Florida Senate - 2016                              CS for SB 832
       By the Committee on Regulated Industries; and Senator Negron
       580-02681C-16                                          2016832c1
    1                        A bill to be entitled                      
    2         An act relating to fantasy contests; creating s.
    3         546.11, F.S.; providing a short title; creating s.
    4         546.12, F.S.; providing legislative findings and
    5         intent; creating s. 546.13, F.S.; defining terms;
    6         creating s. 545.14, F.S.; creating the Office of
    7         Amusement within the Department of Business and
    8         Professional Regulation; requiring that the office be
    9         under the supervision of a senior manager who is
   10         exempt from the Career Service System and is appointed
   11         by the secretary of the department; providing duties
   12         of the office; providing for rulemaking; creating s.
   13         546.15, F.S.; providing licensing requirements for
   14         contest operators offering fantasy contests; exempting
   15         applicants for a contest operator’s license from
   16         certain licensing requirements for a specified period
   17         of time after receipt of a complete application by the
   18         Office of Amusements; requiring the office to grant or
   19         deny a license within a specified timeframe; providing
   20         that a completed application is deemed approved 120
   21         days after receipt by the office under certain
   22         circumstances; providing requirements for the license
   23         application; providing that persons or entities are
   24         not eligible for licensure under certain
   25         circumstances; providing a definition; requiring a
   26         contest operator to provide evidence of a surety bond;
   27         requiring the surety bond to be kept during the term
   28         of the license and any renewal term thereafter;
   29         authorizing the office to suspend, revoke, or deny a
   30         license under certain circumstances; creating s.
   31         546.16, F.S.; requiring a contest operator to
   32         implement specified consumer protection procedures;
   33         requiring a contest operator to annually contract with
   34         a third party to perform an independent audit;
   35         requiring a contest operator to submit the audit
   36         results to the department; creating s. 546.17, F.S.;
   37         requiring contest operators to keep and maintain
   38         certain records for a specified period; providing
   39         requirements; requiring a contest operator to file a
   40         quarterly report with the office; providing for
   41         rulemaking; creating s. 546.18, F.S.; providing a
   42         civil penalty; creating s. 546.19, F.S.; exempting
   43         fantasy contests from certain provisions in ch. 849,
   44         F.S.; providing applicability of penalty provisions;
   45         providing an effective date.
   47  Be It Enacted by the Legislature of the State of Florida:
   49         Section 1. Section 546.11, Florida Statutes, is created to
   50  read:
   51         546.11 SHORT TITLE.—Sections 546.11-546.19 may be cited as
   52  the “Fantasy Contest Amusement Act.”
   53         Section 2. Section 546.12, Florida Statutes, is created to
   54  read:
   55         546.12. LEGISLATIVE INTENT.—It is the intent of the
   56  Legislature to ensure public confidence in the integrity of
   57  fantasy contests and fantasy contest operators. This act is
   58  designed to strictly regulate the operators of fantasy contests
   59  and individuals who participate in such contests and to adopt
   60  consumer protections related to fantasy contests. Furthermore,
   61  the Legislature finds that fantasy contests, as that term is
   62  defined in s. 546.13, involve the skill of contest participants
   63  and do not constitute gambling, gaming, or games of chance.
   64         Section 3. Section 546.13, Florida Statutes, is created to
   65  read:
   66         546.13 DEFINITIONS.—As used in ss. 546.11-546.19, the term:
   67         (1) “Confidential information” means information related to
   68  the playing of fantasy contests by contest participants which is
   69  obtained solely as a result of a person’s employment with or
   70  work as an agent of a contest operator.
   71         (2) “Contest operator” means a person or entity that offers
   72  fantasy contests for a cash prize to members of the public.
   73         (3) “Contest participant” means a person who pays a fee for
   74  the ability to participate in a fantasy contest offered by a
   75  contest operator.
