Regular Session 2015-2016 House Bill 2150 P.N. 3531

PRIOR PRINTER'S NO. 3494

PRINTER'S NO. 3531

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2150

Session of

2015

INTRODUCED BY DUNBAR, DIAMOND, A. HARRIS, KORTZ, KOTIK, MASSER,

MILLARD, NEILSON, YOUNGBLOOD, EVERETT, RAVENSTAHL AND NELSON,

JUNE 9, 2016

AS REPORTED FROM COMMITTEE ON GAMING OVERSIGHT, HOUSE OF

REPRESENTATIVES, AS AMENDED, JUNE 15, 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.

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 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 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 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

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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.

"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

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(relating to definitions).

"In-State participant." An individual who resides within

this Commonwealth and participates in a fantasy contest

conducted by a licensed operator AND PAYS A FEE TO A LICENSED

OPERATOR FROM A LOCATION WITHIN THIS COMMONWEALTH. 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 ENTITY REPRESENTATIVE." A PERSON, INCLUDING AN

ATTORNEY, AGENT OR LOBBYIST, ACTING ON BEHALF OF OR AUTHORIZED

TO REPRESENT THE INTEREST OF AN APPLICANT, LICENSEE OR OTHER

PERSON AUTHORIZED BY THE BOARD TO ENGAGE IN AN ACT OR ACTIVITY

WHICH IS REGULATED UNDER THIS ACT REGARDING A MATTER BEFORE, OR

WHICH MAY BE REASONABLY BE EXPECTED TO COME BEFORE, 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

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contest, whether the individual resides IS LOCATED in this

Commonwealth or another jurisdiction.

"Person." A natural person, corporation, publicly traded

corporation, foundation, organization, business trust, estate,

limited liability company, licensed corporation, trust,

partnership, limited liability partnership, association or any

other form of legal business entity.

"Principal." An officer, director, person who directly holds

a beneficial interest in or ownership of the securities of an

applicant for a fantasy contest license or a licensed operator,

person who has a controlling interest in an applicant for a

fantasy contest license or a licensed operator or who has the

ability to elect a majority of the board of directors of a

licensed operator or to otherwise control a licensed operator,

lender or other licensed financial institution of an applicant

for a fantasy contest license or a licensed operator, other than

a bank or lending institution which makes a loan or holds a

mortgage or other lien acquired in the ordinary course of

business, underwriter of an applicant for a fantasy contest

license or a licensed operator or other person or employee of an

applicant for a fantasy contest license or a licensed operator

deemed to be a principal by the board.

"Prize or award." Anything of value worth $100 or more or

cash 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

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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.

CHAPTER 3

ADMINISTRATION

Section 301. General and specific powers of board.

(a) General powers.--

(1) The board shall have regulatory authority over

licensed operators, PRINCIPALS AND KEY EMPLOYEES and shall

ensure the integrity of fantasy contests offered in this

Commonwealth in accordance with this 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.

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(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

(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

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(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 EXECUTIVE DIRECTOR OF THE BOARD OR OTHER DESIGNATED

STAFF.

(9) To require licensed operators and applicants for a

fantasy contest license to submit any information or

documentation necessary to ensure the proper regulation of

fantasy contests in accordance with this 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 ADOPTED by the State Board of

Accountancy 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 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

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Alcohol Programs, to develop a process by which licensed

operators provide participants with a toll-free telephone

number that refers PROVIDES individuals to WITH INFORMATION

ON HOW TO ACCESS 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.

(B.1) LICENSED ENTITY REPRESENTATIVE.--

(1) A LICENSED ENTITY REPRESENTATIVE SHALL REGISTER WITH

THE BOARD, IN A MANNER PRESCRIBED BY THE BOARD. THE

REGISTRATION SHALL INCLUDE THE NAME, EMPLOYER OR FIRM,

BUSINESS ADDRESS AND BUSINESS TELEPHONE NUMBER OF BOTH THE

LICENSED ENTITY REPRESENTATIVE AND ANY LICENSED OPERATOR,

APPLICANT FOR LICENSURE OR OTHER PERSON BEING REPRESENTED.

