PRINTER'S NO. 785
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
665
Session of
2017
INTRODUCED BY RESCHENTHALER, WILLIAMS, SCARNATI, BARTOLOTTA AND
STEFANO, MAY 4, 2017
REFERRED TO COMMUNITY, ECONOMIC AND RECREATIONAL DEVELOPMENT,
MAY 4, 2017
AN ACT
Providing for fantasy contests; imposing duties upon the
Department of Revenue, the Department of Drug and Alcohol
Programs and the Pennsylvania Gaming Control Board; and
making appropriations.
TABLE OF CONTENTS
Chapter 1. General Provisions
Section 101. Short title.
Section 102. Definitions.
Chapter 3. Administration
Section 301. General and specific powers of board.
Section 302. Temporary regulations.
Section 303. Fantasy contest license appeals.
Section 304. Board minutes and records.
Section 305. Reports of board.
Chapter 5. Licensure
Section 501. General prohibition.
Section 502. Application.
Section 503. Issuance and denial of license.
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Section 504. License renewal.
Section 505. Conditions of licensure.
Section 506. Prohibitions.
Section 507. Change in ownership or control of licensed
operators.
Section 508. Penalties.
Chapter 7. Fiscal Provisions
Section 701. Fantasy contest tax.
Section 702. Licensed operator deposits.
Section 703. Responsibility and authority of department.
Chapter 9. Miscellaneous Provisions
Section 901. Applicability of other statutes.
Section 902. Licensed gaming entities.
Section 903. Funding.
Section 904. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
GENERAL PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Fantasy
Sports Consumer Protection Act.
Section 102. Definitions.
The following words and phrases when used in this act 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." The licensed placement, operation and
play of slot machines and table games under 4 Pa.C.S. (relating
to amusements) as authorized and approved by the board.
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"Controlling interest." Either of the following:
(1) For a publicly traded domestic or foreign
corporation, 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 minimum 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
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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 act.
"Gaming floor." A portion of a licensed facility where slot
machines or table games have been installed for use or play.
"Gaming service provider." As defined in 4 Pa.C.S. § 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.
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"Key employee." An individual who is employed by an
applicant for a fantasy contest license or an individual who is
empowered to make discretionary decisions that regulate fantasy
contest operations as determined by the board.
"Licensed entity representative." As defined in 4 Pa.C.S. §
1103 (relating to definitions).
"Licensed gaming entity." As defined in 4 Pa.C.S. § 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
another form of legal business entity.
"Principal." An officer, director, person who directly holds
a beneficial interest in or ownership of an amount equal to or
greater than 5% of all 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
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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.
"Season-long fantasy sports contest." A fantasy contest
offered by a licensed operator or a fantasy contest that is
conducted over an entire sports season where entry fees are paid
prior to the start of the season.
CHAPTER 3
ADMINISTRATION
Section 301. General and specific powers of board.
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(a) General powers.--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 act.
(b) Specific powers.--The board shall have the following
powers:
(1) To issue, approve, renew, revoke, suspend, condition
or deny issuance of a single fantasy contest license to a
licensed operator.
(2) To suspend, condition or deny the issuance or
renewal of a license or levy fines for a violation of this
act.
(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 702 required to meet the obligations under this act
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 act are not enacted by June 30,
funds appropriated for the administration of this act which
are unexpended, uncommitted and unencumbered at the end of a
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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 act. Except as
provided in section 302, 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 act.
(8) To require key employees and principals of
prospective and existing applicants and licensees to submit
to fingerprinting by the Pennsylvania State Police. The
Pennsylvania State Police shall submit the fingerprints to
the Federal Bureau of Investigation for purposes of verifying
the identity of the individual and obtaining records of
criminal arrests and convictions.
(9) To require prospective and existing applicants and
licensees to submit photographs consistent with the standards
of the Commonwealth Photo Imaging Network.
(10) To delegate any of the board's responsibilities
under this act to the executive director of the board or
other designated staff.
(11) To require licensed operators and applicants for a
fantasy contest license to submit information or
documentation necessary to ensure the proper regulation of
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fantasy contests in accordance with this act.