   76         (4) “Entry fee” means the cash or cash equivalent amount
   77  that is required to be paid by a fantasy contest player to a
   78  fantasy contest operator to participate in a fantasy contest.
   79         (5) “Fantasy contest” means a fantasy or simulation sports
   80  game or contest offered by a contest operator or a noncommercial
   81  contest operator in which a contest participant manages a
   82  fantasy or simulation sports team composed of athletes from an
   83  amateur or professional sports organization and which meets the
   84  following conditions:
   85         (a) All prizes and awards offered to winning participants
   86  are established and made known to the participants in advance of
   87  the game or contest and their value is not determined by the
   88  number of participants or the amount of any fees paid by those
   89  participants.
   90         (b) All winning outcomes reflect the relative knowledge and
   91  skill of the participants and are determined predominantly by
   92  accumulated statistical results of the performance of the
   93  athletes participating in multiple real-world sporting or other
   94  events. However, a winning outcome may not be based:
   95         1. On the score, point spread, or any performance or
   96  performances of a single real-world team or any combination of
   97  such teams;
   98         2. Solely on any single performance of an individual
   99  athlete in a single real-world sporting or other event; or
  100         3. On a live pari-mutuel event, as the term “pari-mutuel”
  101  is defined by s. 550.002.
  102         (6) “Noncommercial contest operator” means a person who
  103  organizes and conducts a fantasy contest in which contest
  104  participants are charged entry fees for the right to
  105  participate; entry fees are collected, maintained, and
  106  distributed by the same person; and all entry fees are returned
  107  to the players in the form of prizes.
  108         (7) “Office” means the Office of Amusements created in s.
  109  546.14.
  110         Section 4. Section 546.14, Florida Statutes is created to
  111  read:
  112         546.14 OFFICE OF AMUSEMENTS.—
  113         (1) The Office of Amusements is created within the
  114  Department of Business and Professional Regulation. The office
  115  shall operate under the supervision of a senior manager exempt
  116  under s. 110.205 in the Senior Management Service appointed by
  117  the secretary.
  118         (2) The duties of the office include, but are not limited
  119  to, administering and enforcing this act and any rules adopted
  120  pursuant thereto and any other duties authorized by the
  121  Secretary of Business and Professional Regulation. The office
  122  may work with department personnel as needed to assist in
  123  fulfilling its duties.
  124         (3) The office may:
  125         (a) Conduct investigations and monitor the operation and
  126  play of fantasy contests.
  127         (b) Review the books, accounts, and records of any current
  128  or former contest operator.
  129         (c) Suspend or revoke any license, after hearing, for any
  130  violation of state law or rule.
  131         (d) Take testimony, issue summons and subpoenas for any
  132  witness, and issue subpoenas duces tecum in connection with any
  133  matter within its jurisdiction.
  134         (e) Monitor and ensure the proper collection and
  135  safeguarding of contest fees and the payment of contest prizes
  136  in accordance with consumer protection procedures adopted
  137  pursuant to s. 546.16.
  138         (4) The office may adopt rules to implement this act.
  139         Section 5. Section 546.15, Florida Statutes, is created to
  140  read:
  141         546.15 LICENSING.—
  142         (1) A contest operator that offers fantasy contests for
  143  play by persons in this state must be licensed by the office to
  144  conduct fantasy contests within this state. The initial license
  145  application fee is $500,000 and the annual license renewal fee
  146  is $100,000, however, the respective fees may not exceed 10
  147  percent of the amount of entry fees collected by a contest
  148  operator from the operation of fantasy contests in this state,
  149  less the amount of cash or cash equivalents paid to contest
  150  participants. The office shall require the contest operator to
  151  provide written evidence of the proposed amount of entry fees
  152  and cash or cash equivalents to be paid to contest participants
  153  during the annual license period. Prior to renewing a license,
  154  the contest operator shall provide written evidence to the
  155  office of the actual entry fees collected and cash or cash
  156  equivalents paid to contest participants during the previous
  157  period of licensure. The contest operator shall remit to the
  158  office any difference in license fee that results from the
  159  difference between the proposed amount of entry fees and cash or
  160  cash equivalents paid to contest participants and the actual
  161  amounts collected and paid.
