A10736 Summary:

BILL NOA10736
 
SAME ASSAME AS S08153
 
SPONSORPretlow
 
COSPNSRDinowitz, Zebrowski, Garbarino, Murray, Jean-Pierre, Ceretto, Lupinacci
 
MLTSPNSR
 
Add Art 14 §§1400 - 1412, amd §104, RWB L
 
Relates to the registration and regulation of interactive fantasy sports contests.
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A10736 Actions:

BILL NOA10736
 
06/14/2016referred to racing and wagering
06/15/2016reported referred to codes
06/15/2016reported referred to ways and means
06/16/2016reported referred to rules
06/16/2016reported
06/16/2016rules report cal.511
06/16/2016ordered to third reading rules cal.511
06/17/2016passed assembly
06/17/2016delivered to senate
06/17/2016REFERRED TO RULES
06/17/2016SUBSTITUTED FOR S8153
06/17/20163RD READING CAL.2014
06/17/2016PASSED SENATE
06/17/2016RETURNED TO ASSEMBLY
08/02/2016delivered to governor
08/03/2016signed chap.237
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A10736 Committee Votes:

RACING AND WAGERING Chair:Pretlow DATE:06/15/2016AYE/NAY:9/2 Action: Favorable refer to committee Codes
PretlowAyeGarbarinoAye
MarkeyAyeTediscoNay
GuntherAyeLawrenceAye
MillerAye
GoldfederAye
SolagesAye
WoernerAye
SantabarbaraNay

CODES Chair:Lentol DATE:06/15/2016AYE/NAY:19/3 Action: Favorable refer to committee Ways and Means
LentolAyeGrafAye
SchimmingerAyeGiglioAye
WeinsteinNayMcKevittAye
HevesiAyeMontesanoAye
WrightAyeRaAye
PretlowAyeTenneyAye
CookAye
CymbrowitzAye
TitusAye
O'DonnellNay
LavineAye
PerryAye
ZebrowskiAye
AbinantiNay
WeprinAye
MosleyAye

WAYS AND MEANS Chair:Farrell DATE:06/16/2016AYE/NAY:29/5 Action: Favorable refer to committee Rules
FarrellAyeOaksAye
LentolAyeCrouchAye
SchimmingerAyeBarclayAye
GanttAyeFitzpatrickNay
WeinsteinNaySaladinoAye
GlickNayHawleyAye
NolanAyeDupreyAye
PretlowAyeCorwinAye
PerryAyeMalliotakisAye
ColtonAyeWalterAye
CookAye
CahillNay
AubryAye
HooperAye
ThieleAye
WrightAye
CusickAye
OrtizAye
BenedettoAye
MarkeyAye
MoyaNay
WeprinAye
RodriguezAye
RamosAye
BraunsteinExcused

RULES Chair:Heastie DATE:06/16/2016AYE/NAY:27/1 Action: Favorable
HeastieAyeKolbAye
GottfriedAyeTediscoNay
LentolAyeOaksAye
FarrellAyeButlerAye
GanttAyeCrouchAye
NolanAyeFinchExcused
WeinsteinAyeBarclayAye
HooperAyeRaiaAye
OrtizAyeDupreyAye
PretlowAye
CookAye
GlickAye
MorelleAye
AubryAye
EnglebrightAye
WrightExcused
DinowitzAye
ColtonAye
MagnarelliAye
PerryAye
MarkeyAye

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A10736 Floor Votes:

