Florida Senate - 2016                        COMMITTEE AMENDMENT
       Bill No. SB 832
                              LEGISLATIVE ACTION                        
                    Senate             .             House              
                  Comm: RCS            .                                
                  01/29/2016           .                                

       The Committee on Regulated Industries (Negron) recommended the
    1         Senate Amendment (with title amendment)
    3         Delete everything after the enacting clause
    4  and insert:
    5         Section 1. Section 546.11, Florida Statutes, is created to
    6  read:
    7         546.11 SHORT TITLE.—Sections 546.11-546.18 may be cited as
    8  the “Fantasy Contest Amusement Act.”
    9         Section 2. Section 546.12, Florida Statutes, is created to
   10  read:
   11         546.12. LEGISLATIVE INTENT.—It is the intent of the
   12  Legislature to ensure public confidence in the integrity of
   13  fantasy contests and fantasy contest operators. This act is
   14  designed to strictly regulate the operators of fantasy contests
   15  and individuals who participate in such contests and to adopt
   16  consumer protections related to fantasy contests. Furthermore,
   17  the Legislature finds that fantasy contests, as that term is
   18  defined in s. 546.13, involve the skill of contest participants
   19  and do not constitute gambling, gaming, or games of chance.
   20         Section 3. Section 546.13, Florida Statutes, is created to
   21  read:
   22         546.13 DEFINITIONS.—As used in this chapter, the term:
   23         (1) “Confidential information” means information related to
   24  the playing of fantasy contests by contest participants which is
   25  obtained solely as a result of a person’s employment with or
   26  work as an agent of a contest operator.
   27         (2) “Contest operator” means a person or entity that offers
   28  fantasy contests for a cash prize to members of the public.
   29         (3) “Contest participant” means a person who pays a fee for
   30  the ability to participate in a fantasy contest offered by a
   31  contest operator.
   32         (4) “Entry fee” means the cash or cash equivalent amount
   33  that is required to be paid by a fantasy contest player to a
   34  fantasy contest operator to participate in a fantasy contest.
   35         (5) “Fantasy contest” means a fantasy or simulation sports
   36  game or contest offered by a contest operator or a noncommercial
   37  contest operator in which a contest participant manages a
   38  fantasy or simulation sports team composed of athletes from an
   39  amateur or professional sports organization and which meets the
   40  following conditions:
   41         (a) All prizes and awards offered to winning participants
   42  are established and made known to the participants in advance of
   43  the game or contest and their value is not determined by the
   44  number of participants or the amount of any fees paid by those
   45  participants.
   46         (b) All winning outcomes reflect the relative knowledge and
   47  skill of the participants and are determined predominantly by
   48  accumulated statistical results of the performance of the
   49  athletes participating in multiple real-world sporting or other
   50  events. However, a winning outcome may not be based:
   51         1. On the score, point spread, or any performance or
   52  performances of a single real-world team or any combination of
   53  such teams;
   54         2. Solely on any single performance of an individual
   55  athlete in a single real-world sporting or other event; or
   56         3. On a live pari-mutuel event, as the term “pari-mutuel”
   57  is defined by s. 550.002.
   58         (6) “Noncommercial contest operator” means a person who
   59  organizes and conducts a fantasy contest in which contest
   60  participants are charged entry fees for the right to
   61  participate; entry fees are collected, maintained, and
   62  distributed by the same person; and all entry fees are returned
   63  to the players in the form of prizes.
   64         (7) “Office” means the Office of Amusements created in s.
   65  546.14.
   66         Section 4. Section 546.14, Florida Statutes is created to
   67  read:
   68         546.14 OFFICE OF AMUSEMENTS.—
   69         (1) The Office of Amusements is created within the
   70  Department of Business and Professional Regulation. The office
   71  shall operate under the supervision of a senior manager exempt
   72  under s. 110.205 in the Senior Management Service appointed by
   73  the secretary.
