PRINTER'S NO. 971
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
865
Session of
2017
INTRODUCED BY DUNBAR, CHARLTON, HELM, ORTITAY, WHEELAND AND
MASSER, MARCH 16, 2017
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, MARCH 16, 2017
AN ACT
Amending Title 4 (Amusements) of the Pennsylvania Consolidated
Statutes, providing for fantasy contests.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Title 4 of the Pennsylvania Consolidated Statutes
is amended by adding a part to read:
PART I
AMUSEMENTS GENERALLY
Chapter
1. Preliminary Provisions (Reserved)
3. Fantasy Contests
CHAPTER 1
PRELIMINARY PROVISIONS
(Reserved)
CHAPTER 3
FANTASY CONTESTS
Subchapter
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A. General Provisions
B. Administration
C. Licensure
D. Fiscal Provisions
E. Miscellaneous Provisions
SUBCHAPTER A
GENERAL PROVISIONS
Sec.
301. Scope.
302. Definitions.
§ 301. Scope.
This chapter relates to fantasy contests.
§ 302. Definitions.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Board." The Pennsylvania Gaming Control Board.
"Conduct of gaming." As defined in section 1103 (relating to
definitions).
"Controlling interest." Either of the following:
(1) For a publicly traded domestic or foreign
corporation, partnership, limited liability company or other
form of publicly traded legal entity, a controlling interest
is an interest if a person's sole voting rights under State
law or corporate articles or bylaws entitle the person to
elect or appoint one or more of the members of the board of
directors or other governing board or the ownership or
beneficial holding of 5% or more of the securities of the
publicly traded corporation, partnership, limited liability
company or other form of publicly traded legal entity, unless
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this presumption of control or ability to elect is rebutted
by clear and convincing evidence.
(2) For a privately held domestic or foreign
corporation, partnership, limited liability company or other
form of privately held legal entity, a controlling interest
is the holding of securities of 15% or more in the legal
entity, unless this presumption of control is rebutted by
clear and convincing evidence.
"Department." The Department of Revenue of the Commonwealth.
"Entry fee." The cash or cash equivalent paid by a
participant to a licensed operator in order to participate in a
fantasy contest.
"Fantasy contest." An online fantasy or simulated game or
contest with an entry fee and a prize or award administered by a
licensed operator in which:
(1) The value of all prizes or awards offered to winning
participants is established and made known to participants in
advance of the contest.
(2) All winning outcomes reflect the relative knowledge
and skill of participants and are determined by accumulated
statistical results of the performance of individuals,
including athletes in the case of sports events.
(3) No winning outcome is based on the score, point
spread or performance of a single actual team or combination
of teams or solely on a single performance of an individual
athlete or player in a single actual event.
"Fantasy contest account." The formal electronic system
implemented by a licensed operator to record a participant's
entry fees, prizes or awards and other activities related to
participation in the licensed operator's fantasy contests.
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"Fantasy contest adjusted revenues." For each fantasy
contest, the amount equal to the total amount of all entry fees
collected from all participants entering the fantasy contest
minus prizes or awards paid to participants in the fantasy
contest, multiplied by the in-State percentage.
"Fantasy contest license." A license issued by the board
authorizing a person to offer fantasy contests in this
Commonwealth in accordance with this chapter.
"Gaming service provider." As defined in section 1103
(relating to definitions).
"In-State participant." An individual who participates in a
fantasy contest conducted by a licensed operator and pays a fee
to a licensed operator from a location within this Commonwealth.
"In-State percentage." For each fantasy contest, the
percentage, rounded to the nearest tenth of a percent, equal to
the total entry fees collected from all in-State participants
divided by the total entry fees collected from all participants
in the fantasy contest.
"Key employee." An individual who is employed by an
applicant for a fantasy contest license or a licensed operator
in a director or department head capacity and who is empowered
to make discretionary decisions that regulate fantasy contest
operations as determined by the board.
"Licensed entity representative." A person, including an
attorney, agent or lobbyist, acting on behalf of or authorized
to represent the interest of an applicant, licensee or other
person authorized by the board to engage in an act or activity
which is regulated under this chapter regarding a matter before,
or which may be reasonably be expected to come before, the
board.
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"Licensed gaming entity." As defined in section 1103
(relating to definitions).
"Licensed operator." A person who holds a fantasy contest
license.
"Participant." An individual who participates in a fantasy
contest, whether the individual is located in this Commonwealth
or another jurisdiction.
"Person." A natural person, corporation, publicly traded
corporation, foundation, organization, business trust, estate,
limited liability company, licensed corporation, trust,
partnership, limited liability partnership, association or any
other form of legal business entity.
"Principal." An officer, director, person who directly holds
a beneficial interest in or ownership of the securities of an
applicant for a fantasy contest license or a licensed operator,
person who has a controlling interest in an applicant for a
fantasy contest license or a licensed operator or who has the
ability to elect a majority of the board of directors of a
licensed operator or to otherwise control a licensed operator,
lender or other licensed financial institution of an applicant
for a fantasy contest license or a licensed operator, other than
a bank or lending institution which makes a loan or holds a
mortgage or other lien acquired in the ordinary course of
business, underwriter of an applicant for a fantasy contest
license or a licensed operator or other person or employee of an
applicant for a fantasy contest license or a licensed operator
deemed to be a principal by the board.
