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. 46 47 Be It Enacted by the Legislature of the State of Florida: 48 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: 301 546.19 Exemption.—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.