Relates to the registration and regulation of interactive fantasy sports contests

Section 1400 provides legislative findings and purpose.

Section 1401 provides definitions.

Section 1402 authorizes the registration of interactive fantasy sports operators to conduct interactive fantasy sports contests in New York State. Any operator that was offering contests to New York state residents prior to November 10, 2015 would be able to continue operating until their application for registration has been approved or denied, provided that such operator files an application for registration with the New York State Gaming Commission ("the Commission") within ninety days of the promulgation of regulations to effectuate this article.

Each approved registrant would be required to pay an initial registration fee equal to the lesser of $150,000 or 1.5% of their interactive fantasy sports revenue generated in the preceding fiscal year. Registrations would remain in effect for three years.

Section 1403 establishes the scope of information required from an interactive fantasy sports operator upon submission of an application for registration to the Commission.

Section 1404 establishes required safeguards and minimum standards in order to provide players with important consumer protections, including:

*limiting players to one active and continuously used account; *prohibiting persons under the age of 18 from participating in any contest; *ensuring that accurate representations concerning the chances of winning, and the number of winners, are depicted in all advertisements; *ensuring that, unless otherwise approved by the Commission, online fantasy or simulation sports games or contests with an entry fee are not being directly or indirectly promoted or advertised during the conduct of any online fantasy or simulation sports games or contests without an entry fee; *enabling players to exclude themselves from contests and permanently close their accounts at any time; *offering introductory procedures for players, and identifying highly experienced players; *disclosing the number of entries a player may submit to each contest, and the number of total entries allowed for each contest; *measures to protect the privacy and online security of players and their accounts; *ensuring players' funds are protected upon deposit and segregated from the operating funds of the operator or registrant; and *information concerning assistance for compulsive play in New York State.

This section would also limit the number of entries that can be submitted by a player to any contest, prohibit any contest based on a collegiate or high school sport or athletic event, prohibit any contest based on a horse racing event, prohibit the use of third-party scripts or scripting programs, and ensure that advertisements for contests and prizes do not target prohibited participants, minors, or self-excluded persons.

Section 1405 authorizes the Commission to promulgate regulations to implement the provisions of this article. This section also assigned the Commission with all powers necessary and proper to fully and effectively execute this article, including the ability to accept and investigate complaints from players and investigate alleged violations of this article.

Section 1406 requires each registrant to submit an annual report to the Commission no later than June 30 of each year. The Commission would be authorized to conduct a financial audit of any registrant, at any time, to ensure compliance with this article. The Commission would also be required to publish a report based on the aggregate information provided by all registrants' reports, which would be published on the Commission's website.

Section 1407 imposes a 15% State tax on each registrant's interactive fantasy sports revenue for the privilege of conducting interactive fantasy sports contests in New York State.

Section 2 of the bill would establish an immediate effective date.

Justification

On October 6, 2015, the New York State Attorney General's office launched an investigation into whether employees of the two biggest daily fantasy sports companies, DraftKings and FanDuel, were able to gain an unfair financial advantage in daily fantasy football contests by exploiting access to non-public data. On November 10, the Attorney General's office issued a notice to DraftKings and FanDuel demanding that they stop accepting wagers in New York. After months of additional litigation, DraftKings and FanDuel reached an agreement with the Attorney General to stop taking bets from New York customers on March 21, 2016. The agreements outlined the process the companies and the Attorney General would follow in the event that the State Legislature does or does not take action to legalize and regulate daily fantasy sports contests, as well as establish a statutory framework to protect consumers, on or before June 30, 2016.

Bearing in mind that daily interactive fantasy sports contests have the potential to produce unfair advantages for certain players, target minors, and increase compulsive play, this bill seeks to regulate such contests that also accept entry fees from players.

This bill offers important consumer protections to ensure that all contests are safe and fair. Requirements such as limiting players to one active and continuously used account, offering introductory procedures for players, identifying highly experienced players, and depicting accurate representations concerning the chances of winning in all advertisements will help to provide transparency and fairness across all platforms. Measures to protect the privacy and online security of players and their accounts, and requiring registrants to protect players' funds upon deposit, as well as segregate such funds from the companies' operating funds, would provide players with important safety and security protections online.

In addition, requirements would be in place to ensure that players can exclude themselves from contests and permanently close their accounts at any time if they feel that they are becoming compulsive players. For this reason, registrants will also be required to provide information on their websites concerning assistance for compulsive play in New York State. Because of the risks associated with compulsive play, no person under the age of 18 would be permitted to participate in an interactive fantasy sports contest.

By registering and taxing interactive fantasy sports contests, this bill will also bring about a new and abundant source of revenue for New York State.

Legislative history

This is new legislation.

Fiscal implication

To be determined.

Effective date

This act would take effect immediately.