"Prize or award." Anything of value worth $100 or more or
any amount of cash or cash equivalents.
"Publicly traded corporation." A person, other than an
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individual, that:
(1) has a class or series of securities registered under
the Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C.
§ 78a et seq.);
(2) is a registered management company under the
Investment Company Act of 1940 (54 Stat. 789, 15 U.S.C. §
80a-1 et seq.); or
(3) is subject to the reporting obligations imposed by
section 15(d) of the Securities Exchange Act of 1934 by
reason of having filed a registration statement that has
become effective under the Securities Act of 1933 (48 Stat.
74, 15 U.S.C. § 77a et seq.).
"Script." A list of commands that a fantasy-contest-related
computer program can execute that is created by a participant or
third party not approved by the licensed operator to automate
processes on a licensed operator's fantasy contest platform.
"Season-long fantasy contest." A fantasy contest offered by
a licensed operator that is conducted over an entire sports
season.
SUBCHAPTER B
ADMINISTRATION
Sec.
311. General and specific powers of board.
312. Temporary regulations.
313. Fantasy contest license appeals.
314. Board minutes and records.
315. Reports of board.
§ 311. General and specific powers of board.
(a) General powers.--
(1) The board shall have regulatory authority over
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licensed operators, principals and key employees and shall
ensure the integrity of fantasy contests offered in this
Commonwealth in accordance with this chapter.
(2) The board may employ individuals as necessary to
carry out the requirements of this chapter, who shall serve
at the board's pleasure. An employee of the board shall be
considered a State employee for purposes of 71 Pa.C.S. Pt.
XXV (relating to retirement for State employees and
officers).
(b) Specific powers.--The board shall have the following
powers:
(1) At the board's discretion, to issue, approve, renew,
revoke, suspend, condition or deny issuance of licenses.
(2) At the board's discretion, to suspend, condition or
deny the issuance or renewal of a license or levy fines for
any violation of this chapter.
(3) To publish each January on the board's publicly
accessible Internet website a complete list of all persons
who applied for or held a fantasy contest license at any time
during the preceding calendar year and the status of the
application or fantasy contest license.
(4) To prepare and, through the Governor, submit
annually to the General Assembly an itemized budget
consistent with Article VI of the act of April 9, 1929
(P.L.177, No.175), known as The Administrative Code of 1929,
consisting of the amounts necessary to be appropriated by the
General Assembly out of the accounts established under
section 332 (relating to licensed operator deposits) required
to meet the obligations under this chapter accruing during
the fiscal period beginning July 1 of the following year.
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(5) In the event that, in any year, appropriations for
the administration of this chapter are not enacted by June
30, any funds appropriated for the administration of this
chapter which are unexpended, uncommitted and unencumbered at
the end of a fiscal year shall remain available for
expenditure by the board until the enactment of appropriation
for the ensuing fiscal year.
(6) To promulgate rules and regulations necessary for
the administration and enforcement of this chapter. Except as
provided in section 312 (relating to temporary regulations),
regulations shall be adopted under the act of July 31, 1968
(P.L.769, No.240), referred to as the Commonwealth Documents
Law, and the act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(7) To administer oaths, examine witnesses and issue
subpoenas compelling the attendance of witnesses or the
production of documents and records or other evidence or to
designate officers or employees to perform duties required by
this chapter.
(8) At the board's discretion, to delegate any of the
board's responsibilities under this chapter to the executive
director of the board or other designated staff.
(9) To require licensed operators and applicants for a
fantasy contest license to submit any information or
documentation necessary to ensure the proper regulation of
fantasy contests in accordance with this chapter.
(10) To require licensed operators, except for a
licensed operator operating season-long fantasy contests that
generate less than $250,000 in season-long fantasy contest
adjusted revenue, unless the board determines otherwise, to:
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(i) annually contract with a certified public
accountant to conduct an independent audit in accordance
with standards adopted by the American Institute of
Certified Public Accountants to verify compliance with
the provisions of this chapter and board regulations;
(ii) annually contract with a testing laboratory
approved by the board to verify compliance with the
provisions of this chapter and board regulations; and
(iii) annually submit to the board and department a
copy of the audit report required by subparagraph (i) and
submit to the board a copy of the report of the testing
laboratory required by subparagraph (ii).
(11) In conjunction with the Department of Drug and
Alcohol Programs, to develop a process by which licensed
operators provide participants with a toll-free telephone
number that provides individuals with information on how to
access appropriate treatment services for compulsive and
problem play.
(b.1) Licensed entity representative.--
(1) A licensed entity representative shall register with
the board, in a manner prescribed by the board. The
registration shall include the name, employer or firm,
business address and business telephone number of both the
licensed entity representative and any licensed operator,
applicant for licensure or other person being represented.
(2) A licensed entity representative shall have an
affirmative duty to update its registration information on an
ongoing basis. Failure to update shall be punishable by the
board.
(3) The board shall maintain a list of licensed entity
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representatives which shall contain the information required
under paragraph (1) and shall be available for public
inspection at the offices of the board and on the board's
publicly accessible Internet website.
