Regular Session 2017-2018 House Bill 0392 P.N. 0404

PRINTER'S NO. 404

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

392

Session of

2017

INTRODUCED BY DUNBAR, D. COSTA, KORTZ, MILLARD, NEILSON,

ORTITAY, SANKEY AND YOUNGBLOOD, FEBRUARY 8, 2017

REFERRED TO COMMITTEE ON GAMING OVERSIGHT, FEBRUARY 8, 2017

AN ACT

Amending Title 4 (Amusements) of the Pennsylvania Consolidated

Statutes, providing for fantasy contests; in general

provisions, further providing for legislative intent and for

definitions; in Pennsylvania Gaming Control Board, further

providing for Pennsylvania Gaming Control Board established,

for general and specific powers, for licensed gaming entity

application appeals from board, for board minutes and

records, for regulatory authority of board, for slot machine

license fee, for reports of board and for diversity goals of

board; in licensees, further providing for Category 3 slot

machine license, for slot machine license application, for

supplier licenses and for manufacturer licenses, providing

for nongaming service provider, further providing for slot

machine testing and certification standards and for license

renewals and providing for slot machine license operation

fee; in table games, further providing for other financial

transactions, for table game device and associated equipment

testing and certification standards and for local share

assessment; providing for interactive gaming; in revenues,

further providing for establishment of State Gaming Fund and

net slot machine revenue distribution; in administration and

enforcement, further providing for responsibility and

authority of the Department of Revenue, for compulsive and

problem gambling program, for financial and employment

interests, for political influence, for regulation requiring

exclusion or ejection of certain persons, for repeat

offenders excludable from licensed gaming facility, for list

of persons self excluded from gaming activities, for

investigations and enforcement and for prohibited acts and

penalties; in miscellaneous provisions, further providing for

appropriations; and making a related repeal.

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

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:

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"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

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

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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.

"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

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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.

"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

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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

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.

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"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

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.

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(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.

(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

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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:

(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

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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

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.

(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.

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(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

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

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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.

other files and records as it may deem appropriate.

(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

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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.

(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.

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(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

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

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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

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.

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§ 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.

(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.

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(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

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.

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

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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

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

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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.

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

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.

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(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

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

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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

authorization to conduct fantasy contests shall immediately

cease until the board has notified the applicant that the

suspension is no longer in effect.

(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.

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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

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

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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.

(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.

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(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

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:

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(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

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

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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;

(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

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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

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

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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

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.

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

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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'

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

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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.

(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.

(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.--

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(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.

(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 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.--

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(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.

(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.

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(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

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

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