Florida Senate - 2017 SB 592
By Senator Young
18-00385E-17 2017592__
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. 546.14, F.S.; creating the Office of
7 Amusements 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; providing
15 licensing application and renewal fees; requiring the
16 office to grant or deny a license within a specified
17 timeframe; providing that a completed application is
18 deemed approved 120 days after receipt by the office
19 under certain circumstances; exempting applications
20 for a contest operator’s license from certain
21 licensure timeframe requirements; providing
22 requirements for the license application; providing
23 that specified persons or entities are not eligible
24 for licensure under certain circumstances; defining
25 the term “convicted”; authorizing the office to
26 suspend, revoke, or deny a license under certain
27 circumstances; creating s. 546.16, F.S.; requiring a
28 contest operator to implement specified consumer
29 protection procedures under certain circumstances;
30 requiring a contest operator to annually contract with
31 a third party to perform an independent audit under
32 certain circumstances; requiring a contest operator to
33 submit the audit results to the office; creating s.
34 546.17, F.S.; requiring contest operators to keep and
35 maintain certain records for a specified period;
36 requiring such records to be available for audit and
37 inspection; providing for rulemaking; creating s.
38 546.18, F.S.; providing a civil penalty; creating s.
39 546.19, F.S.; exempting fantasy contests from certain
40 provisions in ch. 849, F.S.; providing applicability
41 of specified penalty provisions; providing a directive
42 to the Division of Law Revision and Information;
43 providing an effective date.
44
45 Be It Enacted by the Legislature of the State of Florida:
46
47 Section 1. Section 546.11, Florida Statutes, is created to
48 read:
49 546.11 Short title.—Sections 546.11-546.19 may be cited as
50 the “Fantasy Contest Amusement Act.”
51 Section 2. Section 546.12, Florida Statutes, is created to
52 read:
53 546.12 Legislative intent.—It is the intent of the
54 Legislature to ensure public confidence in the integrity of
55 fantasy contests and fantasy contest operators. This act is
56 designed to strictly regulate the operators of fantasy contests
57 and individuals who participate in such contests and to adopt
58 consumer protections related to fantasy contests. Furthermore,
59 the Legislature finds that fantasy contests, as that term is
60 defined in s. 546.13, involve the skill of contest participants
61 and do not constitute gambling, gaming, or games of chance.
62 Section 3. Section 546.13, Florida Statutes, is created to
63 read:
64 546.13 Definitions.—As used in ss. 546.11-546.19, the term:
65 (1) “Confidential information” means information related to
66 the playing of fantasy contests by contest participants which is
67 obtained solely as a result of a person’s employment with, or
68 work as an agent of, a contest operator.
69 (2) “Contest operator” means a person or entity that offers
70 fantasy contests for a cash prize to members of the public.
71 (3) “Contest participant” means a person who pays an entry
72 fee for the ability to participate in a fantasy contest offered
73 by a contest operator.
74 (4) “Entry fee” means the cash or cash equivalent amount
75 that is required to be paid by a person to a contest operator to
76 participate in a fantasy contest.
77 (5) “Fantasy contest” means a fantasy or simulation sports
78 game or contest offered by a contest operator or a noncommercial
79 contest operator in which a contest participant manages a
80 fantasy or simulation sports team composed of athletes from a
81 professional sports organization and which meets the following
82 conditions:
83 (a) All prizes and awards offered to winning contest
84 participants are established and made known to the contest
85 participants in advance of the game or contest and their value
86 is not determined by the number of contest participants or the
87 amount of any fees paid by those contest participants.
88 (b) All winning outcomes reflect the relative knowledge and
89 skill of the contest participants and are determined
90 predominantly by accumulated statistical results of the
91 performance of the athletes participating in multiple real-world
92 sporting or other events. However, a winning outcome may not be
93 based:
94 1. On the score, point spread, or any performance or
95 performances of a single real-world team or any combination of
96 such teams;
97 2. Solely on any single performance of an individual
98 athlete in a single real-world sporting or other event;
99 3. On a live pari-mutuel event, as the term “pari-mutuel”
100 is defined in s. 550.002; or
101 4. On the performance of athletes participating in an
102 amateur sporting event.
103 (6) “Noncommercial contest operator” means a person who
104 organizes and conducts a fantasy contest in which contest
105 participants are charged entry fees for the right to
106 participate; entry fees are collected, maintained, and
107 distributed by the same person; and all entry fees are returned
108 to the contest participants in the form of prizes.