  162         (2) The office shall grant or deny a complete application
  163  within 120 days after receipt, and a completed application that
  164  is not acted upon by the office within 120 days after receipt is
  165  deemed approved, and the office shall issue the license.
  166  Applications for a contest operator’s license are exempt from
  167  the 90-day licensure timeframe imposed in s. 120.60(1).
  168         (3) The application must include:
  169         (a) The full name of the applicant.
  170         (b) If the applicant is a corporation, the name of the
  171  state in which the applicant is incorporated and the names and
  172  addresses of the officers, directors, and shareholders of the
  173  corporation who hold 5 percent or more equity.
  174         (c) If the applicant is a business entity other than a
  175  corporation, the names and addresses of the principals,
  176  partners, or shareholders who hold 5 percent or more equity.
  177         (d) The names and addresses of the ultimate equitable
  178  owners of the corporation or other business entity, if different
  179  from those provided under paragraphs (b) and (c), unless the
  180  securities of the corporation or entity are registered pursuant
  181  to s. 12 of the Securities Exchange Act of 1934, 15 U.S.C. ss.
  182  78a-78kk, and:
  183         1. The corporation or entity files with the United States
  184  Securities and Exchange Commission, the reports required by s.
  185  13 of that act; or
  186         2. The securities of the corporation or entity are
  187  regularly traded on an established securities market in the
  188  United States.
  189         (e) The estimated number of fantasy sports contests to be
  190  conducted by the applicant annually.
  191         (f) A statement of the assets and liabilities of the
  192  applicant.
  193         (g) If required by the office, the names and addresses of
  194  the officers and directors of any debtor of the applicant and of
  195  stockholders who hold more than 10 percent of the stock of the
  196  debtor.
  197         (h) For each individual listed in the application as an
  198  officer or director, a complete set of fingerprints taken by an
  199  authorized law enforcement officer. The office shall submit such
  200  fingerprints to the Federal Bureau of Investigation for national
  201  processing. Foreign nationals shall submit such documents as
  202  necessary to allow the office to conduct criminal history
  203  records checks in the individual’s home country. The applicant
  204  must pay the full cost of processing fingerprints and required
  205  documentation. The office also may charge a $2 handling fee for
  206  each set of fingerprints submitted.
  207         (4) A person or entity is not eligible for licensure as a
  208  contest operator or licensure renewal if he or she or an officer
  209  or director of the entity is determined by the office, after
  210  investigation, not to be of good moral character or if found to
  211  have been convicted of a felony in this state, any offense in
  212  another jurisdiction which would be considered a felony if
  213  committed in this state, or a felony under the laws of the
  214  United States. For purposes of this subsection, the term
  215  “convicted” means having been found guilty, with or without
  216  adjudication of guilt, as a result of a jury verdict, nonjury
  217  trial, or entry of a plea of guilty or nolo contendere.
  218         (5) The contest operator shall provide evidence of a surety
  219  bond in the amount of $1 million, payable to the state,
  220  furnished by a corporate surety authorized to do business. The
  221  surety bond shall be kept in full force and effect by the
  222  contest operator during the term of the license and any renewal
  223  thereof. The office shall adopt by rule the form required for
  224  such surety bond.
  225         (6) The office may suspend, revoke, or deny the license of
  226  a contest operator who fails to comply with this act or rules
  227  adopted pursuant thereto.
  228         Section 6. Section 546.16, Florida Statutes, is created to
  229  read:
  230         546.16 Consumer protection.—
  231         (1) A contest operator who charges an entry fee to contest
  232  participants shall implement procedures for fantasy sports
  233  contests which:
  234         (a) Prevent employees of the fantasy contest operator, and
  235  relatives living in the same household as such employees, from
  236  competing in a fantasy contest in which a cash prize is awarded.
