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A09509 Summary:

SAME ASNo same as
Add Art 14 SS1400 - 1405, RWB L; amd S225.00, add S225.36, Pen L
Relates to allowing certain interactive poker games.
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A09509 Text:

                STATE OF NEW YORK
                   IN ASSEMBLY
                                       May 5, 2014
        Introduced  by M. of A. PRETLOW -- read once and referred to the Commit-
          tee on Racing and Wagering
        AN ACT to amend the racing, pari-mutuel wagering and  breeding  law  and
          the penal law, in relation to allowing certain interactive poker games
          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                         CERTAIN INTERACTIVE GAMING
     5  Section 1400. Legislative findings and purpose.
     6          1401. Definitions.
     7          1402. Authorization.
     8          1403. Required safeguards/minimum standards.
     9          1404. Scope of licensing review.
    10          1405. State tax.
    11    § 1400. Legislative findings and purpose. The legislature hereby finds
    12  and declares that:
    13    1.  Under  the  penal  law a person engages in gambling when he or she
    14  stakes or risks something of value upon the  outcome  of  a  contest  of

    15  chance  or  a  future  contingent  event not under his or her control or
    16  influence, upon an agreement  or  understanding  that  he  or  she  will
    17  receive  something of value in the event of a certain outcome. A contest
    18  of chance is defined as any  contest,  game,  gaming  scheme  or  gaming
    19  device in which the outcome depends in a material degree upon an element
    20  of  chance,  notwithstanding that skill of the contestants may also be a
    21  factor therein;
    22    2. A contest of chance is defined as any contest, game, gaming  scheme
    23  or  gaming device in which the outcome depends in a material degree upon
    24  an element of chance, notwithstanding that skill of the contestants  may
    25  also  be  a  factor  therein. PL § 225.00(1).  Thus, games of chance may

    26  involve some skill, but in those games  the  level  of  skill  does  not
    27  determine  the  outcome  regardless of the degree of skill employed. See
    28  People v. Turner, 165 Misc. 2d 222, 224, 629 N.Y.S.2d  661,  662  (Crim.
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 9509                             2
     1  Ct.  1995).  On the other hand, where a contest pits the skill levels of
     2  the players against each other, New York courts have found a game to  be
     3  one  of  skill rather than chance. See People v.  Hunt, 162 Misc. 2d 70,

     4  72, 616 N.Y.S.2d 168, 170 (Crim. Ct.  1994) ("Played fairly, still rath-
     5  er than chance is the material component of three-card monte.");
     6    3.  Poker  in many instances has been defined as a game of skill and a
     7  New York federal court in U.S. v. DiCristina, 886 F.Supp. 2nd 164,  224,
     8  assessed that under federal law poker was predominantly a game of skill;
     9    4.  New  York  courts  have  interpreted  New York law to apply a more
    10  rigorous test in identifying a "contest of chance" than  is  applied  by
    11  most  states  in  this  nation  and  the  courts have found that where a
    12  contest pits the skill levels of the players against each  other,  those
    13  games  are  games  of  skill  and  not games of chance. Furthermore, the

    14  courts have not limited the  legislature's  ability  to  determine  that
    15  certain  forms  of  poker  should fall outside the general definition of
    16  gambling since those games are games of skill;
    17    5. Texas Hold'em poker involves two cards  dealt  face  down  to  each
    18  player  and  then  five  community cards placed face-up by the dealer--a
    19  series of three, then two additional single cards, with  players  deter-
    20  mining  whether  to  check,  bet,  raise  or fold after each deal. Omaha
    21  Hold'em poker is a similar game, in which  each  player  is  dealt  four
    22  cards  and  makes  his  or her best hand using exactly two of them, plus
    23  exactly three of the five community cards. These games are considered to