(c) Exceptions.--Except as provided under section 342
(relating to licensed gaming entities), nothing in this section
shall be construed to authorize the board:
(1) To require background investigations for employees,
other than key employees and principals, of an applicant for
a fantasy contest license or a licensed operator.
(2) To require any additional permits or licenses not
specifically enumerated in this chapter.
(3) To impose additional conditions of licensure on
licensed operators or prohibitions on the operation of
fantasy contests not specifically enumerated in this chapter.
§ 312. Temporary regulations.
(a) Promulgation.--In order to facilitate the prompt
implementation of this chapter, regulations promulgated by the
board shall be deemed temporary regulations and shall expire no
later than two years following the effective date of this
section. The board may promulgate temporary regulations not
subject to:
(1) Sections 201, 202 and 203 of the act of July 31,
1968 (P.L.769, No.240), referred to as the Commonwealth
Documents Law.
(2) The act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(b) Expiration.--Except for temporary regulations concerning
network connectivity, security and testing and compulsive and
problem play, the authority provided to the board to adopt
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temporary regulations in subsection (a) shall expire no later
than two years following the effective date of this section.
Regulations adopted after this period shall be promulgated as
provided by law.
§ 313. Fantasy contest license appeals.
An applicant may appeal any final order, determination or
decision of the board involving the approval, issuance, denial,
revocation or conditioning of a fantasy contest license in
accordance with 2 Pa.C.S. Chs. 5 Subch. A (relating to practice
and procedure of Commonwealth agencies) and 7 Subch. A (relating
to judicial review of Commonwealth agency action).
§ 314. Board minutes and records.
(a) Record of proceedings.--The board shall maintain a
record of all proceedings held at public meetings of the board.
The verbatim transcript of the proceedings shall be the property
of the board and shall be prepared by the board upon the request
of any board member or upon the request of any other person and
the payment by that person of the costs of preparation.
(b) Applicant information.--
(1) The board shall maintain a list of all applicants
for a fantasy contest license. The list shall include a
record of all actions taken with respect to each applicant.
The list shall be open to public inspection during the normal
business hours of the board.
(2) Information under paragraph (1) regarding an
applicant whose fantasy contest license has been denied,
revoked or not renewed shall be removed from the list after
seven years from the date of the action.
(c) Other files and records.--The board shall maintain such
other files and records as it may deem appropriate.
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(d) Confidentiality of information.--
(1) The following information submitted by an applicant
for a fantasy contest license under section 322 (relating to
application) or otherwise obtained by the board as part of a
background or other investigation from any source shall be
confidential and withheld from public disclosure:
(i) All information relating to character, honesty
and integrity, including family, habits, reputation,
history of criminal activity, business activities,
financial affairs and business, professional and personal
associations.
(ii) Nonpublic personal information, including home
addresses, telephone numbers and other personal contact
information, Social Security numbers, educational
records, memberships, medical records, tax returns and
declarations, actual or proposed compensation, financial
account records, creditworthiness or financial condition
relating to an applicant.
(iii) Information relating to proprietary
information, trade secrets, patents or exclusive
licenses, architectural and engineering plans and
information relating to competitive marketing materials
and strategies that may include customer-identifying
information or customer prospects for services subject to
competition.
(iv) Information with respect to which there is a
reasonable possibility that public release or inspection
of the information would constitute an unwarranted
invasion into personal privacy of an individual as
determined by the board.
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(v) Records of an applicant for a fantasy contest
license or a licensed operator not required to be filed
with the Securities and Exchange Commission by issuers
that either have securities registered under section 12
of the Securities Exchange Act of 1934 (48 Stat. 881, 15
U.S.C. § 78l) or are required to file reports under
section 15(d) of the Securities Exchange Act of 1934 (48
Stat. 881, 15 U.S.C. § 78o)
(vi) Records considered nonpublic matters or
information by the Securities and Exchange Commission as
provided by 17 CFR 200.80 (relating to commission records
and information).
(vii) Financial or security information deemed
confidential by the board upon a showing of good cause by
the applicant for a fantasy contest license or licensed
operator.
(2) No claim of confidentiality may be made regarding
any criminal history record information that is available to
the public under 18 Pa.C.S. § 9121(b) (relating to general
regulations).
(3) No claim of confidentiality shall be made regarding
any record in possession of the board that is otherwise
publicly available from a Commonwealth agency, local agency
or another jurisdiction.
(4) The information made confidential under this section
shall be withheld from public disclosure, in whole or in
part, except that any confidential information shall be
released upon the order of a court of competent jurisdiction
or, with the approval of the Attorney General, to a duly
authorized law enforcement agency or shall be released to the
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public, in whole or in part, to the extent that such release
is requested by an applicant for a fantasy contest license or
licensed operator and does not otherwise contain confidential
information about another person.
(5) The board may seek a voluntary waiver of
confidentiality from an applicant for a fantasy contest
license or a licensed operator, but may not require an
applicant or licensed operator to waive any confidentiality
provided for in this subsection as a condition for the
approval of an application, renewal of a fantasy contest
license or any other action of the board.