(12) 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 act and board regulations;
(ii) annually contract with a testing laboratory
approved by the board to verify compliance with the
provisions of this act and board regulations; and
(iii) annually submit to the board and department a
copy of the audit report required under subparagraph (i)
and submit to the board a copy of the report of the
testing laboratory required under subparagraph (ii).
(13) In conjunction with the Department of Drug and
Alcohol Programs, to develop a process by which licensed
operators provide participants with a single toll-free
telephone number that provides individuals with information
on how to access appropriate treatment services for
compulsive and problem play.
(14) To authorize licensed entity representatives who:
(i) 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
licensed operator, applicant or other person being
represented.
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(ii) Have an affirmative duty to update the licensed
entity representative's registration information on an
ongoing basis. Failure to update shall be punishable by
the board.
(c) Exceptions.--Except as provided under section 902,
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 additional permits or licenses not
specifically enumerated in this act.
(3) To impose additional conditions of licensure on
licensed operators or prohibitions on the operation of
fantasy contests not specifically enumerated in this act.
Section 302. Temporary regulations.
(a) Promulgation.--In order to facilitate the prompt
implementation of this act, 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
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than two years following the effective date of this section.
Regulations adopted after this period shall be promulgated as
provided by law.
Section 303. Fantasy contest license appeals.
An applicant or a licensee may appeal a 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).
Section 304. Board minutes and records.
(a) 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.
(b) Other files and records.--The board shall maintain other
files and records as the board may deem appropriate.
(c) Confidentiality of information.--
(1) The following information submitted by an applicant
for a fantasy contest license under section 502 or otherwise
obtained by the board as part of a background or other
investigation from a source shall be confidential and
withheld from public disclosure:
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(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.
(v) Records of an applicant as required by
regulation.
(vi) 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
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
a 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 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 the 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 confidentiality
provided for in this subsection as a condition for the
approval of an application, renewal of a fantasy contest
license or another action of the board.
(d) Notice.--Notice of the contents of 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.
(e) 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 act.
Section 305. Reports of board.
(a) Annual report.--The board shall prepare an annual report
which includes the following:
(1) Total fantasy contest adjusted revenues.
(2) 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) 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.
CHAPTER 5
LICENSURE
Section 501. 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 act 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 act.
(2) The board requires the person to suspend the
operation of a fantasy contest until the license is issued or
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renewed.
Section 502. Application.
(a) Form and information.--An application for a license
shall be submitted on a form and in a manner as shall be
required by the board. The application shall contain the
following information:
(1) The name, Federal employer identification number and
principal address of the applicant. If the applicant is a
corporation, this paragraph requires the state of the
applicant's incorporation, the full name and address of each
officer and director. If the applicant is a foreign
corporation, this paragraph requires a statement of whether
or not the foreign corporation is qualified to do business in
this Commonwealth. If the applicant is a partnership or joint
venture, the name and address of each officer.
(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 Federal and State 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 505.
(7) Fingerprints and photographs obtained from the
Pennsylvania State Police. The fingerprints shall be
submitted by the Pennsylvania State Police for a Federal
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criminal check and results returned to the board.
(8) Other information required by the board.
(b) Nonrefundable application fee.--Each application
submitted under this act 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 503.
(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 an inquiry
or investigation.
(d) Abbreviated application process.--The board may
establish an abbreviated application process for a fantasy
contest license for persons that are also licensed to conduct
fantasy contests in another jurisdiction or a licensed gaming
entity that applies to obtain a fantasy contest license.
Information not in possession of the board that is necessary to
fulfill the requirements of this act.
Section 503. 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 an
applicant that:
(1) Has submitted a completed application and paid the
nonrefundable application fee.
(2) Has demonstrated that the applicant has the
financial stability, integrity and responsibility to comply
with the provisions of this act and regulations established
by the board.
(3) Has not been denied a license under subsection (b).
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(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 information
requested;
(2) employs a principal or key employee who has been
convicted of a felony, a crime of moral turpitude or a
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 act or of requirements of the board;
(4) has had a registration, permit or license to conduct
fantasy contests denied or revoked in another jurisdiction;
(5) has legally defaulted in the payment of an
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 a
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, if the applicant conducted fantasy
contests in the previous calendar year in any jurisdiction,
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an amount equivalent to 7.5% of the applicant's fantasy
contest adjusted revenues for the previous calendar year,
whichever is less.
