PRINTER'S NO. 3494
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2150
Session of
2015
INTRODUCED BY DUNBAR, DIAMOND, A. HARRIS, KORTZ, KOTIK, MASSER,
MILLARD, NEILSON AND YOUNGBLOOD, JUNE 9, 2016
REFERRED TO COMMITTEE ON GAMING OVERSIGHT, JUNE 9, 2016
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.
Section 504. License renewal.
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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.
"Controlling interest." Either of the following:
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(1) For a publicly traded domestic or foreign
corporation, a controlling interest is an interest in an
applicant for a fantasy contest license or a licensed
operator 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 any securities 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 in which:
(1) The value of all prizes or awards offered to winning
participants is established and made known to participants in
advance of the contest.
(2) All winning outcomes reflect the relative knowledge
and skill of participants and are determined by accumulated
statistical results of the performance of individuals,
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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.
"Fantasy contest terminal." A physical, land-based
computerized or electronic terminal or similar device that
allows participants to:
(1) register for a fantasy contest account;
(2) pay an entry fee;
(3) select an imaginary team;
(4) receive winnings; or
(5) otherwise participate in a fantasy contest.
"Gaming floor." Any 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).
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"In-State participant." An individual who resides within
this Commonwealth and participates in a fantasy contest
conducted by a licensed operator. The term includes an
individual who pays an entry fee through a fantasy contest
terminal within a licensed facility.
"In-State percentage." For each fantasy contest, the
percentage, rounded to the nearest tenth of a percent, equal to
the total entry fees collected from all in-State participants
divided by the total entry fees collected from all participants
in the fantasy contest.
"Key employee." An individual who is employed by an
applicant for a fantasy contest license or a licensed operator
in a director or department head capacity and who is empowered
to make discretionary decisions that regulate fantasy contest
operations as determined by the board.
"Licensed facility." 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 resides 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
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a beneficial interest in or ownership of the securities of an
applicant for a fantasy contest license or a licensed operator,
person who has a controlling interest in an applicant for a
fantasy contest license or a licensed operator or who has the
ability to elect a majority of the board of directors of a
licensed operator or to otherwise control a licensed operator,
lender or other licensed financial institution of an applicant
for a fantasy contest license or a licensed operator, other than
a bank or lending institution which makes a loan or holds a
mortgage or other lien acquired in the ordinary course of
business, underwriter of an applicant for a fantasy contest
license or a licensed operator or other person or employee of an
applicant for a fantasy contest license or a licensed operator
deemed to be a principal by the board.
"Prize or award." Anything of value worth $100 or more or
cash.
"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.).
CHAPTER 3
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ADMINISTRATION
Section 301. General and specific powers of board.
(a) General powers.--
(1) The board shall have regulatory authority over
licensed operators and shall ensure the integrity of fantasy
contests offered in this Commonwealth in accordance with this
act.
(2) The board may employ individuals as necessary to
carry out the requirements of this act, 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 fantasy
contest licenses.
(2) At the board's discretion, to suspend, condition or
deny the issuance or renewal of a fantasy contest license or
levy fines for any violation of this act.
(3) To publish each January in the Pennsylvania Bulletin
and 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
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(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,
any funds appropriated for the administration of this act
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 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) At the board's discretion, to delegate any of the
board's responsibilities under this act to the Bureau of
Investigations and Enforcement or the Office of Enforcement
Counsel.
(9) To require licensed operators and applicants for a
fantasy contest license to submit any information or
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documentation necessary to ensure the proper regulation of
fantasy contests in accordance with this act.
(10) To require licensed operators to:
(i) annually contract with a certified public
accountant to conduct an independent audit in accordance
with standards promulgated by the State Board of
Accountancy to verify compliance with the provisions of
this act;
(ii) annually contract with a testing laboratory
approved by the board to verify compliance with the
provisions of this act; and
(iii) 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 refers individuals to appropriate treatment
services for compulsive and problem play of fantasy contests.
(12) At the board's discretion, to permit the placement
and operation of fantasy contest terminals within licensed
facilities and to ensure the integrity of fantasy contest
terminals.
(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.
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(2) To require any 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.--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.
Section 303. 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).