(e) Notice.--Notice of the contents of any information,
except to a duly authorized law enforcement agency under this
section, shall be given to an applicant or licensee in a manner
prescribed by the rules and regulations adopted by the board.
(f) Information held by department.--Files, records, reports
and other information in the possession of the department
pertaining to licensed operators shall be made available to the
board as may be necessary for the effective administration of
this chapter.
§ 315. Reports of board.
(a) General rule.--The annual report submitted by the board
under section 1211 (relating to reports of board) shall include
the following information on the conduct of fantasy contests:
(1) Total fantasy contest adjusted revenues.
(2) All taxes, fees, fines and other revenue collected
from licensed operators during the previous year. The
department shall collaborate with the board to carry out the
requirements of this section.
(3) At the board's discretion, any other information
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related to the conduct of fantasy contests or licensed
operators.
(b) Licensed operators.--The board may require licensed
operators to provide information to the board to assist in the
preparation of the report.
SUBCHAPTER C
LICENSURE
Sec.
321. General prohibition.
322. Application.
323. Issuance and denial of license.
324. License renewal.
325. Conditions of licensure.
326. Prohibitions.
327. Change in ownership or control of licensed operators.
328. Penalties.
§ 321. General prohibition.
(a) General rule.--Except as provided for in subsection (b),
no person may offer or otherwise make available for play in this
Commonwealth a fantasy contest without a fantasy contest license
issued by the board.
(b) Existing activity.--A person who applies for or renews a
fantasy contest license in accordance with this chapter may
operate during the application or renewal period unless:
(1) The board has reasonable cause to believe the person
is or may be in violation of the provisions of this chapter.
(2) The board requires the person to suspend the
operation of any fantasy contest until the license is issued
or renewed.
§ 322. Application.
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(a) Form and information.--An application for a license
shall be submitted on a form and in manner as shall be required
by the board. An application for a fantasy contest license shall
contain the following information:
(1) (i) if an individual, the name, Federal employer
identification number and principal address of the
applicant;
(ii) if a corporation, the state of its
incorporation, the full name and address of each officer
and director thereof;
(iii) if a foreign corporation, whether it is
qualified to do business in this Commonwealth; and
(iv) if a partnership or joint venture, the name and
address of each officer thereof.
(2) The name and address of the person having custody of
the applicant's financial records.
(3) The names and addresses of key employees.
(4) The names and addresses of each of the applicant's
principals.
(5) Information, documentation and assurances related to
financial and criminal history as the board deems necessary
to establish by clear and convincing evidence the financial
stability, integrity and responsibility of the applicant and
the applicant's key employees and principals.
(6) Information and documentation necessary to establish
the applicant's ability to comply with section 325 (relating
to conditions of licensure).
(7) Any other information required by the board.
(b) Nonrefundable application fee.--Each application
submitted under this chapter shall be accompanied by a
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nonrefundable application fee, which shall be established by the
board, and which may not exceed the amount necessary to
reimburse the board for all costs incurred by the board for
fulfilling the requirements of this section and section 323
(relating to issuance and denial of license) or exceed an amount
equal to 5% of the applicant's fantasy contest adjusted revenues
for the previous calendar year.
(c) Additional information.--A person applying for a fantasy
contest license shall have the continuing duty to provide
information required by the board and to cooperate in any
inquiry or investigation.
(d) Abbreviated application process.--The board, at its
discretion, may establish an abbreviated application process for
a fantasy contest license for persons that are also licensed
gaming entities. The abbreviated application may only require
information not in possession of the board that is necessary to
fulfill the requirements of this chapter.
§ 323. Issuance and denial of license.
(a) Duty to review applications.--The board shall review all
applications for a license and shall issue a license to any
applicant that:
(1) Has submitted a completed application and paid the
nonrefundable application fee as required by the board under
section 322 (relating to application).
(2) Has demonstrated that the applicant has the
financial stability, integrity and responsibility to comply
with the provisions of this chapter and regulations
established by the board.
(3) Has not been denied a license under subsection (b).
(b) Reasons to deny applications.--The board may deny an
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application for a license if the applicant:
(1) has knowingly made a false statement of material
fact or has deliberately failed to disclose any information
requested;
(2) employs a principal or key employee who has been
convicted of a felony, a crime of moral turpitude or any
criminal offense involving dishonesty or breach of trust
within 10 years prior to the date of the application for
license;
(3) has at any time knowingly failed to comply with the
provisions of this chapter or of any requirements of the
board;
(4) has had a registration, permit or license to conduct
fantasy contests denied or revoked in any other jurisdiction;
(5) has legally defaulted in the payment of any
obligation or debt due to the Commonwealth or is not
compliant with taxes due; or
(6) is not qualified to do business in this Commonwealth
or is not subject to the jurisdiction of the courts of the
Commonwealth.
(c) Time period for review.--The board shall conclude its
review of an application for a fantasy contest license within
120 days of receipt of the completed application. If the license
is not issued, the board shall provide the applicant with the
justification for not issuing the license with specificity.
(d) License fee.--
(1) Within 30 days of the board issuing a fantasy
contest license, an applicant shall pay to the board a
license fee of $50,000 or an amount equivalent to 7.5% of the
applicant's fantasy contest adjusted revenues for the
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previous calendar year, whichever is less, except that an
applicant who is also a licensed gaming entity shall pay to
the board a license fee of $50,000.