(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 may establish
an abbreviated approval process for the issuance of a fantasy
contest license to a licensed gaming entity whose slot machine
license and table game certificate are in good standing.
Section 504. License renewal.
(a) Renewal.--
(1) A license issued under this act shall be valid for a
period of five years.
(2) Nothing in this paragraph shall be construed to
relieve a licensed operator of the affirmative duty to notify
the board of changes relating to the status of the licensed
operator's fantasy contest license or to 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
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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 another sanction the board may impose
under this act, the board may suspend, revoke or deny renewal
of a fantasy contest license issued under this act if the
board receives information that:
(i) the applicant or any of the applicant's key
employees or principals are in violation of any provision
of this act;
(ii) the applicant has furnished the board with
false or misleading information;
(iii) the information contained in the applicant's
initial application or renewal application is no longer
true and correct;
(iv) the applicant has failed to remit taxes or
assessments required under section 701, 702 or 703; or
(v) the applicant has legally defaulted in the
payment of an 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.
(c) Renewal fee.--
(1) Within 30 days of the board renewing a fantasy
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contest license, the licensed operator shall pay to the board
a renewal fee of $5,000 or an amount equivalent to 7.5% of
the applicant's fantasy contest adjusted revenues, 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.
Section 505. Conditions of licensure.
As a condition of licensure, a licensed operator shall
establish and implement the following procedures related to
conduct of fantasy contests:
(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 a
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
username 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 an entry fee.
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(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 in part, on
the accumulated statistical results of a team of individuals
in the league in which the player is a member.
(6) Allow an individual 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
single 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
satisfy the provisions under 4 Pa.C.S. § 1509(c)(1) (relating
to compulsive and problem gambling program).
(9) Disclose the number of entries a single participant
may submit to each fantasy contest and take commercially
reasonable steps to prevent participants from submitting more
than the allowable number.
(10) Prevent the licensed operator's principals,
employees and relatives living in the same household as a
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principal or an employee from competing in a fantasy contest
offered by a 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
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 which 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, when prizes and awards shall
be 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 701, 702 and 703.
(16) Prohibit the use of scripts by participants and
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implement technologies to prevent the use of scripts.
(17) Monitor fantasy contests for the use of scripts and
restrict players found to have used scripts from
participation in future fantasy contests.
(18) Establish another condition deemed appropriate by
the board.
Section 506. Prohibitions.
(a) Actions.--A licensed operator may not:
(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 self-excluded
individual during the time period in which the individual has
self-excluded from the licensed operator's fantasy contests;
(8) knowingly permit a self-excluded individual to enter
the licensed operator's fantasy contests during the time
period in which the individual has self-excluded from the
licensed operator's fantasy contests;
(9) knowingly allow a self-excluded individual to keep a
prize or award;
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(10) knowingly accept a deposit in excess of a limit
established by a participant for the specific time period
established by the participant;
(11) share confidential information that could affect
fantasy contest play with third parties until the information
is made publicly available;
(12) knowingly permit a principal, an employee or a
relative living in the same household as a principal or an
employee to become a participant in a fantasy contest offered
by a licensed operator to the general public in which a
licensed operator offers a prize or award;
(13) offer a fantasy contest where:
(i) the minimum 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
(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;
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(14) fail to remit taxes or assessments to the
department in accordance with sections 701, 702 and 703;
(15) knowingly allow a participant to use a script
during a fantasy contest; or
(16) perform another action prohibited by the board.
(b) Deposit.--The licensed operator shall deposit the amount
of the prize or award under subsection (a)(9) in the General
Fund.
Section 507. Change in ownership or control of licensed
operators.
(a) Notification and approval.--
(1) A licensed operator shall notify the board upon
becoming aware of a 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) Another transaction or occurrence deemed by
the board to be relevant to fantasy contest license
qualifications.
(2) The following shall apply:
(i) Notwithstanding the provisions of paragraph (1)
and subject to subparagraph (ii), a licensed operator
shall not be required to notify the board of an
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
under paragraph (1)(i) or (ii), the securities or
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interests are publicly traded securities and the holdings
of the 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.