    24  be complex forms of poker which involve player  strategy  and  decision-
    25  making and which pit the skill levels of the players against each other.
    26  As games of skill, these forms of poker do not fall under the definition
    27  of gambling as prohibited by the penal law;
    28    6.  The  legislature  further finds that as the Internet has become an
    29  integral part of society, and Internet poker  a  major  form  of  enter-
    30  tainment  for  many  consumers,  any  interactive gaming enforcement and
    31  regulatory structure must begin from the bedrock  premise  that  partic-
    32  ipation  in a lawful and licensed gaming industry is a privilege and not
    33  a right, and that regulatory oversight  is  intended  to  safeguard  the

    34  integrity of the games and participants and to ensure accountability and
    35  the public trust; and
    36    7.  With the passage of the Unlawful Internet Gambling Enforcement Act
    37  of 2006, issues concerning the scope and interpretation  of  state  law,
    38  including the importance of the location of the wager, wagering activity
    39  and  website,  were  clarified.  Those  persons  that  provided goods or
    40  services related to internet gambling involving New York citizens  prior
    41  to  the enactment of that statute - including, at the time, poker, which
    42  was until the adoption of this act unlawful - but  exited  in  an  expe-
    43  ditious  fashion after its enactment should be regarded differently from
    44  those that continued to flout U.S. federal and New York  law  thereafter

    45  for  purposes  of  suitability for licensing under the Unlawful Internet
    46  Gambling Enforcement Act of 2006.    Granting  those  persons  licensing
    47  privileges  or  allowing  the  use  of  the  assets  of  such persons in
    48  connection with interactive gaming in this state, if those  assets  were
    49  used  unlawfully,  would  reward  unlawful gaming activity, would permit
    50  manifestly unsuitable persons  to  profit  from  their  unlawful  gaming
    51  activity  and  would  create  unfair  competition  with  licensees  that
    52  respected federal and state law.
    53    § 1401. Definitions. As used in this article:
    54    1. "Authorized game" means Omaha Hold'em and Texas Hold'em  poker,  as
    55  well as any other poker game that the commission determines is the mate-

        A. 9509                             3
     1  rial  equivalent  of  either of those, whether in a cash game or tourna-
     2  ment.
     3    2.  "Authorized  participants" means persons who are either physically
     4  present in this state when placing a wager or who otherwise are  permit-
     5  ted  by  applicable  law,  as  determined  by the commission, to place a
     6  wager.  The intermediate routing of electronic data in  connection  with
     7  interactive  gaming  shall  not  determine  the location or locations in
     8  which a wager in initiated, received or otherwise made.
     9    3. "Core function" means any of the  following:  (a)  the  management,
    10  administration  or  control  of  wagers  on  interactive gaming; (b) the

    11  management, administration or control of  the  games  with  which  those
    12  wagers are associated; or (c) the development, maintenance, provision or
    13  operation of an interactive gaming platform.
    14    4.  "Covered  asset" means any of the following categories of asset if
    15  used in connection with the knowing and willful acceptance of any  wager
    16  from  persons  located  in  the United States on any form of interactive
    17  gaming (including but not limited to poker) after December thirty-first,
    18  two thousand six, that has not been affirmatively authorized by  law  of
    19  the  United  States  or of each state in which persons making such wager
    20  were located: (a) any trademark, trade name,  service  mark  or  similar

    21  intellectual property that was used to identify any aspect of the inter-
    22  net  website  or  of  the  operator  offering the wagers or games to its
    23  patrons; (b) any database or customer list of  individuals  residing  in
    24  the  United States who placed such wagers; (c) any derivative of a data-
    25  base or customer list described in paragraph (b) of this subdivision; or
    26  (d) an asset used to provide a core function.
    27    5. "Commission" means the New York state gaming commission.
    28    6. "Division" means the division of gaming,  established  under  para-
    29  graph  (c) of subdivision two of section one hundred three of this chap-
    30  ter.
    31    7. "Interactive gaming" means the conduct of games through the use  of