(2) The license fee collected under this subsection
shall be deposited into the General Fund.
(3) If an applicant fails to pay the fee required by
this subsection, the board shall suspend or revoke the
applicant's fantasy contest license until payment of the
license fee is received.
(e) Abbreviated approval process.--The board, at its
discretion, may establish an abbreviated approval process for
the issuance of a fantasy contest license to a licensed gaming
entity whose slot machine license under Chapter 13 (relating to
licenses) and table game operation certificate under Chapter 13A
(relating to table games) are in good standing.
§ 324. License renewal.
(a) Renewal.--
(1) A license issued under this chapter shall be valid
for a period of five years.
(2) Nothing in this subsection shall be construed to
relieve a licensed operator of the affirmative duty to notify
the board of any changes relating to the status of its
fantasy contest license or to any other information contained
in the application materials on file with the board.
(3) The application for renewal of a fantasy contest
license must be submitted at least 90 days prior to the
expiration of the license and include an update of the
information contained in the initial application for a
fantasy contest license. A fantasy contest license for which
a completed renewal application and fee as required under
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subsection (c) has been received by the board shall continue
in effect unless and until the board sends written
notification to the licensed operator that the board has
denied the renewal of the license.
(b) Revocation or failure to renew.--
(1) In addition to any other sanction the board may
impose under this chapter, the board may at its discretion
suspend, revoke or deny renewal of a fantasy contest license
issued under this chapter if it receives information that:
(i) the applicant or any of the applicant's key
employees or principals are in violation of any provision
of this chapter;
(ii) the applicant has furnished the board with
false or misleading information;
(iii) the information contained in the applicant's
initial application or any renewal application is no
longer true and correct;
(iv) the applicant has failed to remit taxes or
assessments required under section 331 (relating to
fantasy contest tax), 332 (relating to licensed operator
deposits) or 333 (relating to responsibility and
authority of department); or
(v) the applicant has legally defaulted in the
payment of any obligation or debt due to the
Commonwealth.
(2) In the event of a revocation or failure to renew,
the applicant's authorization to conduct fantasy contests
shall immediately cease and all fees paid in connection with
the application shall be deemed to be forfeited.
(3) In the event of a suspension, the applicant's
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authorization to conduct fantasy contests shall immediately
cease until the board has notified the applicant that the
suspension is no longer in effect.
(c) Renewal fee.--
(1) Within 30 days of the board renewing a fantasy
contest license, the licensed operator shall pay to the board
a renewal fee of $5,000, or an amount equal to 7.5% of the
applicant's fantasy contest adjusted revenue, whichever is
less.
(2) The renewal fee collected by the board under this
subsection shall be deposited into the General Fund.
(3) If a licensed operator fails to pay the renewal fee
required under this subsection, the board shall suspend or
revoke the licensed operator's fantasy contest license until
payment of the renewal fee is received.
§ 325. Conditions of licensure.
As a condition of licensure, a licensed operator shall
establish and implement the following commercially reasonable
procedures related to conduct of fantasy contests in this
Commonwealth:
(1) Permit only participants who have established a
fantasy contest account with the licensed operator to
participate in a fantasy contest conducted by the licensed
operator.
(2) Verify the age, location and identity of any
participant prior to making a deposit into a fantasy contest
account for a participant located in this Commonwealth. No
participant under 18 years of age may be permitted to
establish a fantasy contest account with a licensed operator.
(3) Verify the identity of a participant by requiring
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the participant to provide the licensed operator a unique
user name and password prior to accessing a fantasy contest
account.
(4) Ensure rules and prizes and awards established by
the licensed operator for a fantasy contest are made known to
a participant prior to the acceptance of any entry fee.
(5) Ensure that a player who is the subject of a fantasy
contest is restricted from entering as a participant in a
fantasy contest that is determined, in whole or part, on the
accumulated statistical results of a team of individuals in
the league in which the player is a member.
(6) Allow a person to restrict himself from entering a
fantasy contest or accessing a fantasy contest account for a
specific period of time as determined by the participant and
implement reasonable procedures to prevent the individual
from participating in the licensed operator's fantasy
contests.
(7) Allow a person to restrict the total amount of
deposits that the participant may pay to the licensed
operator for a specific time period established by the
participant and implement reasonable procedures to prevent
the participant from exceeding the limit.
(8) Conspicuously post compulsive and problem play
notices at fantasy contest registration points and provide a
toll-free telephone number to participants who have expressed
to the licensed operator issues with compulsive and problem
play of fantasy contests. The toll-free telephone number and
the compulsive and problem play notice shall be approved by
the board, in consultation with the Department of Drug and
Alcohol Programs.
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(9) Disclose the number of entries a single participant
may submit to each fantasy contest and take commercially
reasonable steps to prevent such participants from submitting
more than the allowable number.
(10) Prohibit the licensed operator's principals,
employees and relatives living in the same household of an
employee or principal from competing in a fantasy contest
offered by any licensed operator to the general public and in
which fantasy contest the licensed operator offers a prize or
award.
