Florida Senate - 2016 COMMITTEE AMENDMENT Bill No. SB 832 Ì6157905Î615790 LEGISLATIVE ACTION Senate . House Comm: RCS . 01/29/2016 . . . . ————————————————————————————————————————————————————————————————— ————————————————————————————————————————————————————————————————— The Committee on Regulated Industries (Negron) recommended the following: 1 Senate Amendment (with title amendment) 2 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: 257 546.19 Exemption.—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. 267 268 ================= 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.