(2) A LICENSED ENTITY REPRESENTATIVE SHALL HAVE AN

AFFIRMATIVE DUTY TO UPDATE ITS REGISTRATION INFORMATION ON AN

ONGOING BASIS. FAILURE TO UPDATE SHALL BE PUNISHABLE BY THE

BOARD.

(3) THE BOARD SHALL MAINTAIN A LIST OF LICENSED ENTITY

REPRESENTATIVES WHICH SHALL CONTAIN THE INFORMATION REQUIRED

UNDER PARAGRAPH (1) AND SHALL BE AVAILABLE FOR PUBLIC

INSPECTION AT THE OFFICES OF THE BOARD AND ON THE BOARD'S

PUBLICLY ACCESSIBLE INTERNET WEBSITE.

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

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a fantasy contest license or a licensed operator.

(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 EXCEPT FOR TEMPORARY REGULATIONS

CONCERNING NETWORK CONNECTIVITY, SECURITY AND TESTING AND

COMPULSIVE AND PROBLEM PLAY, THE authority provided to the board

to adopt temporary regulations in subsection (a) shall expire no

later than two years following the effective date of this

section. Regulations adopted after this period shall be

promulgated as provided by law.

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

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to judicial review of Commonwealth agency action).

Section 304. Board minutes and records.

(a) Record of proceedings.--The board shall maintain a

record of all proceedings held at public meetings of the board.

The verbatim transcript of the proceedings shall be the property

of the board and shall be prepared by the board upon the request

of any board member or upon the request of any other person and

the payment by that person of the costs of preparation.

(b) Applicant information.--

(1) The board shall maintain a list of all applicants

for a fantasy contest license. The list shall include a

record of all actions taken with respect to each applicant.

The list shall be open to public inspection during the normal

business hours of the board.

(2) Information under paragraph (1) regarding an

applicant whose fantasy contest license has been denied,

revoked or not renewed shall be removed from the list after

seven years from the date of the action.

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

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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 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

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provided by 17 CFR 200.80 (relating to commission records

and information).

(vii) Financial OR SECURITY information deemed

confidential by the board upon a showing of good cause by

the applicant for a fantasy contest license or licensed

operator.

(2) No claim of confidentiality may be made regarding

any criminal history record information that is available to

the public under 18 Pa.C.S. § 9121(b) (relating to general

regulations).

(3) No claim of confidentiality shall be made regarding

any record in possession of the board that is otherwise

publicly available from a Commonwealth agency, local agency

or another jurisdiction.

(4) The information made confidential under this section

shall be withheld from public disclosure, in whole or in

part, except that any confidential information shall be

released upon the order of a court of competent jurisdiction

or, with the approval of the Attorney General, to a duly

authorized law enforcement agency or shall be released to the

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

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license or any other action of the board.

(e) Notice.--Notice of the contents of any information,

except to a duly authorized law enforcement agency under this

section, shall be given to an applicant or licensee in a manner

prescribed by the rules and regulations adopted by the board.

(f) Information held by department.--Files, records, reports

and other information in the possession of the department

pertaining to licensed operators shall be made available to the

board as may be necessary for the effective administration of

this 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

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.

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(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 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

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financial and criminal history as the board deems necessary

to establish by clear and convincing evidence the financial

stability, integrity and responsibility of the applicant and

the applicant's key employees and principals.

(6) Information and documentation necessary to establish

the applicant's ability to comply with section 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 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.

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

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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.

(3) Has not been denied a fantasy contest license under

subsection (b).