(11) Prevent the sharing of confidential information
that could affect fantasy contest play with third parties
until the information is made publicly available.
(12) Take commercially reasonable steps to maintain the
confidentiality of a participant's personal and financial
information.
(13) Segregate participant funds from operational funds
in separate accounts and maintain a reserve in the form of
cash, cash equivalents, security deposits held by banks and
processors, an irrevocable letter of credit, payment
processor reserves and receivables, a bond or a combination
thereof in an amount sufficient to pay all prizes and awards
offered to winning participants. To satisfy this paragraph, a
licensed operator that only offers season-long fantasy
contests that generate less than $250,000 in season-long
fantasy contest adjusted revenue may contract with a third
party to hold prizes and awards in an escrow account until
after the season is concluded and prizes and awards are
distributed.
(14) Provide winning in-State participants with
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information and documentation necessary to ensure the proper
reporting of winnings by in-State participants to the
department.
(15) Remit taxes or assessments to the department in
accordance with sections 331 (relating to fantasy contest
tax), 332 (relating to licensed operator deposits) and 333
(relating to responsibility and authority of department).
(16) Prohibit the use of scripts by participants and
implement technologies to prevent the use of scripts.
(17) Monitor fantasy contests for the use of scripts and
restrict players found to have used such scripts from
participation in future fantasy contests.
(18) Establish any other condition deemed appropriate by
the board.
§ 326. Prohibitions.
(a) General rule.--No licensed operator may:
(1) accept an entry fee from or permit a natural person
under 18 years of age to become a participant in a fantasy
contest;
(2) offer a fantasy contest based, in whole or in part,
on collegiate or high school athletic events or players;
(3) permit a participant to enter a fantasy contest
prior to establishing a fantasy contest account;
(4) establish a fantasy contest account for a person who
is not an individual;
(5) alter rules established for a fantasy contest after
a participant has entered the fantasy contest;
(6) issue credit to a participant to establish or fund a
fantasy contest account;
(7) knowingly directly market to a participant during
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the time period in which the participant has self-excluded
from the licensed operator's fantasy contests;
(8) knowingly permit a participant to enter the licensed
operator's fantasy contests during the time period in which
the participant has self-excluded from the licensed
operators' fantasy contests;
(8.1) knowingly allow a self-excluded individual to keep
a prize or award.
(9) knowingly accept a deposit in excess of a limit
established by a participant for the specific time period
established by the participant;
(10) share confidential information that could affect
fantasy contest play with third parties until the information
is made publicly available;
(11) knowingly permit a principal, an employee or a
relative living in the same household of an employee or
principal to become a participant in a fantasy contest
offered by any licensed operator in which a licensed operator
offers a prize or award;
(12) offer a fantasy contest where:
(i) the value of all prizes or awards offered to
winning participants is not established and made known to
participants in advance of the fantasy contest;
(ii) winning outcomes do not reflect the relative
knowledge and skill of participants;
(iii) the winning outcome is based on the score,
point spread or performance of a single actual team or
combination of teams or solely on a single performance of
an individual athlete or player in a single actual event;
or
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(iv) the winning outcome is not based on statistical
results accumulated from fully completed athletic sports
contests or events, except that participants may be
credited for statistical results accumulated in a
suspended or shortened sports event which has been
partially completed on account of weather or other
natural or unforeseen event;
(13) fail to remit taxes or assessments to the
department in accordance with sections 331 (relating to
fantasy contest tax), 332 (relating to licensed operator
deposits) and 333 (relating to responsibility and authority
of department);
(14) knowingly allow a participant to use a script
during a fantasy contest; and
(15) perform any other action prohibited by the board.
(b) Deposit.--The licensed operator shall deposit the amount
of the prize or award under subsection (a)(8.1) in the General
Fund.
§ 327. Change in ownership or control of licensed operators.
(a) Notification and approval.--
(1) A licensed operator shall notify the board upon
becoming aware of any proposed change of ownership of the
licensed operator by a person or group of persons acting in
concert which involves any of the following:
(i) More than 15% of a licensed operator's
securities or other ownership interests.
(ii) The sale other than in the ordinary course of
business of a licensed operator's assets.
(iii) Any other transaction or occurrence deemed by
the board to be relevant to fantasy contest license
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qualifications.
(2) Notwithstanding the provisions of paragraph (1), a
licensed operator shall not be required to notify the board
of any acquisition by an institutional investor under
paragraph (1)(i) or (ii) if the institutional investor holds
less than 10% of the securities or other ownership interests
referred to in paragraph (1)(i) or (ii), the securities or
interests are publicly traded securities and its holdings of
such securities were purchased for investment purposes only
and the institutional investor files with the board a
certified statement to the effect that the institutional
investor has no intention of influencing or affecting,
directly or indirectly, the affairs of the licensed operator.
However, the institutional investor may vote on matters put
to the vote of the outstanding security holders. Notice to
the board shall be required prior to completion of any
proposed or contemplated change of ownership of a licensed
operator that meets the criteria of this section.