DATE:06/17/2016Assembly Vote  YEA/NAY: 111/21
AbbateYCrespoYGottfriedYLopezYPalumboERSimonNO
AbinantiNOCrouchYGrafYLupardoYPaulinYSimotasY
ArroyoYCurranERGuntherNOLupinacciYPeoples-StokesYSkartadosY
AubryNOCusickYHarrisYMageeYPerryYSkoufisY
BarclayYCymbrowitzYHawleyYMagnarelliYPichardoYSolagesY
BarrettNVDavilaYHevesiYMalliotakisYPretlowYStecY
BarronERDenDekkerYHikindERMarkeyYQuartYSteckY
BenedettoYDilanYHooperYMayerYRaYStirpeY
BichotteERDinowitzYHunterYMcDonaldYRaiaYTediscoNO
BlakeYDiPietroERHyndmanYMcDonoughYRamosYTenneyER
BlankenbushYDupreyYJaffeeERMcKevittYRichardsonYThieleY
BrabenecYEnglebrightYJean-PierreYMcLaughlinYRiveraYTitoneY
BraunsteinYFahyYJohnsNOMillerYRobinsonNOTitusY
BrennanERFarrellYJoynerYMontesanoYRodriguezYWalkerY
BrindisiYFinchERKatzERMorelleYRosenthalYWalterY
BronsonYFitzpatrickNOKavanaghYMosleyYRozicYWeinsteinNO
BuchwaldNOFriendNOKearnsYMoyaYRussellYWeprinY
ButlerYGalefNOKimERMurrayYRyanNOWilliamsY
CahillNOGanttYKolbYNojayYSaladinoYWoernerNO
CancelYGarbarinoYLalorYNolanNOSantabarbaraNOWozniakER
CastorinaNOGiglioYLavineYOaksYSchimelYWrightER
CerettoYGjonajYLawrenceYO'DonnellNOSchimmingerYZebrowskiY
ColtonYGlickNOLentolYOrtizERSeawrightYMr. SpeakerY
CookYGoldfederYLiftonYOtisYSepulvedaY
CorwinYGoodellNOLinaresYPalmesanoYSimanowitzY

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A10736 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10736
 
SPONSOR: Rules (Pretlow)
  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. Such operators would also receive a temporary permit to operate under the required safeguards and minimum standards until their application has been approved or denied. Registrations 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 assigns 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 gross revenue for the privilege of conducting interactive fantasy sports contests in New York State, as well as an additional 0.5% tax that is not to exceed $50,000 annually. Section 1408 allows the Commission to assess the actual costs necessary to regulate registrants pursuant to this article. Section 1409 requires the Commission to direct all taxes, interest, and penalties collected to the State Lottery Fund for education. Section 1410 authorizes the Commission to perform audits of the books and records of operators with permits and registrants, for the purpose of determining the sufficiency of tax payments. Section 1411 provides authorization for interactive fantasy sports contests registered and conducted pursuant to this chapter. Section 1412 prohibits the conduct of unregistered interactive fantasy sports contests. Section 2 of the bill would give the Commission the authority and responsibility of registering and regulating interactive fantasy sports in New York State. Section 3 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 "paid" 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 all interactive fantasy sports contests with an entry fee, including daily and season-long. 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 taxing interactive fantasy sports contests, and directing such funds to the State Lottery Fund, this bill will also bring about a new and abundant source of revenue for education in 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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A10736 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10736
 
                   IN ASSEMBLY
 
                                      June 14, 2016
                                       ___________
 
        Introduced  by COMMITTEE ON RULES -- (at request of M. of A. Pretlow) --
          read once and referred to the Committee on Racing and Wagering
 
        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          1408. Additional regulatory costs.
    14          1409. Disposition of taxes.
    15          1410. Determination of tax liability.
    16          1411. Contests authorized.
    17          1412. Contests prohibited.
    18    § 1400. Legislative findings and purpose. 1.  The  legislature  hereby
    19  finds and declares that:
    20    (a)  Interactive  fantasy  sports are not games of chance because they
    21  consist of fantasy or simulation sports games or contests in  which  the
    22  fantasy or simulation sports teams are selected based upon the skill and
    23  knowledge of the participants and not based on the current membership of
    24  an  actual  team  that  is a member of an amateur or professional sports
    25  organization;
    26    (b) Interactive fantasy sports  contests  are  not  wagers  on  future
    27  contingent  events  not  under  the  contestants'  control  or influence
    28  because contestants have control over which players they choose and  the
    29  outcome of each contest is not dependent upon the performance of any one
    30  player or any one actual team. The outcome of any fantasy sports contest
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15896-03-6