    32  the  internet  or  other communications technology that allows a person,
    33  utilizing money, checks,  electronic  checks,  electronic  transfers  of
    34  money, credit cards, debit cards or any other instrumentality, to trans-
    35  mit  to  a  computer information to assist in the placing of a wager and
    36  corresponding information related to  the  display  of  the  game,  game
    37  outcomes  or  other  similar  information. The term does not include the
    38  conduct of (a) non-gambling  games  that  do  not  otherwise  require  a
    39  license  under  state  or  federal law; or (b) games that occur entirely
    40  among participants who are located on a licensed casino premises.
    41    8. "Communications technology" means any method used  and  the  compo-

    42  nents  employed  by  an  establishment to facilitate the transmission of
    43  information, including, without limitation, transmission  and  reception
    44  by  systems  based  on  wire,  cable, radio, microwave, light, optics or
    45  computer data networks, including, without limitation, the internet  and
    46  intranets.
    47    9. "Interactive gaming gross revenue" shall mean the total of all sums
    48  paid  to a licensee from interactive gaming involving authorized partic-
    49  ipants, less only the total of all sums paid out as winnings to  patrons
    50  and  promotional gaming credits; provided, however, that the cash equiv-
    51  alent value of any merchandise or other non-cash thing of value included
    52  in a contest or tournament shall not be included in  the  total  of  all

    53  sums  paid out as winnings to players for purposes of determining inter-
    54  active gaming gross revenue.
    55    (a) Neither amounts deposited with a licensee for purposes of interac-
    56  tive gaming nor amounts taken in fraudulent acts perpetrated  against  a

        A. 9509                             4
     1  licensee for which the licensee is not reimbursed shall be considered to
     2  have been "paid" to the licensee for purposes of calculating interactive
     3  gaming gross revenue.
     4    (b)  "Promotional  gaming credit" includes bonuses, promotions and any
     5  amount received by a licensee from a patron for which the  licensee  can
     6  demonstrate that it or its affiliate has not received cash.

     7    10.  "Interactive gaming platform" shall mean the combination of hard-
     8  ware, software and data networks used to manage, administer  or  control
     9  wagers  on  interactive  gaming or the games with which those wagers are
    10  associated.
    11    11. "Internet" means  a  computer  network  of  interoperable  packet-
    12  switched data networks.
    13    12.  "Licensee"  shall mean a person who is licensed by the commission
    14  to offer interactive gaming using  an  interactive  gaming  platform  to
    15  authorized  participants.  A  licensee  may utilize multiple interactive
    16  gaming platforms provided that each platform is approved by the  commis-
    17  sion.
    18    13.  "Omaha Hold'em poker" shall mean the poker game marketed as Omaha

    19  Hold'em poker or Omaha poker in which each player is  dealt  four  cards
    20  and  must  make  his  or  her  best hand using exactly two of them, plus
    21  exactly three of the five community cards.
    22    14. "Significant vendor" means any person who offers or  who  proposes
    23  to  offer  any  of  the  following  services with respect to interactive
    24  gaming:  (a) a core function; (b) sale, licensing or  other  receipt  of
    25  compensation  for  selling  or  licensing a database or customer list of
    26  individuals residing in the United States selected in whole or  in  part
    27  because  they  placed  wagers  or participated in gambling games with or
    28  through an internet website or operator (or any  derivative  of  such  a

    29  data  base or customer list); (c) provision of any trademark, tradename,
    30  service mark or similar intellectual property under which a licensee  or
    31  significant  vendor  identifies  interactive  games to customers; or (d)
    32  provision of any product, service or asset to a licensee or  significant
    33  vendor  in  return  for  a percentage of interactive gaming revenue (not
    34  including fees to  financial  institutions  and  payment  providers  for
    35  facilitating  a deposit or withdrawal by an authorized participant). The
    36  term "significant vendor" shall not  include  a  provider  of  goods  or
    37  services  to  a  licensee that are not specifically designed for use and
    38  not principally used in connection with interactive gaming.

