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.