(b) Reasons to deny applications.--The board shall MAY 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) EMPLOYS A PRINCIPAL OR KEY EMPLOYEE WHO has been

convicted of a felony, a crime of moral turpitude or any

criminal offense involving dishonesty or breach of trust

within 10 years prior to the date of the application for

license;

(3) has at any time knowingly failed to comply with the

provisions of this 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.

review of an application for a fantasy contest license within 60

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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 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

license fee of $50,000 or an amount equivalent to 7.5% of the

applicant's fantasy contest adjusted revenues FOR THE

PREVIOUS CALENDAR YEAR, whichever is less, except that an

applicant who is also a licensed gaming entity shall pay to

the board a license fee of $50,000.

(2) The license fee collected under this subsection

shall be deposited into the General Fund.

(3) If an applicant fails to pay the fee required by

this subsection, the board shall suspend or revoke the

applicant's fantasy contest license until payment of the

license fee is received.

(e) Abbreviated approval process.--The board, at its

discretion, may establish an abbreviated approval process for

the issuance of a fantasy contest license to a licensed gaming

entity whose slot machine license 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 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 any changes relating to the status of its

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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 90 days prior to the

expiration of the license and include an update of the

information contained in the initial application for a

fantasy contest license. A fantasy contest license for which

a completed renewal application and fee as required under

subsection (c) has been received by the board shall continue

in effect unless and until the board sends written

notification to the licensed operator that the board has

denied the renewal of the license.

(b) Revocation or failure to renew.--

(1) In addition to any other sanction the board may

impose under this 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

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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

cease until the board has notified the applicant that the

suspension is no longer in effect.

(1) Within 30 days of the board renewing a fantasy

contest license, the licensed operator shall pay to the board

a renewal fee of $5,000.

(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 MAKING A DEPOSIT INTO a

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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 OF A PARTICIPANT BY REQUIRING

THE PARTICIPANT TO PROVIDE THE LICENSED OPERATOR A UNIQUE

USER NAME AND PASSWORD PRIOR TO ACCESSING a fantasy contest

account.

(4) Ensure rules AND PRIZES AND AWARDS established by

the licensed operator for a fantasy contest are made known to

a participant prior to the acceptance of any entry fee.

(5) Ensure that a player who is the subject of a fantasy

contest is restricted from entering as a participant in a

fantasy contest that is determined, in whole or part, on the

accumulated statistical results of a team of individuals on

IN THE LEAGUE IN which the player is a member.

(6) Allow a participant PERSON to restrict himself from

entering a fantasy contest or accessing a fantasy contest

account for a specific period of time as determined by the

participant and implement reasonable procedures to prevent

the individual from participating in the licensed operator's

fantasy contests.

(7) Allow a participant PERSON to restrict the total

amount of entry fees 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 designate

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and train classes of employees that shall be responsible for

providing PROVIDE a toll-free telephone number to

participants who have expressed to the licensed operator

issues with compulsive and problem play of fantasy contests.

The toll-free telephone number and the compulsive and problem

play notice shall be approved by the board, in consultation

with the Department of Drug and Alcohol Programs.

(9) Disclose the number of entries a single participant

may submit to each fantasy contest and take COMMERCIALLY

reasonable steps to prevent such participants from submitting

more than the allowable number.

(10) Prevent the licensed operator's employees and

relatives living in the same household of an employee from

competing in a fantasy contest offered by the ANY 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) (11) Prevent the sharing of confidential

information that could affect fantasy contest play with third

parties until the information is made publicly available.

(13) Maintain (12) TAKE COMMERCIALLY REASONABLE STEPS

TO MAINTAIN the confidentiality of a participant's personal

and financial information.

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(14) (13) Segregate participant funds from operational

funds in separate accounts and maintain a reserve in the form

of cash, cash equivalents, security deposits held by banks

and processors, AN irrevocable letter of credit, PAYMENT

PROCESSOR RESERVES AND RECEIVABLES, A bond or a combination

thereof in an amount sufficient to pay all prizes and awards

offered to winning participants.

(15) (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.

(16) (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

IMPLEMENT TECHNOLOGIES TO PREVENT THE USE OF SCRIPTS.

(17) MONITOR FANTASY CONTESTS FOR THE USE OF SCRIPTS AND

RESTRICT PLAYERS FOUND TO HAVE USED SUCH SCRIPTS FROM

PARTICIPATION IN FUTURE FANTASY CONTESTS.