(ii) 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 a 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 act and shall pay the application fee
and license fee as required by sections 502 and 503, 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 a licensed operator shall
require that the new entity independently qualify for a
fantasy contest license in accordance with this act, and
shall pay a new application and license fee as required by
sections 502 and 503, except that if the new entity is
another licensed operator, the new entity shall not be
required to requalify for a fantasy contest license or pay
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another application fee and license fee.
(c) Change in control defined.--For purposes of this
section, a change in control of a licensed operator shall mean
the acquisition by a person or group of persons acting in
concert of:
(1) more than 20% of a licensed operator's securities
or other ownership interests, with the exception of ownership
interest of the person that existed at the time of initial
licensing and payment of the initial fantasy contest license
fee; or
(2) 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.
(d) License revocation.--Failure to comply with this section
may cause the fantasy contest license issued under this act 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 a required application or license fee has been paid.
Section 508. 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 a case where a violation of this
act 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 the
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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 act
not to exceed $5,000 for each violation.
(2) A violation of this act 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 act shall
be liable for a civil penalty of not more than $1,000 for
each violation.
(2) The civil penalty shall be recovered in a civil
action brought by the board and shall be paid into the
General Fund.
CHAPTER 7
FISCAL PROVISIONS
Section 701. Fantasy contest tax.
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(a) Imposition.--Each licensed operator shall report to the
department and pay from the licensed operator's quarterly
fantasy contest adjusted revenues, on a form and in the manner
prescribed by the department, a tax of 12% of 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 a liability imposed elsewhere in this
act, 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.
Section 702. Licensed operator deposits.
(a) Accounts established.--The State Treasurer shall
establish within the Treasury Department an account for each
licensed operator for the deposit of sums required under
subsection (b) to:
(1) recover costs or expenses incurred by the board and
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the department in carrying out the powers and duties under
this act based upon a budget submitted by the board and the
department under subsection (c); and
(2) repay loans made by the General Fund to the board or
the department in connection with carrying out the powers and
duties under this act.
(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 the licensed operator's 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 the powers and duties
under this act based on a budget submitted by the board
and the department under subsection (c); and
(ii) repay loans made from the General Fund to the
board in connection with carrying out the powers and
duties under this act.
(c) Itemized budget reporting.--
(1) The board and the department shall prepare an
itemized budget consisting of amounts to be appropriated out
of the accounts established under this section necessary to
administer this act and annually submit that budget to the
chairperson of the Appropriations Committee of the Senate and
the chairperson of the Appropriations Committee of the House
of Representatives.
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(2) As soon as practicable after submitting copies of
the itemized budget, the board and the department shall
jointly prepare analyses of and make recommendations
regarding the itemized budget and submit the analyses to the
chairperson of the Appropriations Committee of the Senate and
the chairperson of the Appropriations Committee of the House
of Representatives.
(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 failing to timely remit to the
department amounts required under this section shall be
liable, in addition to a liability imposed elsewhere in this
act, 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.
Section 703. Responsibility and authority of department.
(a) General rule.--The department may administer and collect
taxes imposed under section 701 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 the department's prescribed duties in
accordance with sections 701 and 702, including the collection
of taxes, penalties, assessments and interest.
(b) Procedure.--The department may promulgate regulations in
the same manner in which the board is authorized under section
302.
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CHAPTER 9
MISCELLANEOUS PROVISIONS
Section 901. 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 act.
(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
act.
(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 act.
(d) State Lottery Law.--This act shall not apply to a
fantasy contest or similar game or contest 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.
Section 902. 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 act shall be construed
to limit the board's general and sole regulatory authority over
the conduct of gaming or related activities under 4 Pa.C.S.
(relating to amusements), 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.
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(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 4 Pa.C.S. § 1317.2 (relating to gaming service
provider) in order to operate fantasy contests subject to the
restrictions of subsection (d) on behalf of a licensed gaming
entity.
Section 903. Funding.
(a) Appropriation.--The following amounts are appropriated:
(1) The sum of $1,250,000 is appropriated to the board
for the fiscal period July 1, 2017, to June 30, 2018, for the
purpose of implementing and administering the provisions of
this act.
(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 act.
(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 702 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.
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(c) Unused amounts.--On July 1, 2018, a 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 904. Effective date.
This act shall take effect as follows:
(1) Section 903 shall take effect immediately.
(2) This section shall take effect immediately.
(3) The remainder of this act shall take effect in 180
days.
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