Section 304. Board minutes and records.
(a) Record of proceedings.--The board shall maintain a
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record of all proceedings held at public meetings of the board.
The verbatim transcript of the proceedings shall be the property
of the board and shall be prepared by the board upon the request
of any board member or upon the request of any other person and
the payment by that person of the costs of preparation.
(b) Applicant information.--
(1) The board shall maintain a list of all applicants
for a fantasy contest license. The list shall include a
record of all actions taken with respect to each applicant.
The list shall be open to public inspection during the normal
business hours of the board.
(2) Information under paragraph (1) regarding an
applicant whose fantasy contest license has been denied,
revoked or not renewed shall be removed from the list after
seven years from the date of the action.
(c) Other files and records.--The board shall maintain such
other files and records as it may deem appropriate.
(d) 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 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
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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 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 information deemed confidential by
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the board upon a showing of good cause by the applicant
for a fantasy contest license or licensed operator.
(2) No claim of confidentiality may be made regarding
any criminal history record information that is available to
the public under 18 Pa.C.S. § 9121(b) (relating to general
regulations).
(3) No claim of confidentiality shall be made regarding
any record in possession of the board that is otherwise
publicly available from a Commonwealth agency, local agency
or another jurisdiction.
(4) The information made confidential under this section
shall be withheld from public disclosure, in whole or in
part, except that any confidential information shall be
released upon the order of a court of competent jurisdiction
or, with the approval of the Attorney General, to a duly
authorized law enforcement agency or shall be released to the
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
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prescribed by the rules and regulations adopted by the board.
(f) Information held by department.--Files, records, reports
and other information in the possession of the department
pertaining to licensed operators shall be made available to the
board as may be necessary for the effective administration of
this act.
Section 305. Reports of board.
(a) General rule.--No later than 12 months after the
effective date of this section and every year thereafter, the
annual report submitted by the board under 4 Pa.C.S. § 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.
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.
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(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 any fantasy contest until the license is issued
or renewed.
Section 502. Application.
(a) Form and information.--An application for a fantasy
contest 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) The name, Federal employer identification number and
principal address of the applicant; if a corporation, the
state of its incorporation, the full name and address of each
officer and director thereof, and, if a foreign corporation,
whether it is qualified to do business in this Commonwealth;
if a partnership or joint venture, the name and address of
each officer thereof.
(2) The name and address of the person having custody of
the applicant's financial records.
(3) The names and addresses of key employees.
(4) The names and addresses of each of the applicant's
principals.
(5) Information, documentation and assurances related to
financial and criminal history as the board deems necessary
to establish by clear and convincing evidence the financial
stability, integrity and responsibility of the applicant and
the applicant's key employees and principals.
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(6) Information and documentation necessary to establish
the applicant's ability to comply with section 505.
(7) Any 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
shall be retained by the board 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 any
inquiry or investigation.
(d) Abbreviated application process.--The board, at its
discretion, may establish an abbreviated application process for
a fantasy contest license for persons that are also licensed
gaming entities. The abbreviated application may only require
information not in possession of the board that is necessary to
fulfill the requirements of this act.
Section 503. Issuance and denial of license.
(a) Duty to review applications.--The board shall review all
applications for a fantasy contest license and shall issue a
fantasy contest license to any applicant that:
(1) Has submitted a completed application and paid the
nonrefundable application fee as required by the board under
section 502.
(2) Has demonstrated by clear and convincing evidence
that the applicant has the financial stability, integrity and
responsibility to comply with the provisions of this act and
regulations established by the board.
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(3) Has not been denied a fantasy contest license under
subsection (b).
(b) Reasons to deny applications.--The board shall deny an
application for a fantasy contest license if the applicant:
(1) has knowingly made a false statement of material
fact or has deliberately failed to disclose any information
requested;
(2) 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 act or of any requirements of the board;
(4) has had a registration, permit or license to conduct
fantasy contests denied for just cause, suspended or revoked
in any other jurisdiction;
(5) has legally defaulted in the payment of any
obligation or debt due to the Commonwealth or is not
compliant with taxes due to the department; or
(6) is not qualified to do business in this Commonwealth
or is not subject to the jurisdiction of the courts of the
Commonwealth.