(18) ESTABLISH ANY OTHER CONDITION DEEMED APPROPRIATE BY

THE BOARD.

Section 506. Prohibitions.

No licensed operator may:

(1) accept an entry fee from or permit a natural person

under 18 years of age to become a participant in a fantasy

contest;

(2) offer a fantasy contest based, in whole or in part,

on collegiate OR HIGH SCHOOL athletic events or collegiate

players;

(3) permit a participant to enter a fantasy contest

prior to establishing a fantasy contest account;

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(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 CREDIT to a participant for any purpose

TO ESTABLISH OR FUND A FANTASY CONTEST ACCOUNT;

(7) KNOWINGLY directly market to a participant during

the time period in which the participant has self-excluded

from the licensed 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 A DEPOSIT in excess of

a limit established by a participant for the specific time

period established by the participant;

(10) share confidential information that could affect

fantasy contest play with third parties until the information

is made publicly available;

(11) knowingly permit an employee or relative living in

the same household of an employee to become a participant in

a fantasy contest offered by the ANY licensed operator in

which a licensed operator offers a prize or award;

(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

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participants in advance of the fantasy contest;

(ii) winning outcomes do not reflect the relative

knowledge and skill of participants;

(iii) the winning outcome is based on the score,

point spread or performance of a single actual team or

combination of teams or solely on a single performance of

an individual athlete or player in a single actual event;

(iv) the winning outcome is not based on statistical

results accumulated from fully completed athletic sports

contests or events, except that participants may be

credited for statistical results accumulated in a

suspended or shortened sports event which has been

partially completed on account of weather or other

natural or unforeseen event;

(14) (13) except as permitted under section 902, offer

or make available in this Commonwealth a fantasy contest

terminal; and

(15) (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; AND

(16) PERFORM ANY OTHER ACTION PROHIBITED BY THE BOARD.

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 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:

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(i) More than 5% 15% of a licensed operator's

securities or other ownership interests.

(ii) The sale other than in the ordinary course of

business of a licensed operator's assets.

(iii) Any other transaction or occurrence deemed by

the board to be relevant to fantasy contest license

qualifications.

(2) Notwithstanding the provisions of paragraph (1), a

licensed operator shall not be required to notify the board

of any acquisition by an institutional investor under

paragraph (1)(i) or (ii) if the institutional investor holds

less than 10% of the securities or other ownership interests

referred to in paragraph (1)(i) or (ii), the securities or

interests are publicly traded securities and its holdings of

such securities were purchased for investment purposes only

and the institutional investor files with the board a

certified statement to the effect that the institutional

investor has no intention of influencing or affecting,

directly or indirectly, the affairs of the licensed operator,

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.--

(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

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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 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., EXCEPT THAT IF THE

NEW CONTROLLER IS ANOTHER LICENSED OPERATOR, THE NEW

CONTROLLER SHALL NOT BE REQUIRED TO REQUALIFY FOR A FANTASY

CONTEST LICENSE OR PAY ANOTHER APPLICATION FEE AND LICENSE

FEE.

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

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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.--

(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, 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.

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(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

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.

(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

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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 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 OR THE DEPARTMENT 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

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the board in connection with carrying out its powers and

duties under this act.

(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

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

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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

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.

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.

(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 PRODUCT AUTHORIZED UNDER THE ACT OF

AUGUST 26, 1971 (P.L.351, NO.91), KNOWN AS THE STATE LOTTERY

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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.--

(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

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).

(1) A licensed gaming entity may petition the board, on

a form and in a manner as required by the board, to UPON

APPROVAL OF A FANTASY CONTEST LICENSE APPLICATION, A LICENSED

GAMING ENTITY MAY 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

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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 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, 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 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

five 10 years from the date the board issues the first fantasy

contest license.

APPROPRIATED UNDER SUBSECTION (A) THAT IS UNEXPENDED,

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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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