   74         (2) The duties of the office include, but are not limited
   75  to, administering and enforcing this act and any rules adopted
   76  pursuant thereto and any other duties authorized by the
   77  Secretary of Business and Professional Regulation. The office
   78  may work with department personnel as needed to assist in
   79  fulfilling its duties.
   80         (3) The office may:
   81         (a) Conduct investigations and monitor the operation and
   82  play of fantasy contests.
   83         (b) Review the books, accounts, and records of any current
   84  or former contest operator.
   85         (c) Suspend or revoke any license, after hearing, for any
   86  violation of state law or rule.
   87         (d) Take testimony, issue summons and subpoenas for any
   88  witness, and issue subpoenas duces tecum in connection with any
   89  matter within its jurisdiction.
   90         (e) Monitor and ensure the proper collection and
   91  safeguarding of contest fees and the payment of contest prizes
   92  in accordance with consumer protection procedures adopted
   93  pursuant to s. 546.16.
   94         (4) The office may adopt rules to implement this act.
   95         Section 5. Section 546.15, Florida Statutes, is created to
   96  read:
   97         546.15 LICENSING.—
   98         (1) A contest operator that offers fantasy contests for
   99  play by persons in this state must be licensed by the office to
  100  conduct fantasy contests within this state. The initial license
  101  application fee is $500,000 and the annual license renewal fee
  102  is $100,000, however, the respective fees may not exceed 10
  103  percent of the amount of entry fees collected by a contest
  104  operator from the operation of fantasy contests in this state,
  105  less the amount of cash or cash equivalents paid to contest
  106  participants. The office shall require the contest operator to
  107  provide written evidence of the proposed amount of entry fees
  108  and cash or cash equivalents to be paid to contest participants
  109  during the annual license period. Prior to renewing a license,
  110  the contest operator shall provide written evidence to the
  111  office of the actual entry fees collected and cash or cash
  112  equivalents paid to contest participants during the previous
  113  period of licensure. The contest operator shall remit to the
  114  office any difference in license fee that results from the
  115  difference between the proposed amount of entry fees and cash or
  116  cash equivalents paid to contest participants and the actual
  117  amounts collected and paid.
  118         (2) The office shall grant or deny a complete application
  119  within 120 days after receipt, and a completed application that
  120  is not acted upon by the office within 120 days after receipt is
  121  deemed approved, and the office shall issue the license.
  122  Applications for a contest operator’s license are exempt from
  123  the 90-day licensure timeframe imposed in s. 120.60(1).
  124         (3) The application must include:
  125         (a) The full name of the applicant.
  126         (b) If the applicant is a corporation, the name of the
  127  state in which the applicant is incorporated and the names and
  128  addresses of the officers, directors, and shareholders of the
  129  corporation who hold 5 percent or more equity.
  130         (c) If the applicant is a business entity other than a
  131  corporation, the names and addresses of the principals,
  132  partners, or shareholders who hold 5 percent or more equity.
  133         (d) The names and addresses of the ultimate equitable
  134  owners of the corporation or other business entity, if different
  135  from those provided under paragraphs (b) and (c), unless the
  136  securities of the corporation or entity are registered pursuant
  137  to s. 12 of the Securities Exchange Act of 1934, 15 U.S.C. ss.
  138  78a-78kk, and:
  139         1. The corporation or entity files with the United States
  140  Securities and Exchange Commission, the reports required by s.
  141  13 of that act; or
  142         2. The securities of the corporation or entity are
  143  regularly traded on an established securities market in the
  144  United States.
  145         (e) The estimated number of fantasy sports contests to be
  146  conducted by the applicant annually.
  147         (f) A statement of the assets and liabilities of the
  148  applicant.
  149         (g) If required by the office, the names and addresses of
  150  the officers and directors of any debtor of the applicant and of
  151  stockholders who hold more than 10 percent of the stock of the
  152  debtor.