(c) Time period for review.--The board shall conclude its
review of an application for a fantasy contest license within 60
days of receipt of the application. If the license is not
issued, the board shall provide the applicant with the
justification for not issuing such 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
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license fee of $50,000 or an amount equivalent to 7.5% of the
applicant's fantasy contest adjusted revenues, 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 and table game certificate are
in good standing.
Section 504. License renewal.
(a) Renewal.--
(1) A fantasy contest license issued under this act
shall be renewed on an annual basis.
(2) Nothing in this paragraph 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 60 days prior to the
expiration of the license and include an update of the
information contained in the initial application for a
fantasy contest license. A fantasy contest license for which
a completed renewal application and fee as required under
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subsection (c) has been received by the board shall continue
in effect unless and until the board sends written
notification to the licensed operator that the board has
denied the renewal of the license.
(b) Revocation or failure to renew.--
(1) In addition to any other sanction the board may
impose under this act, the board may at its discretion
suspend, revoke or deny renewal of a fantasy contest license
issued under this act if it receives information from any
source 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 any 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 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 the previously
approved 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
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cease until the board has notified the applicant that the
suspension is no longer in effect.
(c) Renewal fee.--
(1) Within 30 days of the board renewing a fantasy
contest license, the licensed operator shall pay to the board
a renewal fee of $5,000.
(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 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 establishing 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 and location of a participant
prior to permitting access to a fantasy contest account.
(4) Ensure rules established by the licensed operator
for a fantasy contest are made known to a participant prior
to the acceptance of any 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 part, on the
accumulated statistical results of a team of individuals on
which the player is a member.
(6) Allow a participant 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 participant to restrict the total amount of
entry fees 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 designate
and train classes of employees that shall be responsible for
providing 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 reasonable steps
to prevent such participants from submitting more than the
allowable number.
(10) Prevent the licensed operator's employees and
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relatives living in the same household of an employee from
competing in a fantasy contest offered by the licensed
operator to the general public and in which fantasy contest
the licensed operator offers a prize or award.
(11) Identify classes of employees who, by the nature of
their duties and employment responsibilities, could provide
information that would create an unfair advantage to a
participant in a fantasy contest conducted by another
licensed operator and implement reasonable procedures to
prevent such classes of employees and their relatives living
in the same household from participating in a fantasy contest
for a prize or award operated by another licensed operator.
(12) Prevent the sharing of confidential information
that could affect fantasy contest play with third parties
until the information is made publicly available.
(13) Maintain the confidentiality of a participant's
personal and financial information.
(14) 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, irrevocable letter of credit, bond or a
combination thereof in an amount sufficient to pay all prizes
and awards offered to winning participants.
(15) Provide winning in-State participants with
information and documentation necessary to ensure the proper
reporting of winnings by in-State participants to the
department.
(16) Remit taxes or assessments to the department in
accordance with sections 701, 702 and 703.
Section 506. Prohibitions.
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No licensed operator may:
(1) accept an entry fee from or permit a natural person
under 18 years of age to become a participant in a fantasy
contest;
(2) offer a fantasy contest based, in whole or in part,
on collegiate athletic events or collegiate 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 a loan to a participant for any purpose;
(7) directly market to a participant during the time
period in which the participant has self-excluded from the
licensed operators' 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;
(9) knowingly accept an entry fee 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 an employee or relative living in
the same household of an employee to become a participant in
a fantasy contest offered by the licensed operator in which a
licensed operator offers a prize or award;
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(12) knowingly permit certain classes of employees from
becoming participants in a fantasy contest for a prize or
award offered by another licensed operator if becoming
participants would create an unfair advantage;
(13) offer a fantasy contest where:
(i) the value of all prizes or awards offered to
winning participants is not established and made known to
participants in advance of the fantasy contest;
(ii) winning outcomes do not reflect the relative
knowledge and skill of participants;
(iii) the winning outcome is based on the score,
point spread or performance of a single actual team or
combination of teams or solely on a single performance of
an individual athlete or player in a single actual event;
or
(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;
(14) except as permitted under section 902, offer or
make available in this Commonwealth a fantasy contest
terminal; and
(15) fail to remit taxes or assessments to the
department in accordance with sections 701, 702 and 703.