    39    15. "Texas Hold'em poker" shall mean the type  of  poker  marketed  as
    40  Texas  Hold'em  poker  that  involves two cards being dealt face down to
    41  each player and then five community cards being placed  face-up  by  the
    42  dealer--a series of three then two additional single cards, with players
    43  having the option to check, bet, raise or fold after each deal.
    44    §  1402.  Authorization. 1.   The commission shall, within one hundred
    45  eighty days of the effective date  of  this  article,  promulgate  regu-
    46  lations  to implement interactive gaming in this state and shall author-
    47  ize up to ten licenses to operate interactive gaming  involving  author-
    48  ized  participants,  subject to the provisions of this article and other
    49  applicable provisions of law.

    50    2. The commission shall, to the extent practicable, issue licenses  to
    51  multiple  applicants  no  sooner  than one hundred eighty days after the
    52  promulgation of regulations in order to ensure a robust and  competitive
    53  market  for  consumers  and  to  prevent early licensees from gaining an
    54  unfair competitive advantage.
    55    3. No person may operate, manage  or  make  available  an  interactive
    56  gaming  platform or act as a significant vendor with respect to interac-

        A. 9509                             5
     1  tive gaming that is offered to persons  located  in  this  state  unless
     2  licensed by the commission pursuant to this article and only those games
     3  authorized by the commission shall be permitted.

     4    4. Any person found suitable by the commission may be issued a license
     5  as an operator or significant vendor pursuant to this article. In deter-
     6  mining suitability, the commission shall consider those factors it deems
     7  relevant in its discretion, including but not limited to:
     8    (a)  Whether  the applicant is a person of good character, honesty and
     9  integrity;
    10    (b) Whether the applicant is a person whose prior activities, criminal
    11  record, if any, reputation, habits and associations do not:
    12    (i) pose a threat to the public interest or  to  the  effective  regu-
    13  lation and control of interactive gaming; or
    14    (ii)  create  or  enhance the dangers of unsuitable, unfair or illegal

    15  practices, methods and activities in the conduct of  interactive  gaming
    16  or  in  the carrying on of the business and financial arrangements inci-
    17  dental to such gaming;
    18    (c) Whether the applicant is capable of  and  likely  to  conduct  the
    19  activities  for  which  the applicant is licensed in accordance with the
    20  provisions of this article, any regulations prescribed under this  arti-
    21  cle and all other applicable laws;
    22    (d)  Whether  the  applicant has or guarantees acquisition of adequate
    23  business competence and experience in the operation of  licensed  gaming
    24  or  of  interactive  gaming  in this state or in a state with comparable
    25  licensing requirements;

    26    (e) Whether the applicant has or will obtain sufficient financing  for
    27  the nature of the proposed operation and from a suitable source; and
    28    (f)  Whether  the  applicant has disclosed to the commission all known
    29  affiliations or relationships, whether direct or indirect, with  persons
    30  and assets of persons described by subdivision three of section fourteen
    31  hundred four of this article.
    32    5. The commission further shall develop standards by which to evaluate
    33  and  approve  interactive  gaming  platforms  for  use  with interactive
    34  gaming. Interactive gaming platforms must be approved by the  commission
    35  before  being used by a licensee or significant vendor to conduct inter-
    36  active gaming in this state.