        A. 10736                            2
 
     1  does  not  correspond to the outcome of any one sporting event. Instead,
     2  the outcome depends on how the  performances  of  participants'  fantasy
     3  roster choices compare to the performance of others' roster choices.
     4    2.  Based  on  the  findings  in  subdivision one of this section, the
     5  legislature declares that interactive fantasy sports do  not  constitute
     6  gambling in New York state as defined in article two hundred twenty-five
     7  of the penal law.
     8    3.  The  legislature  further finds that as the internet has become an
     9  integral part of society, and interactive fantasy sports a major form of
    10  entertainment  for  many  consumers,  any  interactive  fantasy   sports
    11  enforcement and regulatory structure must begin from the bedrock premise
    12  that  participation  in a lawful and licensed interactive fantasy sports
    13  industry is a privilege and not a right, and that  regulatory  oversight
    14  is intended to safeguard the integrity of the games and participants and
    15  to ensure accountability and the public trust.
    16    §  1401.  Definitions.  As  used  in this article, the following terms
    17  shall have the following meanings:
    18    1. "Authorized player" shall mean an individual located  in  New  York
    19  state,  who is not a prohibited player, that participates in an interac-
    20  tive fantasy sports contest offered by a registrant.
    21    2. "Collegiate sport or athletic event" shall mean a sport or athletic
    22  event offered or sponsored by or played in connection with a  public  or
    23  private  institution that offers education services beyond the secondary
    24  level.
    25    3. "Commission" shall mean the New York state gaming commission.
    26    4. "Entry fee" shall mean cash or cash equivalent that is paid  by  an
    27  authorized  player  to  an  operator  or registrant to participate in an
    28  interactive fantasy sports contest offered by such  operator  or  regis-
    29  trant.
    30    5. "High school sport or athletic event" shall mean a sport or athlet-
    31  ic  event  offered or sponsored by or played in connection with a public
    32  or private institution that offers education services at  the  secondary
    33  level.
    34    6.  "Highly  experienced  player"  shall mean an authorized player who
    35  has:
    36    (a) entered more than one thousand contests offered by a single opera-
    37  tor or registrant; or
    38    (b) won more than three prizes valued at one thousand dollars each  or
    39  more from a single operator or registrant.
    40    7.  "Horse  racing  event"  shall  mean  any  sport  or athletic event
    41  conducted in New York state subject to the provisions of  articles  two,
    42  three,  four,  five,  six,  nine, ten and eleven of this chapter, or any
    43  sport or athletic event conducted outside of New York  state,  which  if
    44  conducted  in  New York state would be subject to the provisions of this
    45  chapter.
    46    8. "Interactive fantasy sports contest" or "contest" shall mean a game
    47  of skill wherein one or more contestants compete against each  other  by
    48  using  their knowledge and understanding of athletic events and athletes
    49  to select and manage rosters  of  simulated  players  whose  performance
    50  directly corresponds with the actual performance of human competitors on
    51  sports teams and in sports events.
    52    9.  "Interactive  fantasy  sports gross revenue" shall mean the amount
    53  equal to the total of all entry fees not attributable to New York  state
    54  prohibited  sports  events  that a registrant collects from all players,
    55  less the total of all sums not attributable to New York state prohibited
    56  sports events paid out as winnings to all  players,  multiplied  by  the