Section 507. Change in ownership or control of licensed
operators.
(a) Notification and approval.--
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(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 5% 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,
provided, however, that the institutional investor may vote
on matters put to the vote of the outstanding security
holders. Notice to the board shall be required prior to
completion of any proposed or contemplated change of
ownership of a licensed operator that meets the criteria of
this section.
(b) Qualification of purchaser and change of control.--
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(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.
(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 act, and
the licensed operator shall pay a new application and license
fee as required by sections 502 and 503.
(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 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.
(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 any required application or license fee has been paid.
Section 508. Penalties.
(a) Suspension or revocation of license.--
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(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
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 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 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.
(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 such violation.
(2) The civil penalty shall be recovered in a civil
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action brought by the board and shall be paid into the
General Fund.
CHAPTER 7
FISCAL PROVISIONS
Section 701. 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 5% of its quarterly fantasy contest
adjusted revenues.
(b) Deposits and distributions.--
(1) The tax imposed under subsection (a) shall be
payable to the department on a quarterly basis and shall be
based upon quarterly fantasy contest adjusted revenue derived
during the previous quarter.
(2) All funds owed to the Commonwealth under this
section shall be held in trust for the Commonwealth by the
licensed operator until the funds are paid to the department.
(3) The tax imposed under subsection (a) shall be
deposited into the General Fund.
(c) Penalty.--
(1) A licensed operator who fails to timely remit to the
department amounts required under this section shall be
liable, in addition to any liability imposed elsewhere in
this 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.
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(a) Accounts established.--The State Treasurer shall
establish within the State Treasury 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
the department in carrying out their powers and duties under
this act 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 in connection with carrying out its 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 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 act 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 act.
(c) Itemized budget reporting.--
(1) The board and the department shall jointly prepare
and annually submit to the chairman of the Appropriations
Committee of the Senate and the chairman of the
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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 act.
(2) As soon as practicable after submitting copies of
the itemized budget, the board and the department shall
jointly prepare and submit to the chairmen of the committees
analyses of and make recommendations regarding the itemized
budget.
(d) Appropriation.--Costs and expenses from accounts
established under subsection (a) shall only be disbursed upon
appropriation by the General Assembly.
(e) Penalty.--
(1) A licensed operator who fails to timely remit to the
department amounts required under this section shall be
liable, in addition to any liability imposed elsewhere in
this 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 its prescribed duties in accordance
with sections 701 and 702 and subsection (c), including the
collection of taxes, penalties, assessments and interest.
(b) Procedure.--For purposes of implementing sections 701
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and 702 and subsection (c), the department may promulgate
regulations in the same manner in which the board is authorized
as provided in section 302.
(c) Automatic withholding.--Licensed operators shall
withhold and remit to the department any tax amount owed to the
department by a winning in-State participant under Article III
of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, for prizes and awards greater than $5,000.
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.
Section 902. Licensed gaming entities.
(a) Scope.--This section shall apply to a licensed gaming
entity that holds a fantasy contest license.
(b) Applicability.--
(1) 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
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providers and individuals and entities associated with them.
(2) A fantasy contest terminal shall not be considered a
"slot machine" or "table game" under 4 Pa.C.S. § 1103
(relating to definitions).
(c) Fantasy contest terminals.--
(1) A licensed gaming entity may petition the board, on
a form and in a manner as required by the board, to place and
operate fantasy contest terminals within the licensed gaming
entity's licensed facility.
(2) At its discretion, the board may approve the
placement and operation of fantasy contest terminals at a
location within the licensed facility, provided that fantasy
contest terminals shall not be placed on the gaming floor.
(d) Restricted contests.--A licensed gaming entity may offer
fantasy contests that are exclusive to participants who are at
least 21 years of age.
(e) Promotional play.--For a restricted contest under
subsection (d), 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.
(f) 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 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
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for the fiscal period July 1, 2016, to June 30, 2017, 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, 2016, to June 30,
2017, 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. The total amounts
appropriated to the board and department under this section
shall be repaid to the General Fund no later than five years
from the date the board issues the first fantasy contest
license.
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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