
    28  complaint alleging a violation of the provisions of  this  article  with
    29  the commission.
    30    9.  Registrants  shall  maintain  records of all accounts belonging to
    31  authorized players and retain such records for five years from the  date
    32  an account was created.
    33    §  1405.  Powers and duties of the commission. 1. The commission shall
    34  promulgate regulations to implement the provisions of this article. Such
    35  regulations shall provide for the registration and operation of contests
    36  in New York state and shall include, but not be limited to,  responsible
    37  protections with regard to compulsive play and safeguards for fair play.
    38    2.  The  commission  shall  have  the  following powers and duties for
    39  purposes of administering, regulating, and enforcing the  provisions  of
    40  this article:
    41    (a)  all  powers  and  duties assigned by this article, as well as all
    42  powers necessary and proper to fully and effectively execute this  arti-
    43  cle;
    44    (b)  to  approve  and  deny  applications  for registration to conduct
    45  contests in New York state, and to suspend, refuse or renew,  or  revoke
    46  any registration issued to a registrant under this article;
    47    (c) to review and approve each platform and each contest offered by an
    48  operator or registrant;
    49    (d)  to  accept and investigate complaints of any kind from an author-
    50  ized player and attempt to mediate such complaints where appropriate;
    51    (e) to investigate alleged violations of this article;
    52    (f) to initiate proper enforcement proceedings where  such  action  is
    53  deemed by the commission to be necessary or appropriate; and
    54    (g) all powers and duties assigned by this chapter.
    55    §  1406.  Annual  report.  1.  Each registrant shall annually submit a
    56  report to the commission no later than the thirtieth  of  June  of  each

        A. 10473--A                         9
 
     1  year, which shall include the following information as it shall apply to
     2  accounts held by authorized players located in New York state:
     3    (a) the number of accounts held by authorized players on all platforms
     4  offered  by  the  registrant,  and the number of accounts held by highly
     5  experienced players on all platforms offered by the registrant;
     6    (b) the total number of new  accounts  established  in  the  preceding
     7  year,  as well as the total number of accounts permanently closed in the
     8  preceding year;
     9    (c) the total amount of entry fees received from authorized players;
    10    (d) the total amount of prizes awarded to authorized players;
    11    (e) the total amount of interactive fantasy sports revenue received by
    12  the registrant;
    13    (f) the total number of authorized players that requested  to  exclude
    14  themselves from contests;
    15    (g)  any additional information that the commission deems necessary to
    16  carry out the provisions of this article.
    17    2. Upon the submission of such annual report, to such extent that  the
    18  commission  deems  it to be in the public interest, the commission shall
    19  be authorized to conduct a financial audit of  any  registrant,  at  any
    20  time, to ensure compliance with this article.
    21    3.  The commission shall annually publish a report based on the aggre-
    22  gate information provided by all registrants pursuant to subdivision one
    23  of this section, which shall be published on the commission's website no
    24  later than one hundred eighty days after the deadline for the submission
    25  of individual reports as specified in subdivision one of this section.
    26    § 1407. State tax.  For the privilege of conducting interactive fanta-
    27  sy sports contests in the state, registrants shall pay a tax  equivalent
    28  to  fifteen  percent  of  their interactive fantasy sports gross revenue
    29  generated within the state.
    30    § 2. Section 104 of the racing, pari-mutuel wagering and breeding  law
    31  is amended by adding a new subdivision 23 to read as follows:
    32    23.  To  register  and regulate interactive fantasy sports in New York
    33  state.
    34    § 3. This act shall take effect immediately.
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