        A. 10736                            3
 
     1  resident  percentage  for  New  York  state; provided, however, that the
     2  total of all sums paid out as winnings to players shall not include  the
     3  cash  equivalent value of any merchandise or thing of value awarded as a
     4  prize.
     5    10. "Interactive fantasy sports operator" or "operator" shall mean any
     6  person  or  entity that offers any interactive fantasy sports contest to
     7  any authorized player through any interactive fantasy sports platform.
     8    11. "Interactive fantasy sports platform" or "platform" shall mean the
     9  combination of hardware, software, and data  networks  used  to  manage,
    10  administer, or control contests and any associated entry fees.
    11    12. "Interactive fantasy sports registrant" or "registrant" shall mean
    12  an  operator  that  is  registered  by  the commission. A registrant may
    13  utilize multiple interactive fantasy sports platforms and offer multiple
    14  contests, provided that each platform and each contest has been reviewed
    15  and approved by the commission.
    16    13. "Minor" shall mean any person under the age of eighteen years.
    17    14. "Prohibited player" shall mean:
    18    (a) any member, officer, employee or agent of an  operator  or  regis-
    19  trant;
    20    (b)  any spouse, child, brother, sister or parent residing as a member
    21  of the same household in the principal place of  abode  of  any  member,
    22  officer, employee or agent of an operator or registrant;
    23    (c)  any individual with access to non-public confidential information
    24  about contests;
    25    (d) any amateur or professional athlete whose performance may be  used
    26  to determine the outcome of a contest;
    27    (e) any sports agent, team employee, referee, or league official asso-
    28  ciated with any sport or athletic event on which contests are based;
    29    (f) any individual located in a state where the conduct of contests is
    30  expressly prohibited; or
    31    (g) any minor.
    32    15.  "Prohibited  sports  event"  shall  mean  any collegiate sport or
    33  athletic event, any high school sport or athletic  event  or  any  horse
    34  racing event.
    35    16.  "Resident  percentage"  shall  mean, for each interactive fantasy
    36  sports contest, the percentage,  rounded  to  the  nearest  tenth  of  a
    37  percent,  of  the total entry fees collected from players located in New
    38  York state, divided by the total entry fees collected from  all  players
    39  in interactive fantasy sports contests not prohibited in New York state.
    40    17.  "Sports  event"  shall  mean any amateur or professional sport or
    41  athletic event, except a prohibited sports event.
    42    § 1402. Registration. 1. (a) No operator shall administer, manage,  or
    43  otherwise  make  available  an  interactive  fantasy  sports platform to
    44  persons located in New York state unless registered with the  commission
    45  pursuant to section fourteen hundred three of this article. A registrant
    46  may use multiple interactive fantasy sports platforms and offer multiple
    47  types  of contests, provided that each platform and each type of contest
    48  has been reviewed and approved by the commission.  This article, and any
    49  and all rules and regulations adopted under the authority of this  arti-
    50  cle,  shall  apply only to interactive fantasy sports contests for which
    51  an authorized player pays an entry fee.
    52    (b) Any operator that was offering contests to persons located in  New
    53  York  state  prior  to  the tenth of November, two thousand fifteen, may
    54  continue to offer contests to persons located in New  York  state  until
    55  such operator's application for registration has been approved or denied
    56  in  accordance  with  section  fourteen  hundred  three of this article,

        A. 10736                            4
 
     1  provided that such operator receives  a  temporary  permit  pursuant  to
     2  subdivision  two  of this section and files an application for registra-
     3  tion with the commission within ninety days of the promulgation of regu-
     4  lations to effectuate this article.
     5    2.  The  commission  shall provide a temporary permit to each operator
     6  that was offering contests pursuant to paragraph (b) of subdivision  one
     7  of  this  section  to  allow  such  operator  to  continue to offer such
     8  contests, on a provisional basis, until such operator's application  for
     9  registration  has  been  approved  or  denied in accordance with section
    10  fourteen hundred three of this  article,  provided  that  such  operator
    11  meets  all  the  requirements  in  section fourteen hundred four of this
    12  article.
    13    3. Registrations issued by the commission shall remain in  effect  for
    14  three years. The commission shall establish a process for renewal.
    15    4.  Interactive  fantasy  sports  contests  offered by a registrant in
    16  accordance with the provisions of  this  article  shall  not  constitute
    17  gambling as defined in article two hundred twenty-five of the penal law.
    18    5.  The commission shall publish a list of all operators registered in
    19  New York state pursuant to this section on the commission's website  for
    20  public use.
    21    6.  The  commission  shall  promulgate  regulations  to  implement the
    22  provisions of this article, including the  development  of  the  initial
    23  form  of  the  application  for  registration.    Such regulations shall
    24  provide for the registration and operation of contests in New York state
    25  and shall include, but not be limited to, responsible  protections  with
    26  regard to compulsive play and safeguards for fair play.
    27    §  1403.  Scope  of  registration  review.  1.  The  commission  shall
    28  prescribe the initial form of the  application  for  registration  which
    29  shall require, but not be limited to:
    30    (a) the full name and principal address of the operator;
    31    (b)  if a corporation, the name of the state in which incorporated and
    32  the full names and addresses of any partner, officer,  director,  share-
    33  holder  holding  ten  percent  or  more  equity,  and ultimate equitable
    34  owners;
    35    (c) if a business entity other than a corporation, the full names  and
    36  addresses of the principals, partners, shareholders holding five percent
    37  or more equity, and ultimate equitable owners;
    38    (d)  whether  such corporation or entity files information and reports
    39  with the United States Securities and Exchange Commission as required by
    40  section thirteen of the Securities Exchange Act of 1934,  15  U.S.C.  §§
    41  78a-78kk;  or  whether  the  securities of the corporation or entity are
    42  regularly traded on an  established  securities  market  in  the  United
    43  States;
    44    (e)  the type and estimated number of contests to be conducted annual-
    45  ly;
    46    (f) a statement of the assets and liabilities of the operator.
    47    2. The commission may require the full  names  and  addresses  of  the
    48  officers  and  directors  of  any creditor of the operator, and of those
    49  stockholders who hold more than ten percent of the stock of  the  credi-
    50  tor.
    51    3. Upon receipt of an application for registration for each individual
    52  listed  on  such  application  as an officer or director, the commission
    53  shall submit to the division of criminal justice services a set of fing-
    54  erprints, and the division of criminal justice services  processing  fee
    55  imposed  pursuant  to subdivision eight-a of section eight hundred thir-
    56  ty-seven of the executive law and any fee imposed by the federal  bureau