  153         (h) For each individual listed in the application as an
  154  officer or director, a complete set of fingerprints taken by an
  155  authorized law enforcement officer. The office shall submit such
  156  fingerprints to the Federal Bureau of Investigation for national
  157  processing. Foreign nationals shall submit such documents as
  158  necessary to allow the office to conduct criminal history
  159  records checks in the individual’s home country. The applicant
  160  must pay the full cost of processing fingerprints and required
  161  documentation. The office also may charge a $2 handling fee for
  162  each set of fingerprints submitted.
  163         (4) A person or entity is not eligible for licensure as a
  164  contest operator or licensure renewal if he or she or an officer
  165  or director of the entity is determined by the office, after
  166  investigation, not to be of good moral character or if found to
  167  have been convicted of a felony in this state, any offense in
  168  another jurisdiction which would be considered a felony if
  169  committed in this state, or a felony under the laws of the
  170  United States. For purposes of this subsection, the term
  171  “convicted” means having been found guilty, with or without
  172  adjudication of guilt, as a result of a jury verdict, nonjury
  173  trial, or entry of a plea of guilty or nolo contendere.
  174         (5) The contest operator shall provide evidence of a surety
  175  bond in the amount of $1 million, payable to the state,
  176  furnished by a corporate surety authorized to do business. The
  177  surety bond shall be kept in full force and effect by the
  178  contest operator during the term of the license and any renewal
  179  thereof. The office shall adopt by rule the form required for
  180  such surety bond.
  181         (6) The office may suspend, revoke, or deny the license of
  182  a contest operator who fails to comply with this act or rules
  183  adopted pursuant thereto.
  184         Section 6. Section 546.16, Florida Statutes, is created to
  185  read:
  186         546.16 Consumer protection.—
  187         (1) A contest operator who charges an entry fee to contest
  188  participants shall implement procedures for fantasy sports
  189  contests which:
  190         (a) Prevent employees of the fantasy contest operator, and
  191  relatives living in the same household as such employees, from
  192  competing in a fantasy contest in which a cash prize is awarded.
  193         (b) Prohibit the contest operator from being a contest
  194  participant in a fantasy contest that he or she offers.
  195         (c) Prevent the employees or agents of the contest operator
  196  from sharing with third parties confidential information that
  197  could affect fantasy contest play until the information has been
  198  made publicly available.
  199         (d) Verify that contest participants are 18 years of age or
  200  older.
  201         (e) Restrict an individual who is a player, a game
  202  official, or another participant in a real-world game or
  203  competition from participating in a fantasy contest that is
  204  determined, in whole or in part, on the performance of that
  205  individual, the individual’s real-world team, or the accumulated
  206  statistical results of the sport or competition in which he or
  207  she is a player, game official, or other participant.
  208         (f) Allow individuals to restrict or prevent their own
  209  access to such a fantasy contest and take reasonable steps to
  210  prevent those individuals from entering a fantasy sports
  211  contest.
  212         (g) Limit the number of entries a single contest
  213  participant may submit to each fantasy contest and take
  214  reasonable steps to prevent participants from submitting more
  215  than the allowable number of entries.
  216         (h) Segregate contest participants’ funds from operational
  217  funds and maintain a reserve in the form of cash, cash
  218  equivalents, an irrevocable letter of credit, a bond, or a
  219  combination thereof in the total amount of deposits in contest
  220  participants’ accounts for the benefit and protection of
  221  authorized contest participants’ funds held in fantasy contest
  222  accounts.
  223         (2) A contest operator that offers fantasy contests in this
  224  state which require contest participants to pay an entry fee
  225  shall annually contract with a third party to perform an
  226  independent audit, consistent with the standards established by
  227  the Public Company Accounting Oversight Board, to ensure
  228  compliance with this act. The contest operator shall submit the
  229  results of the independent audit to the office.