  237         (b) Prohibit the contest operator from being a contest
  238  participant in a fantasy contest that he or she offers.
  239         (c) Prevent the employees or agents of the contest operator
  240  from sharing with third parties confidential information that
  241  could affect fantasy contest play until the information has been
  242  made publicly available.
  243         (d) Verify that contest participants are 18 years of age or
  244  older.
  245         (e) Restrict an individual who is a player, a game
  246  official, or another participant in a real-world game or
  247  competition from participating in a fantasy contest that is
  248  determined, in whole or in part, on the performance of that
  249  individual, the individual’s real-world team, or the accumulated
  250  statistical results of the sport or competition in which he or
  251  she is a player, game official, or other participant.
  252         (f) Allow individuals to restrict or prevent their own
  253  access to such a fantasy contest and take reasonable steps to
  254  prevent those individuals from entering a fantasy sports
  255  contest.
  256         (g) Limit the number of entries a single contest
  257  participant may submit to each fantasy contest and take
  258  reasonable steps to prevent participants from submitting more
  259  than the allowable number of entries.
  260         (h) Segregate contest participants’ funds from operational
  261  funds and maintain a reserve in the form of cash, cash
  262  equivalents, an irrevocable letter of credit, a bond, or a
  263  combination thereof in the total amount of deposits in contest
  264  participants’ accounts for the benefit and protection of
  265  authorized contest participants’ funds held in fantasy contest
  266  accounts.
  267         (2) A contest operator that offers fantasy contests in this
  268  state which require contest participants to pay an entry fee
  269  shall annually contract with a third party to perform an
  270  independent audit, consistent with the standards established by
  271  the Public Company Accounting Oversight Board, to ensure
  272  compliance with this act. The contest operator shall submit the
  273  results of the independent audit to the office.
  274         Section 7. Section 546.17, Florida Statutes is created to
  275  read:
  276         546.17 RECORDS AND REPORTS.—
  277         (1) Each contest operator shall keep and maintain daily
  278  records of its operations and shall maintain such records for a
  279  period of at least 3 years. The records must sufficiently detail
  280  all financial transactions to determine compliance with the
  281  requirements of this section and must be available for audit and
  282  inspection by the office or other law enforcement agencies
  283  during the contest operator’s regular business hours. The office
  284  shall adopt rules to implement this subsection.
  285         (2) Each contest operator shall file quarterly with the
  286  office a report that includes the required records and any
  287  additional information deemed necessary by the office. The
  288  report shall be submitted on forms prescribed by the office, and
  289  are deemed public records once filed.
  290         Section 8. Section 546.18, Florida Statutes, is created to
  291  read:
  292         546.18 PENALTIES.—A contest operator, or an employee or
  293  agent thereof, who violates this act is subject to a civil
  294  penalty not to exceed $5,000 for each violation, not to exceed
  295  $100,000 in the aggregate, which shall accrue to the state. An
  296  action to recover such penalties may be brought by the office or
  297  the Department of Legal Affairs in the circuit courts in the
  298  name and on behalf of the state.
  299         Section 9. Section 546.19, Florida Statutes, is created to
  300  read:
  301         546.19Exemption.—Fantasy contests conducted by a contest
  302  operator or noncommercial contest operator in accordance with
  303  this act are not subject to s. 849.01, s. 849.08, s. 849.09, s.
  304  849.11, s. 849.14, or s. 849.25.
  305         Section 10. The penalty provisions established by s.
  306  546.18, Florida Statutes, do not apply to a contest operator who
  307  applies for a license within 90 days after the effective date of
  308  this act and receives a license within 240 days after the
  309  effective date of this act.
  310         Section 11. This act shall take effect upon becoming a law.