109 (7) “Office” means the Office of Amusements created in s.
110 546.14.
111 Section 4. Section 546.14, Florida Statutes is created to
112 read:
113 546.14 Office of Amusements.—
114 (1) The Office of Amusements is created within the
115 Department of Business and Professional Regulation. The office
116 shall operate under the supervision of a senior manager exempt
117 under s. 110.205 in the Senior Management Service appointed by
118 the Secretary of Business and Professional Regulation.
119 (2) The duties of the office include, but are not limited
120 to, administering and enforcing this act and any rules adopted
121 pursuant to this act and any other duties authorized by the
122 secretary. The office may work with department personnel as
123 needed to assist in 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 a 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 entry fees and the payment of contest prizes in
136 accordance with consumer protection procedures adopted pursuant
137 to s. 546.16.
138 (4) The office may adopt rules to implement and administer
139 this act.
140 Section 5. Section 546.15, Florida Statutes, is created to
141 read:
142 546.15 Licensing.—
143 (1) A contest operator that offers fantasy contests for
144 play by persons in this state must be licensed by the office to
145 conduct fantasy contests within this state. The initial license
146 application fee is $500,000, and the annual license renewal fee
147 is $100,000; however, the respective fees may not exceed 10
148 percent of the amount of entry fees collected by a contest
149 operator from the operation of fantasy contests in this state,
150 less the amount of cash or cash equivalents paid to contest
151 participants. The office shall require the contest operator to
152 provide written evidence of the proposed amount of entry fees
153 and cash or cash equivalents to be paid to contest participants
154 during the annual license period. Before renewing a license, the
155 contest operator shall provide written evidence to the office of
156 the actual entry fees collected and cash or cash equivalents
157 paid to contest participants during the previous period of
158 licensure. The contest operator shall remit to the office any
159 difference in license fee which results from the difference
160 between the proposed amount of entry fees and cash or cash
161 equivalents paid to contest participants and the actual amounts
162 collected and paid.
163 (2) The office shall grant or deny a completed application
164 within 120 days after receipt. A completed application that is
165 not acted upon by the office within 120 days after receipt is
166 deemed approved, and the office shall issue the license.
167 Applications for a contest operator’s license are exempt from
168 the 90-day licensure timeframe imposed in s. 120.60(1).
169 (3) The application must include:
170 (a) The full name of the applicant.
171 (b) If the applicant is a corporation, the name of the
172 state in which the applicant is incorporated and the names and
173 addresses of the officers, directors, and shareholders who hold
174 15 percent or more equity.
175 (c) If the applicant is a business entity other than a
176 corporation, the names and addresses of each principal, partner,
177 or shareholder who holds 15 percent or more equity.
178 (d) The names and addresses of the ultimate equitable
179 owners of the corporation or other business entity, if different
180 from those provided under paragraphs (b) or (c), unless the
181 securities of the corporation or entity are registered pursuant
182 to s. 12 of the Securities Exchange Act of 1934, 15 U.S.C. ss.
183 78a-78kk, and:
184 1. The corporation or entity files with the United States
185 Securities and Exchange Commission the reports required by s. 13
186 of that act; or
187 2. The securities of the corporation or entity are
188 regularly traded on an established securities market in the
189 United States.
190 (e) The estimated number of fantasy contests to be
191 conducted by the applicant annually.
192 (f) A statement of the assets and liabilities of the
193 applicant.
194 (g) If required by the office, the names and addresses of
195 the officers and directors of any debtor of the applicant and of
196 stockholders who hold more than 10 percent of the stock of the
197 debtor.
198 (h) For each individual listed in the application as an
199 officer or director, a complete set of fingerprints taken by an
200 authorized law enforcement officer. The office shall submit such
201 fingerprints to the Federal Bureau of Investigation for national
202 processing. A foreign national shall submit such documents as
203 necessary to allow the office to conduct criminal history
204 records checks in the individual’s home country. The applicant
205 must pay the full cost of processing fingerprints and required
206 documentation. The office also may charge a $2 handling fee for
207 each set of fingerprints submitted.