        A. 10736                            5
 
     1  of  investigation.  Upon  receipt  of  the fingerprints, the division of
     2  criminal justice services shall promptly forward a set of  the  individ-
     3  ual's  fingerprints  to  the  federal  bureau  of  investigation for the
     4  purpose  of  a  nationwide  criminal  history  record check to determine
     5  whether such individual has been convicted of a criminal offense in  any
     6  state  other than New York or in a federal jurisdiction. The division of
     7  criminal justice services shall promptly provide the requested  criminal
     8  history information to the commission. For the purposes of this section,
     9  the  term  "criminal  history  information"  shall  mean a record of all
    10  convictions of crimes and any pending criminal charges maintained on  an
    11  individual  by the division of criminal justice services and the federal
    12  bureau of investigation. All such criminal history information  sent  to
    13  the  commission  pursuant  to this subdivision shall be confidential and
    14  shall not be published or in any way disclosed to persons other than the
    15  commission, unless otherwise authorized by law.
    16    4. Upon receipt of criminal history information pursuant  to  subdivi-
    17  sion three of this section, the commission shall make a determination to
    18  approve or deny an application for registration; provided, however, that
    19  before  making a determination on such application, the commission shall
    20  provide the subject of the record with a copy of such  criminal  history
    21  information  and  a copy of article twenty-three-A of the correction law
    22  and inform such prospective applicant seeking to be credentialed of  his
    23  or  her  right to seek correction of any incorrect information contained
    24  in such criminal history information pursuant  to  the  regulations  and
    25  procedures  established  by  the  division of criminal justice services.
    26  The commission shall deny any application for registration, or  suspend,
    27  refuse  to renew, or revoke any existing registration issued pursuant to
    28  this article, upon the finding that the operator or registrant,  or  any
    29  partner, officer, director, or shareholder:
    30    (a)  has  knowingly  made  a  false  statement of material fact or has
    31  deliberately failed to disclose any information required by the  commis-
    32  sion;
    33    (b)  has  had  a  registration or license to offer or conduct contests
    34  denied, suspended, or revoked in any other state  or  country  for  just
    35  cause;
    36    (c) has legally defaulted in the payment of any obligation or debt due
    37  to any state or political subdivision; or
    38    (d)  has  at  any time knowingly failed to comply with any requirement
    39  outlined in section fourteen hundred four of  this  article,  any  other
    40  provision of this article, any regulations promulgated by the commission
    41  or any additional requirements of the commission.
    42    5.  All  determinations  to approve or deny an application pursuant to
    43  this article shall be performed in a manner consistent with  subdivision
    44  sixteen of section two hundred ninety-six of the executive law and arti-
    45  cle  twenty-three-A of the correction law. When the commission denies an
    46  application, the operator shall be afforded notice and the right  to  be
    47  heard  and offer proof in opposition to such determination in accordance
    48  with the regulations of the commission.
    49    § 1404. Required safeguards, minimum standards. 1. As a  condition  of
    50  registration  in  New  York  state,  each  operator and registrant shall
    51  implement the following measures:
    52    (a) limit each authorized player to one active and  continuously  used
    53  account,  and  prevent  prohibited  players from maintaining accounts or
    54  participating in any contest offered by such operator or registrant;
    55    (b) prohibit minors from participating in any contest, which includes:

        A. 10736                            6
 
     1    (i) if a registrant becomes or is made aware that a minor has  partic-
     2  ipated in one of its contests, such registrant shall promptly, within no
     3  more than two business days, refund any deposit received from the minor,
     4  whether  or  not  the  minor  has engaged in or attempted to engage in a
     5  contest;  provided, however, that any refund may be offset by any prizes
     6  already awarded;
     7    (ii) each registrant shall publish  and  facilitate  parental  control
     8  procedures  to  allow parents or guardians to exclude minors from access
     9  to any contest or platform.  Such procedures shall include  a  toll-free
    10  number to call for help in establishing such parental controls; and
    11    (iii)  each registrant shall take appropriate steps to confirm that an
    12  individual opening an account is not a minor.
    13    (c) when referencing the chances or likelihood of  winning  in  adver-
    14  tisements  or  upon contest entry, make clear and conspicuous statements
    15  that are not inaccurate or misleading concerning the chances of  winning
    16  and the number of winners;
    17    (d)  enable authorized players to exclude themselves from contests and
    18  take reasonable steps to prevent such players from  entering  a  contest
    19  from which they have excluded themselves;
    20    (e)  permit  any  authorized  player  to  permanently close an account
    21  registered to such player, on any and all platforms  supported  by  such
    22  operator or registrant, at any time and for any reason;
    23    (f)  offer  introductory procedures for authorized players, that shall
    24  be prominently displayed on the main page of  such  operator  or  regis-
    25  trant's platform, that explain contest play and how to identify a highly
    26  experienced player;
    27    (g) identify all highly experienced players in any contest by a symbol
    28  attached  to  such players' usernames, or by other easily visible means,
    29  on all platforms supported by such operator or registrant;
    30    (h) disclose the number of entries  a  single  authorized  player  may
    31  submit to each contest;
    32    (i)  disclose  the  maximum  number  of total entries allowed for each
    33  contest;
    34    (j) implement measures to protect the privacy and online  security  of
    35  authorized players and their accounts;
    36    (k)  offer all authorized players access to his or her account history
    37  and account details;
    38    (l) ensure authorized players' funds are protected  upon  deposit  and
    39  segregated  from  the operating funds of such operator or registrant and
    40  otherwise protected from corporate insolvency, financial risk, or crimi-
    41  nal or civil actions against such operator or registrant;
    42    (m) list on each website, in a prominent place, information concerning
    43  assistance for compulsive play in New York state, including a  toll-free
    44  number  directing  callers  to  reputable  resources  containing further
    45  information, which shall be free of charge;
    46    (n) ensure the value of any prizes and awards  offered  to  authorized
    47  players  shall  be established and made known to such players in advance
    48  of the contest, and such value shall not be determined by the number  of
    49  authorized players or the amount of any entry fees paid by such players;
    50    (o)  ensure  all  winning  outcomes reflect the relative knowledge and
    51  skill of the authorized players and shall be determined predominantly by
    52  accumulated statistical results of the  performance  of  individuals  in
    53  sports events;
    54    (p)  ensure  no  winning  outcome  shall  be based on the score, point
    55  spread, or performance of a single sports team, or  any  combination  of
    56  such teams;