(b) Qualification of purchaser and change of control.--
(1) A purchaser of the assets, other than in the
ordinary course of business, of a licensed operator shall
independently qualify for a fantasy contest license in
accordance with this chapter and shall pay the application
fee and license fee as required by sections 322 (relating to
application) and 323 (relating to issuance and denial of
license), except that if the purchaser of assets is another
licensed operator, the purchaser of assets shall not be
required to requalify for a fantasy contest license or pay
another application fee and license fee.
(2) A change in control of any licensed operator shall
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require that the licensed operator independently qualify for
a fantasy contest license in accordance with this chapter,
and the licensed operator shall pay a new application and
license fee as required by sections 322 and 323, except that
if the new controller is another licensed operator, the new
controller shall not be required to requalify for a fantasy
contest license or pay another application fee and license
fee.
(c) License revocation.--Failure to comply with this section
may cause the fantasy contest license issued under this chapter
to be revoked or suspended by the board unless the purchase of
the assets or the change in control that meets the criteria of
this section has been independently qualified in advance by the
board and any required application or license fee has been paid.
(d) Definitions.--As used in this section, the following
words and phrases shall have the meanings given to them in this
subsection unless the context clearly indicates otherwise:
"Change in control of a licensed operator." The acquisition
by a person or group of persons acting in concert of more than
20% of a licensed operator's securities or other ownership
interests, with the exception of any ownership interest of the
person that existed at the time of initial licensing and payment
of the initial fantasy contest license fee, or more than 20% of
the securities or other ownership interests of a corporation or
other form of business entity that owns directly or indirectly
at least 20% of the voting or other securities or other
ownership interests of the licensed operator.
§ 328. Penalties.
(a) Suspension or revocation of license.--
(1) After a public hearing with at least 15 days'
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notice, the board may suspend or revoke a licensed operator's
fantasy contest license in any case where a violation of this
chapter has been shown by a preponderance of the evidence.
(2) The board may revoke a fantasy contest license if
the board finds that facts not known by the board at the time
the board considered the application indicate that such
license should not have been issued.
(b) Administrative penalties.--
(1) In addition to suspension or revocation of a fantasy
contest license, the board may impose administrative
penalties on a licensed operator for violations of this
chapter not to exceed $5,000 for each violation.
(2) A violation of this chapter that is determined to be
an offense of a continuing nature shall be deemed to be a
separate offense on each event or day during which the
violation occurs, except that the total administrative
penalty for an offense of a continuing nature may not exceed
$25,000.
(3) The licensed operator shall have the right to appeal
administrative penalties in accordance with 2 Pa.C.S. Chs. 5
Subch. A (relating to practice and procedure of Commonwealth
agencies) and 7 Subch. A (relating to judicial review of
Commonwealth agency action).
(4) Penalties imposed under this subsection shall be
deposited into the General Fund.
(c) Civil penalties.--
(1) In addition to the provisions of this section, a
person who knowingly violates a provision of this chapter
shall be liable for a civil penalty of not more than $1,000
for each such violation.
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(2) The civil penalty shall be recovered in a civil
action brought by the board and shall be paid into the
General Fund.
SUBCHAPTER D
FISCAL PROVISIONS
Sec.
331. Fantasy contest tax.
332. Licensed operator deposits.
333. Responsibility and authority of department.
§ 331. Fantasy contest tax.
(a) Imposition.--Each licensed operator shall report to the
department and pay from its quarterly fantasy contest adjusted
revenues, on a form and in the manner prescribed by the
department, a tax of 12% of its quarterly fantasy contest
adjusted revenues.
(b) Deposits and distributions.--
(1) The tax imposed under subsection (a) shall be
payable to the department on a quarterly basis and shall be
based upon quarterly fantasy contest adjusted revenue derived
during the previous quarter.
(2) All funds owed to the Commonwealth under this
section shall be held in trust for the Commonwealth by the
licensed operator until the funds are paid to the department.
(3) The tax imposed under subsection (a) shall be
deposited into the General Fund.
(c) Penalty.--
(1) A licensed operator who fails to timely remit to the
department amounts required under this section shall be
liable, in addition to any liability imposed elsewhere in
this chapter, to a penalty of 5% per month up to a maximum of
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25% of the amounts ultimately found to be due, to be
recovered by the department.
(2) Penalties imposed under this subsection shall be
deposited in the General Fund.
§ 332. Licensed operator deposits.
(a) Accounts established.--The State Treasurer shall
establish within the State Treasury an account for each licensed
operator for the deposit required under subsection (b) to:
(1) recover costs or expenses incurred by the board and
the department in carrying out their powers and duties under
this chapter based upon a budget submitted by the board and
the department under subsection (c); and
(2) repay any loans made by the General Fund to the
board or the department in connection with carrying out its
powers and duties under this chapter.
(b) Deposits.--
(1) The department shall determine the appropriate
assessment amount for each licensed operator, which shall be
a percentage assessed on the licensed operator's fantasy
contest adjusted revenues. Each licensed operator shall
deposit funds into its account on a quarterly basis.
(2) The percentage assessed shall not exceed an amount
necessary to:
(i) recover costs or expenses incurred by the board
and the department in carrying out their powers and
duties under this chapter based on a budget submitted by
the board and the department under subsection (c); and
(ii) repay any loans made from the General Fund to
the board in connection with carrying out its powers and
duties under this chapter.