208 (4) A person or entity is not eligible for licensure as a
209 contest operator or for licensure renewal if the person or an
210 officer or director of the entity is determined by the office,
211 after investigation, not to be of good moral character or is
212 found to have been convicted of a felony in this state, any
213 offense in another jurisdiction which would be considered a
214 felony if committed in this state, or a felony under the laws of
215 the United States. As used in this subsection, the term
216 “convicted” means having been found guilty, with or without
217 adjudication of guilt, as a result of a jury verdict, nonjury
218 trial, or entry of a plea of guilty or nolo contendere.
219 (5) The office may suspend, revoke, or deny the license of
220 a contest operator who fails to comply with this act or rules
221 adopted pursuant hereto.
222 Section 6. Section 546.16, Florida Statutes, is created to
223 read:
224 546.16 Consumer protection.—
225 (1) A contest operator that charges an entry fee to contest
226 participants shall implement procedures for fantasy contests
227 which:
228 (a) Prevent employees of the contest operator, and
229 relatives living in the same household as such employees, from
230 competing in a fantasy contest in which a cash prize is awarded.
231 (b) Prohibit the contest operator from being a contest
232 participant in a fantasy contest that he or she offers.
233 (c) Prevent employees or agents of the contest operator
234 from sharing with third parties confidential information that
235 could affect fantasy contest play until the information has been
236 made publicly available.
237 (d) Verify that contest participants are 18 years of age or
238 older.
239 (e) Restrict an individual who is a player, a game
240 official, or another participant in a real-world game or
241 competition from participating in a fantasy contest that is
242 determined, in whole or in part, on the performance of that
243 individual, the individual’s real-world team, or the accumulated
244 statistical results of the sport or competition in which he or
245 she is a player, game official, or other participant.
246 (f) Allow individuals to restrict or prevent their own
247 access to such a fantasy contest and take reasonable steps to
248 prevent those individuals from entering a fantasy contest.
249 (g) Limit the number of entries a single contest
250 participant may submit to each fantasy contest and take
251 reasonable steps to prevent participants from submitting more
252 than the allowable number of entries.
253 (h) Segregate contest participants’ funds from operational
254 funds or maintain a reserve in the form of cash, cash
255 equivalents, payment processor reserves, payment processor
256 receivables, an irrevocable letter of credit, a bond, or a
257 combination thereof in the total amount of deposits in contest
258 participants’ accounts for the benefit and protection of
259 authorized contest participants’ funds held in fantasy contest
260 accounts.
261 (2) A contest operator that offers fantasy contests in this
262 state which require contest participants to pay an entry fee
263 shall annually contract with a third party to perform an
264 independent audit, consistent with the standards established by
265 the American Institute of Certified Public Accountants, to
266 ensure compliance with this act. The contest operator shall
267 submit the results of the independent audit to the office.
268 Section 7. Section 546.17, Florida Statutes, is created to
269 read:
270 546.17 Records and reports.—Each contest operator shall
271 keep and maintain daily records of its operations and shall
272 maintain such records for at least 3 years. The records must
273 sufficiently detail all financial transactions to determine
274 compliance with the requirements of this section and must be
275 available for audit and inspection by the office or other law
276 enforcement agencies during the contest operator’s regular
277 business hours. The office shall adopt rules to implement this
278 section.
279 Section 8. Section 546.18, Florida Statutes, is created to
280 read:
281 546.18 Penalties.—A contest operator, or an employee or
282 agent thereof, who violates this act is subject to a civil
283 penalty, not to exceed $5,000 for each violation and not to
284 exceed $100,000 in the aggregate, which shall accrue to the
285 state. An action to recover such penalties may be brought by the
286 office or the Department of Legal Affairs in the circuit courts
287 in the name and on behalf of the state.
288 Section 9. Section 546.19, Florida Statutes, is created to
289 read:
290 546.19 Exemption.—Fantasy contests conducted by a contest
291 operator or noncommercial contest operator in accordance with
292 this act are not subject to s. 849.01, s. 849.08, s. 849.09, s.
293 849.11, s. 849.14, or s. 849.25.
294 Section 10. The penalty provisions established in s.
295 546.18, Florida Statutes, do not apply to a contest operator who
296 applies for a license within 90 days after the effective date of
297 this act and receives a license within 240 days after the
298 effective date of this act.
299 Section 11. The Division of Law Revision and Information is
300 directed to replace the phrase “the effective date of this act”
301 wherever it occurs in this act with the date the act becomes a
302 law.
303 Section 12. This act shall take effect upon becoming a law.