    37    6. The commission shall require all licensees to pay a one-time fee of
    38  ten million dollars.
    39    7. Licenses issued by the commission shall remain in  effect  for  ten
    40  years.
    41    8.  The  commission,  by  regulation, may authorize and promulgate any
    42  rules necessary to implement agreements with other states, or authorized
    43  agencies thereof: (a) to enable patrons in those states  to  participate
    44  in  interactive gaming offered by licensees under this article or (b) to
    45  enable patrons in  this  state  to  participate  in  interactive  gaming
    46  offered by licensees under the laws of those other states, provided that
    47  such  other state or authorized agency applies suitability standards and

    48  review materially  consistent  with  the  provisions  of  this  article,
    49  including  but  not  limited  to the requirements set out in subdivision
    50  three of section fourteen hundred four of this article.
    51    9. Any regulations adopted  pursuant  to  subdivision  eight  of  this
    52  section must set forth provisions that address:
    53    (a)  Any  arrangements to share revenue between New York and any other
    54  state or agency within another state; and

        A. 9509                             6
     1    (b) Arrangements to ensure the integrity of interactive gaming offered
     2  pursuant to any such agreement and the protection of patrons located  in
     3  this state.
     4    10. The commission may delegate its responsibilities to administer the

     5  provisions  of  this article to the division, as it sees fit, except for
     6  its responsibilities to approve licenses and to conduct the  proceedings
     7  required under subdivision four of section fourteen hundred four of this
     8  article.
     9    §  1403.  Required  safeguards/minimum standards. The commission shall
    10  require licensees to implement measures to meet the standards set out in
    11  this section, along with such other standards that the commission in its
    12  discretion may choose to require:
    13    1. appropriate  safeguards  to  ensure,  to  a  reasonable  degree  of
    14  certainty,  that participants in interactive gaming are not younger than
    15  twenty-one years of age.
    16    2. appropriate  safeguards  to  ensure,  to  a  reasonable  degree  of

    17  certainty,  that  participants  in  interactive  gaming  are  physically
    18  located within the state or such other jurisdiction that the  commission
    19  has determined to be permissible.
    20    3.  appropriate  safeguards  to  protect,  to  a  reasonable degree of
    21  certainty, the privacy and online security of participants  in  interac-
    22  tive gaming.
    23    4.  appropriate  safeguards  to  ensure,  to  a  reasonable  degree of
    24  certainty, that the interactive gaming  is  fair  and  honest  and  that
    25  appropriate  measures  are  in place to deter, detect and, to the extent
    26  reasonably possible, to prevent cheating, including collusion,  and  use
    27  of  cheating  devices,  including  use  of  software programs (sometimes

    28  referred to as "bots") that make bets or wagers according to algorithms.
    29    5. appropriate safeguards to minimize compulsive gaming and to provide
    30  notice to participants of resources to help problem gamblers.
    31    6. appropriate safeguards to ensure participants' funds  are  held  in
    32  accounts  segregated  from  the  funds  of  licensees  and otherwise are
    33  protected from corporate insolvency, financial risk or criminal or civil
    34  actions against the licensee.
    35    § 1404. Scope of licensing review. 1. In connection with  any  license
    36  issued  pursuant  to  this  article, the licensee, significant vendor or
    37  applicant shall identify and the commission shall review the suitability
    38  of such licensee's, significant vendor's  or  applicant's  owner,  chief

    39  executive  officer,  chief  financial  officer  and any other officer or
    40  employee who the commission  deems  is  significantly  involved  in  the
    41  management  or  control of the licensee, significant vendor or applicant
    42  or of the interactive gaming platform.  "Owner"  for  purposes  of  this
    43  article means any person who directly or indirectly holds any beneficial
    44  or ownership interest in the applicant of five percent or greater or any
    45  amount  of  ownership  that  the commission determines to be significant
    46  ownership of the licensee, significant vendor, or applicant.
    47    2. Institutional investors are subject to the provisions  set  out  in
    48  this section.
    49    (a) An institutional investor holding under twenty-five percent of the

    50  equity  securities  of  a  licensee's or significant vendor's (or appli-
    51  cant's) holding or intermediary companies, shall be granted a waiver  of
    52  any investigation of suitability or other requirement if such securities
    53  are  those  of a corporation, whether publicly traded or privately held,
    54  and its holdings  of  such  securities  were  purchased  for  investment
    55  purposes  only  and it files a certified statement to the effect that it
    56  has no intention of influencing or affecting the affairs of the  issuer,