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(c) Itemized budget reporting.--
(1) The board and the department shall prepare and
annually submit to the chairperson of the Appropriations
Committee of the Senate and the chairperson of the
Appropriations Committee of the House of Representatives an
itemized budget consisting of amounts to be appropriated out
of the accounts established under this section necessary to
administer this chapter.
(2) As soon as practicable after submitting copies of
the itemized budget, the board and the department shall
jointly prepare and submit to the chairperson of the
committees analyses of and make recommendations regarding the
itemized budget.
(d) Appropriation.--Costs and expenses from accounts
established under subsection (a) shall only be disbursed upon
appropriation by the General Assembly.
(e) Penalty.--
(1) A licensed operator who fails to timely remit to the
department amounts required under this section shall be
liable, in addition to any liability imposed elsewhere in
this chapter, to a penalty of 5% per month up to a maximum of
25% of the amounts ultimately found to be due, to be
recovered by the department.
(2) Penalties imposed under this subsection shall be
deposited into the General Fund.
§ 333. Responsibility and authority of department.
(a) General rule.--The department may administer and collect
taxes imposed under section 331 (relating to fantasy contest
tax) and interest imposed under section 806 of the act of April
9, 1929 (P.L.343, No.176), known as The Fiscal Code, and
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promulgate and enforce rules and regulations to carry out its
prescribed duties in accordance with sections 331 and 332
(relating to licensed operator deposits), including the
collection of taxes, penalties, assessments and interest.
(b) Procedure.--For purposes of implementing sections 331
and 332, the department may promulgate regulations in the same
manner in which the board is authorized as provided in section
312 (relating to temporary regulations).
SUPBCHAPTER E
MISCELLANEOUS PROVISIONS
Sec.
341. Applicability of other statutes.
342. Licensed gaming entities.
343. Funding.
§ 341. Applicability of other statutes.
(a) Unlawful gambling.--The provisions of 18 Pa.C.S. § 5513
(relating to gambling devices, gambling, etc.) shall not apply
to a fantasy contest conducted in accordance with this chapter.
(b) Pool selling and bookmaking.--The provisions of 18
Pa.C.S. § 5514 (relating to pool selling and bookmaking) shall
not apply to a fantasy contest conducted in accordance with this
chapter.
(c) Lotteries.--The provisions of 18 Pa.C.S. § 5512
(relating to lotteries, etc.) shall not apply to a fantasy
contest conducted in accordance with this chapter.
(d) State Lottery Law.--This chapter shall not apply to a
fantasy contest or similar product authorized under the act of
August 26, 1971 (P.L.351, No.91), known as the State Lottery
Law, and authorized solely by the department and the Division of
the State Lottery.
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§ 342. Licensed gaming entities.
(a) Scope.--This section shall apply to a licensed gaming
entity that holds a fantasy contest license.
(b) Applicability.--Nothing in this chapter shall be
construed to limit the board's general and sole regulatory
authority over the conduct of gaming or related activities under
Part II (relating to gaming), including, but not limited to, the
certification, registration and regulation of gaming service
providers and individuals and entities associated with them.
(c) Restricted contests.--A licensed gaming entity may offer
fantasy contests that are exclusive to participants who are at
least 21 years of age.
(d) Promotional play.--For a restricted contest under
subsection (c), a licensed gaming entity may offer slot machine
or table game promotional play to a participant who is at least
21 years of age as a prize or award or for participating in a
fantasy contest conducted by the licensed gaming entity.
(e) Gaming service providers.--A licensed operator who is
not a licensed gaming entity may, at the discretion of the
board, be certificated or registered as a gaming service
provider under section 1317.2 (relating to gaming service
provider) in order to operate fantasy contests subject to the
restrictions of subsection (c) on behalf of a licensed gaming
entity.
§ 343. Funding.
(a) Appropriation.--The following amounts are appropriated:
(1) The sum of $1,250,000 is appropriated to the board
for the fiscal year period July 1, 2017, to June 30, 2018,
for the purpose of implementing and administering the
provisions of this chapter.
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(2) The sum of $500,000 is appropriated to the
department for the fiscal period July 1, 2017, to June 30,
2018, for the purpose of implementing and administering the
provisions of this chapter.
(b) Repayment.--The appropriations in this section shall be
considered loans from the General Fund and shall be repaid to
the General Fund quarterly through assessments on licensed
operators authorized under section 332 (relating to licensed
operator deposits) by the department. The total amounts
appropriated to the board and department under this section
shall be repaid to the General Fund no later than 10 years from
the date the board issues the first fantasy contest license.
(c) Unused amounts.--On July 1, 2018, any portion of amounts
appropriated under subsection (a) that is unexpended,
unencumbered or uncommitted as of June 30 of the prior fiscal
year shall automatically be transferred to the General Fund.
Section 2. This act shall take effect as follows:
(1) Except as set forth in paragraph (2)(ii), the
addition of 4 Pa.C.S. Ch. 3 shall take effect in 180 days.
(2) The following provisions shall take effect
immediately:
(i) This section.
(ii) The addition of 4 Pa.C.S. § 343.
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