        A. 10736                            7
 
     1    (q)  ensure  no  winning  outcome  shall be based solely on any single
     2  performance of an individual athlete  in  a  single  sport  or  athletic
     3  event; and
     4    (r)  ensure  no  game or contest shall be based on a prohibited sports
     5  event.
     6    2. Each registrant shall restrict the number of entries submitted by a
     7  single authorized player for any contest to a  maximum  of  one  hundred
     8  fifty  entries  per player per contest, or a maximum of three percent of
     9  the total number of entries by all players for any contest, whichever is
    10  less, or as determined by the commission. Registrants shall take reason-
    11  able steps to prevent authorized players from submitting more  than  the
    12  allowable  number  of entries per contest.  The commission shall promul-
    13  gate regulations to further effectuate this subdivision to  ensure  that
    14  the  number  of  entries submitted by a single authorized player for any
    15  contest will lead to a fair and  equitable  distribution  of  number  of
    16  entries.
    17    3. (a) Operators shall not directly or indirectly operate, promote, or
    18  advertise  any  platform or contest to persons located in New York state
    19  unless registered pursuant to this article.
    20    (b) Unless otherwise approved by regulation of the commission,  opera-
    21  tors  and registrants shall not directly or indirectly promote or adver-
    22  tise any online fantasy or simulation sports games or contests  with  an
    23  entry  fee during the conduct of any online fantasy or simulation sports
    24  games or contests without an entry fee. This paragraph shall  not  apply
    25  to  any  operator  or  registrant that prohibits prohibited players from
    26  participating in online fantasy or simulation sports games  or  contests
    27  without an entry fee.
    28    4.  Registrants  shall  not  offer any contest based on any prohibited
    29  sports event.
    30    5. Registrants shall not permit any minor or prohibited participant to
    31  enter any contest.
    32    6. Advertisements for contests and  prizes  offered  by  a  registrant
    33  shall  not  target  prohibited  participants,  minors,  or self-excluded
    34  persons.  Representations or implications about  average  winnings  from
    35  contests  shall  not be unfair or misleading. Such representations shall
    36  include, at a minimum:
    37    (a) the median and mean net winnings of all authorized players partic-
    38  ipating in contests offered by such registrant; and
    39    (b) the percentage of winnings awarded by  the  registrant  to  highly
    40  experienced players participating in contests offered by such registrant
    41  within the preceding calendar year.
    42    7.  Registrants  shall  prohibit  the  use  of  third-party scripts or
    43  scripting programs for any contest and ensure that measures are in place
    44  to deter, detect and, to the extent reasonably possible, prevent  cheat-
    45  ing, including collusion, and the use of cheating devices, including use
    46  of  software  programs  that  submit  entry  fees or adjust the athletes
    47  selected by an authorized player.
    48    8. Operators and registrants shall  develop  and  prominently  display
    49  procedures  on the main page of such operator's or registrant's platform
    50  for the filing of a complaint by  the  authorized  player  against  such
    51  registrant.  An  initial  response  shall be given by such registrant to
    52  such player filing the complaint within forty-eight  hours.  A  complete
    53  response  shall  be  given  by such registrant to such player filing the
    54  complaint within ten business days.   An authorized player  may  file  a
    55  complaint  alleging  a  violation of the provisions of this article with
    56  the commission.

        A. 10736                            8
 
     1    9. Registrants shall maintain records of  all  accounts  belonging  to
     2  authorized  players and retain such records for five years from the date
     3  an account was created.
     4    §  1405. Powers and duties of the commission. 1.  The commission shall
     5  promulgate regulations to implement the provisions of and effectuate the
     6  policy and objectives of this article as the commission may deem  neces-
     7  sary  or advisable, including the development of the initial form of the
     8  application for registration. Such regulations  shall  provide  for  the
     9  registration  and  operation  of  contests  in  New York state and shall
    10  include, without limitation,  responsible  protections  with  regard  to
    11  compulsive play and safeguards for fair play. Such regulations may regu-
    12  late  the  conduct  and  operation  of  contests  and platforms, protect
    13  contestants and promote the fairness, honesty and integrity of contests.
    14    2. The commission shall have  the  following  powers  and  duties  for
    15  purposes  of  administering, regulating, and enforcing the provisions of
    16  this article:
    17    (a) all powers and duties assigned by this article,  as  well  as  all
    18  powers  necessary and proper to fully and effectively execute this arti-
    19  cle;
    20    (b) to approve and  deny  applications  for  registration  to  conduct
    21  contests  in  New York state, and to suspend, refuse or renew, or revoke
    22  any registration issued to a registrant under this article;
    23    (c) to review and approve each platform and each contest offered by an
    24  operator or registrant;
    25    (d) to accept and investigate complaints of any kind from  an  author-
    26  ized player and attempt to mediate such complaints where appropriate;
    27    (e) to investigate alleged violations of this article;
    28    (f)  to  initiate  proper enforcement proceedings where such action is
    29  deemed by the commission to be necessary or appropriate; and
    30    (g) all powers and duties assigned by this chapter.
    31    § 1406. Annual report. 1. Each  registrant  shall  annually  submit  a
    32  report  to  the  commission  no later than the thirtieth of June of each
    33  year, which shall include the following information as it shall apply to
    34  accounts held by authorized players located in New York state:
    35    (a) the number of accounts held by authorized players on all platforms
    36  offered by the registrant, and the number of  accounts  held  by  highly
    37  experienced players on all platforms offered by the registrant;
    38    (b)  the  total  number  of  new accounts established in the preceding
    39  year, as well as the total number of accounts permanently closed in  the
    40  preceding year;
    41    (c) the total amount of entry fees received from authorized players;
    42    (d) the total amount of prizes awarded to authorized players;
    43    (e) the total amount of interactive fantasy sports revenue received by
    44  the registrant;
    45    (f)  the  total number of authorized players that requested to exclude
    46  themselves from contests;
    47    (g) any additional information that the commission deems necessary  to
    48  carry out the provisions of this article.
    49    2.  Upon the submission of such annual report, to such extent that the
    50  commission deems it to be in the public interest, the  commission  shall
    51  be  authorized  to  conduct  a financial audit of any registrant, at any
    52  time, to ensure compliance with this article.
    53    3. The commission shall annually publish a report based on the  aggre-
    54  gate information provided by all registrants pursuant to subdivision one
    55  of this section, which shall be published on the commission's website no