        A. 9509                             7
     1  the  licensee (or significant vendor or applicant, as applicable) or its
     2  holding or intermediary companies; provided, however, that it  shall  be

     3  permitted to vote on matters put to the vote of the outstanding security
     4  holders.  The  commission  may  grant  such a waiver to an institutional
     5  investor holding a higher percentage of such securities upon  a  showing
     6  of good cause and if the conditions specified in this paragraph are met.
     7  Any institutional investor granted a waiver under this subdivision which
     8  subsequently determines to influence or affect the affairs of the issuer
     9  shall provide not less than thirty days' notice of such intent and shall
    10  file  with  the  commission  a  request for determination of suitability
    11  before taking any action that may influence or affect the affairs of the
    12  issuer; provided, however, that it shall be permitted to vote on matters

    13  put to the vote of the outstanding security holders. If an institutional
    14  investor changes its investment  intent,  or  if  the  commission  finds
    15  reasonable cause to believe that the institutional investor may be found
    16  unsuitable,  no  action  other  than  divestiture shall be taken by such
    17  investor with respect to its security  holdings  until  there  has  been
    18  compliance  with  any  requirements established by the commission, which
    19  may include the execution of a trust agreement. The licensee (or signif-
    20  icant vendor or applicant, as  applicable)  and  its  relevant  holding,
    21  intermediary  or  subsidiary  company  shall notify the commission imme-
    22  diately of any information about, or actions of, an institutional inves-

    23  tor holding its equity securities where such information or  action  may
    24  impact  upon the eligibility of such institutional investor for a waiver
    25  pursuant to this subdivision.
    26    (b) If at any time the commission finds that an institutional investor
    27  holding any security of a holding or intermediary company of a  licensee
    28  or  significant  vendor  or  applicant,  or,  where relevant, of another
    29  subsidiary company of a holding or intermediary company of a licensee or
    30  significant vendor or applicant which is  related  in  any  way  to  the
    31  financing  of  the licensee or significant vendor or applicant, fails to
    32  comply with the terms of paragraph (a) of this subdivision, or if at any

    33  time the commission finds that, by reason of the extent or nature of its
    34  holdings, an institutional investor is in a position to exercise such  a
    35  substantial  impact  upon  the  controlling  interests  of a licensee or
    36  significant vendor or applicant that investigation and determination  of
    37  suitability  of  the  institutional investor is necessary to protect the
    38  public interest, the commission may take any necessary action  otherwise
    39  authorized under this article to protect the public interest.
    40    (c)  For  purposes  of this section, an "institutional investor" shall
    41  mean any retirement fund administered by a public agency for the  exclu-
    42  sive  benefit  of  federal, state, or local public employees; investment

    43  company registered under the Investment Company Act of 1940 (15 U.S.C. §
    44  80a-1 et seq.); collective investment trust  organized  by  banks  under
    45  Part  Nine  of  the Rules of the Comptroller of the Currency; closed end
    46  investment trust; chartered or licensed life insurance company or  prop-
    47  erty  and  casualty  insurance  company;  banking and other chartered or
    48  licensed lending institution; investment advisor  registered  under  The
    49  Investment  Advisors  Act  of 1940 (15 U.S.C. § 80b-I et seq.); and such
    50  other persons as the commission may  determine  for  reasons  consistent
    51  with the public interest.
    52    3. The commission shall not issue a license to or otherwise find suit-
    53  able any prospective licensee or significant vendor who:

    54    (a)  has  at any time, either directly, or through another person whom
    55  it owned, in whole or in significant part, or controlled:

        A. 9509                             8
     1    (i) knowingly and willfully  accepted  or  made  available  wagers  on
     2  interactive  gaming (including poker) from persons located in the United
     3  States after December thirty-first, two thousand six, unless such wagers
     4  were affirmatively authorized by law of the United  States  or  of  each
     5  state in which persons making such wager were located; or
     6    (ii) knowingly facilitated or otherwise provided services with respect
     7  to interactive gaming (including poker) involving persons located in the