  230         Section 7. Section 546.17, Florida Statutes is created to
  231  read:
  232         546.17 RECORDS AND REPORTS.—
  233         (1) Each contest operator shall keep and maintain daily
  234  records of its operations and shall maintain such records for a
  235  period of at least 3 years. The records must sufficiently detail
  236  all financial transactions to determine compliance with the
  237  requirements of this section and must be available for audit and
  238  inspection by the office or other law enforcement agencies
  239  during the contest operator’s regular business hours. The office
  240  shall adopt rules to implement this subsection.
  241         (2) Each contest operator shall file quarterly with the
  242  office a report that includes the required records and any
  243  additional information deemed necessary by the office. The
  244  report shall be submitted on forms prescribed by the office, and
  245  are deemed public records once filed.
  246         Section 8. Section 546.18, Florida Statutes, is created to
  247  read:
  248         546.18 PENALTIES.—A contest operator, or an employee or
  249  agent thereof, who violates this act is subject to a civil
  250  penalty not to exceed $5,000 for each violation, not to exceed
  251  $100,000 in the aggregate, which shall accrue to the state. An
  252  action to recover such penalties may be brought by the office or
  253  the Department of Legal Affairs in the circuit courts in the
  254  name and on behalf of the state.
  255         Section 9. Section 546.19, Florida Statutes, is created to
  256  read:
  257         546.19Exemption.—Fantasy contests conducted by a contest
  258  operator and noncommercial contest operator in accordance with
  259  this act are not subject to s. 849.01, s. 849.08, s. 849.09, s.
  260  849.11, s. 849.14, or s. 849.25.
  261         Section 10. The penalty provisions established by s.
  262  546.18, Florida Statutes, do not apply to a contest operator who
  263  applies for a license within 90 days after the effective date of
  264  this act and receives a license within 240 days after the
  265  effective date of this act.
  266         Section 11. This act shall take effect upon becoming law.
  268  ================= T I T L E  A M E N D M E N T ================
  269  And the title is amended as follows:
  270         Delete everything before the enacting clause
  271  and insert:
  272                        A bill to be entitled                      
  273         An act relating to fantasy contests; creating s.
  274         546.11, F.S.; providing a short title; creating s.
  275         546.12, F.S.; providing legislative findings and
  276         intent; creating s. 546.13, F.S.; defining terms;
  277         creating s. 545.14, F.S.; creating the Office of
  278         Amusement within the Department of Business and
  279         Professional Regulation; requiring that the office be
  280         under the supervision of a senior manager who is
  281         exempt from the Career Service System and is appointed
  282         by the secretary of the department; providing duties
  283         of the office; providing for rulemaking; creating s.
  284         546.15, F.S.; providing licensing requirements for
  285         contest operators offering fantasy contests; exempting
  286         applicants for a contest operator’s license from
  287         certain licensing requirements for a specified period
  288         of time after receipt of a complete application by the
  289         Office of Amusements; requiring the office to grant or
  290         deny a license within a specified timeframe; providing
  291         that a completed application is deemed approved 120
  292         days after receipt by the office under certain
  293         circumstances; providing requirements for the license
  294         application; providing that persons or entities are
  295         not eligible for licensure under certain
  296         circumstances; providing a definition; requiring a
  297         contest operator to provide evidence of a surety bond;
  298         requiring the surety bond to be kept during the term
  299         of the license and any renewal term thereafter;
  300         authorizing the office to suspend, revoke, or deny a
  301         license under certain circumstances; creating s.
  302         546.16, F.S.; requiring a contest operator to
  303         implement specified consumer protection procedures;
  304         requiring a contest operator to annually contract with
  305         a third party to perform an independent audit;
  306         requiring a contest operator to submit the audit
  307         results to the department; creating s. 546.17, F.S.;
  308         requiring contest operators to keep and maintain
  309         certain records for a specified period; providing
  310         requirements; requiring a contest operator to file a
  311         quarterly report with the office; providing for
  312         rulemaking; creating s. 546.18, F.S.; providing a
  313         civil penalty; creating s. 546.19, F.S.; exempting
  314         fantasy contests from regulation under ch. 849, F.S.;
  315         providing applicability of penalty provisions;
  316         providing an effective date.