        A. 10736                            9
 
     1  later than one hundred eighty days after the deadline for the submission
     2  of individual reports as specified in subdivision one of this section.
     3    § 1407. State tax.  For the privilege of conducting interactive fanta-
     4  sy  sports contests in the state, registrants shall pay a tax equivalent
     5  to fifteen percent of their interactive  fantasy  sports  gross  revenue
     6  generated  within  the  state;  in addition, registrants shall pay a tax
     7  equal to one-half of one percent,  but  not  to  exceed  fifty  thousand
     8  dollars annually.
     9    § 1408. Additional regulatory costs. The commission may assess annual-
    10  ly,  in  arrears,  on  each  registrant  proportional to the interactive
    11  fantasy sports gross revenue of such registrant in  the  preceding  year
    12  compared  to  the  aggregate interactive fantasy sports gross revenue of
    13  all registrants in the preceding year actual costs necessary to regulate
    14  in accordance with the provisions  of  this  article.  Such  assessments
    15  shall be made only within amounts appropriated therefor.
    16    §  1409.  Disposition  of  taxes. 1. The commission shall pay into the
    17  state lottery fund all taxes imposed by this article; any  interest  and
    18  penalties  imposed by the commission relating to those taxes; all penal-
    19  ties levied and collected by the commission; and the appropriate  funds,
    20  cash or prizes forfeited from interactive fantasy sports.
    21    2.  The  commission  shall  require  at  least monthly deposits by the
    22  interactive fantasy sports operator of any payments pursuant to  section
    23  fourteen hundred seven of this article, at such times, under such condi-
    24  tions,  and  in  such  depositories  as shall be prescribed by the state
    25  comptroller. The deposits shall be deposited to the credit of the  state
    26  lottery  fund.  The commission shall require a monthly report and recon-
    27  ciliation statement to be filed with it on or before the  tenth  day  of
    28  each  month,  with  respect  to gross revenues and deposits received and
    29  made, respectively, during the preceding month.
    30    § 1410. Determination of tax liability.  The  commission  may  perform
    31  audits  of the books and records of an interactive fantasy sports opera-
    32  tor with a permit or registrant, at such times and intervals as it deems
    33  appropriate, for the purpose  of  determining  the  sufficiency  of  tax
    34  payments. If a return required with regard to obligations imposed is not
    35  filed,  or  if a return when filed or is determined by the commission to
    36  be incorrect or insufficient with or without an audit, the amount of tax
    37  due shall be determined by the commission. Notice of such  determination
    38  shall be given to the interactive fantasy sports operator liable for the
    39  payment of the tax. Such determination shall finally and irrevocably fix
    40  the  tax  unless  the  person against whom it is assessed, within thirty
    41  days after receiving notice of such determination, shall  apply  to  the
    42  commission  for  a  hearing  in  accordance  with the regulations of the
    43  commission.
    44    § 1411.  Contests  authorized.  Interactive  fantasy  sports  contests
    45  registered  and conducted pursuant to the provisions of this chapter are
    46  hereby authorized.
    47    § 1412. Contests prohibited. The conduct of  unregistered  interactive
    48  fantasy sports contests is prohibited.
    49    §  2. Section 104 of the racing, pari-mutuel wagering and breeding law
    50  is amended by adding a new subdivision 23 to read as follows:
    51    23. To register and regulate interactive fantasy sports  in  New  York
    52  state.
    53    § 3. This act shall take effect immediately.
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