     8  United  States  for a person described in subparagraph (i) of this para-
     9  graph and acted with knowledge of the fact that such wagers or  interac-
    10  tive gaming involved persons located in the United States.
    11    (b)  has purchased or acquired, directly or indirectly, in whole or in
    12  significant part, a person described in paragraph (a) of  this  subdivi-
    13  sion  or  will  use  that  person  or a covered asset in connection with
    14  interactive gaming licensed pursuant to this article.
    15    4. A prospective licensee or significant vendor may appeal a  determi-
    16  nation  by  the  commission  that  it is within the scope of subdivision
    17  three of this section only in accordance with the  procedures  specified
    18  in this subdivision.

    19    (a)  The  commission  shall afford the prospective licensee or signif-
    20  icant vendor a hearing at which such  person  may  provide  evidence  to
    21  support  the  bases on which it seeks relief. The commission shall waive
    22  the prohibition if the prospective licensee or significant vendor demon-
    23  strates by clear and convincing evidence that its conduct in  connection
    24  with  interactive  gaming  and  wagers  involving persons located in the
    25  United States was not unlawful and,  if  applicable,  that  the  covered
    26  assets  to  be  used or that are being used by such person in connection
    27  with interactive gaming licensed pursuant to this article were not  used
    28  in a manner that was unlawful. The determination of the commission shall

    29  be  made  without regard to whether the person has been prosecuted under
    30  the  criminal laws of any state, the United States or other jurisdiction
    31  and the proceeding terminated in a manner other than with a  conviction.
    32  If  the  prohibition  is waived, the prospective licensee or significant
    33  vendor still must satisfy all otherwise applicable license and suitabil-
    34  ity requirements.
    35    (b) The commission shall preside over the hearing  and  shall  act  as
    36  finder of fact entitled to evaluate the credibility of the witnesses and
    37  persuasiveness  of  the  evidence,  pursuant  to whatever procedures the
    38  commissioner determines to be appropriate.
    39    § 1405. State tax. Licensees engaged in  the  business  of  conducting

    40  interactive  gaming  pursuant  to article thirteen of this chapter shall
    41  pay a privilege tax based on the  licensee's  interactive  gaming  gross
    42  revenue at a fifteen percent rate.
    43    §  2.  Subdivision  1 of section 225.00 of the penal law is amended to
    44  read as follows:
    45    1. "Contest of chance" means  any  contest,  game,  gaming  scheme  or
    46  gaming  device  in  which  the  outcome  depends  [in a material degree]
    47  predominantly upon an element of chance, notwithstanding that  skill  of
    48  the contestants may also be a factor therein.
    49    §  3.  The penal law is amended by adding a new section 225.36 to read
    50  as follows:
    51  § 225.36. Interactive gaming offenses and exceptions.
    52    1. A person is guilty of an interactive gaming offense when he or  she

    53  knowingly  and willfully offers unlicensed interactive gaming to persons
    54  in this state, or the knowing and willful  provision  of  services  with
    55  respect thereto.

        A. 9509                             9
     1    2.  Licensed  interactive  gaming  activities  under  section fourteen
     2  hundred two of the racing, pari-mutuel wagering and breeding  law  shall
     3  not be a gambling offense under this article.
     4    3.  A person offering unlicensed interactive gaming to persons in this
     5  state shall be liable for  all  taxes  set  forth  in  section  fourteen
     6  hundred five of the racing, pari-mutuel wagering and breeding law in the
     7  same  manner  and  amounts  as  if  such  person were a licensee. Timely

     8  payment of such taxes shall not constitute a defense to any  prosecution
     9  or other proceeding in connection with the interactive gaming except for
    10  a prosecution or other proceeding alleging failure to make such payment.
    11    § 4. This act shall take effect immediately.
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