Rep(s). By Representatives Boothe, Clouse, Rowe and Martin


HB354

ENGROSSED

A BILL
TO BE ENTITLED
AN ACT

Relating to regulating fantasy contests; to establish the Fantasy Contests Act; to provide definitions of certain terms; to require registration of certain fantasy contest operators; to require certain fantasy contest operators to implement procedures for consumer protection of fantasy contest players; and to exempt fantasy contests from the prohibition against gambling; and in connection therewith would have as its purpose or effect the requirement of a new or increased expenditure of local funds within the meaning of Amendment 621 of the Constitution of Alabama of 1901, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended.

BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:

Section 1. This act shall be known and may be cited as the Fantasy Contests Act.

Section 2. For the purposes of this act, the following terms shall have the following meanings:

(1) ACTIVE FANTASY CONTEST PLAYER ACCOUNT. A user who has participated in a fantasy contest for an entry fee in the State of Alabama in the preceding 24 months.

(2) CONFIDENTIAL INFORMATION. Information related to the play of a fantasy contest by fantasy contest players obtained as a result of, or by virtue of, a person's employment.

(3) ENTRY FEE. Cash or cash equivalent that is required to be paid by a fantasy contest player to a fantasy contest operator in order to participate in a fantasy contest.

(4) FANTASY CONTEST. Any fantasy or simulated game or contest in which one or more fantasy contest players compete against each other and winning outcomes reflect the relative knowledge and skill of the fantasy contest players and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events.

(5) FANTASY CONTEST OPERATOR. A person or entity that offers fantasy contests with an entry fee for a cash prize to the general public.

(6) FANTASY CONTEST PLAYER. A person who participates in a fantasy contest offered by a fantasy contest operator.

(7) GROSS FANTASY CONTEST REVENUES. The amount equal to the total of all entry fees that a fantasy contest operator collects from all fantasy contest players, less the total of all sums paid out as winning to all fantasy contest players multiplied by the location percentage for Alabama.

(8) LOCATION PERCENTAGE. The percentage, rounded to the nearest tenth of a percent, of the total of all entry fees collected from fantasy contest players located in Alabama, divided by the total entry fees collected from all fantasy contest players in fantasy contests.

(9) REGULATOR. The Office of the Attorney General.

Section 3. (a)(1) No fantasy contest operator shall offer any fantasy contest with an entry fee in this state without first being registered with the Office of the Attorney General. Applications for registration and renewal shall be under oath, in the form prescribed by the Attorney General. The Office of the Attorney General shall make applications for operators available within 180 days of the effective date of this act.

(2) A fantasy contest operator that offered fantasy contests in this state prior to May 1, 2016, is entitled to operate fantasy contests in this state upon the effective date of this act, provided such operator files an application for registration with the Office of the Attorney General within 60 days of availability of the application.

(b) The Office of the Attorney General may not shall adopt rules or regulations limiting or regulating the rules or administration of an individual fantasy contest, the statistical makeup of a fantasy contest, or the digital platform of a fantasy contest operator.

(c) At the time of initial registration to offer fantasy contests with an entry fee in this state, a fantasy contest operator shall pay to the Office of the Attorney General an initial registration fee as follows:

(1) A fantasy contest operator with 5,000 or more active player accounts shall pay an initial registration fee of eighty-five thousand dollars ($85,000). A fantasy contest operator with fewer than 5,000 active fantasy contest player accounts shall pay an initial registration fee of five thousand dollars ($5,000).

(2) A fantasy contest operator that has operated in this state, but not immediately preceding its application for registration, shall pay the initial registration fee based upon the total number of active fantasy contest player accounts it had over the most recent 24-month period of operation in the state.

(3) A fantasy contest operator that has never operated in this state shall pay an initial registration fee of five thousand dollars ($5,000).

(d) On the anniversary date of the fantasy contest operator's registration, the fantasy contest operator shall annually pay to the Office of the Attorney General a registration renewal fee in accordance with the fee schedule in subdivision (1) of subsection (c).

(e) Any operator applying for registration, renewal, or transfer of a registration may operate during the application period unless the Office of the Attorney General has reasonable cause to believe that the operator is or may be in violation of this act and the Office of the Attorney General requires the operator to suspend the operation of any fantasy contest until registration, transfer, or renewal of registration is approved.

Section 4. In addition to the registration and renewal fees, a fantasy contest operator shall annually pay to the state General Fund a regulatory assessment of six percent of the fantasy contest operatorís gross fantasy contest revenues for the preceding 12 months of operation.††

Section 5. (a) A fantasy contest operator who operates fantasy contests with an entry fee shall implement commercially reasonable procedures that are intended to accomplish all of the following:

(1) Prevent employees of the fantasy contest operator, and relatives living in the same household as such employees, from competing in any such public fantasy contest offered by any fantasy contest operator in which the operator offers a cash prize to the general public.

(2) Prevent sharing of confidential information that could affect fantasy contest play with third parties until information is made publicly available.

(3) Prevent the fantasy contest operator from participating in a fantasy contest he or she offers.

(4) Verify that a fantasy contest player in a fantasy contest is 19 years of age or older.

(5) Prevent the fantasy contest operator from offering contests based on the performances of participants in collegiate, high school, or youth athletic events.

(6) Prevent the fantasy contest operator from offering a fantasy contest open to the general public that does not establish and make known all prizes and awards offered to winning participants in advance of the game or contest.

(7) Provide that no winning outcome is based on the score, point spread, or any performance of any single actual sports team or combination of such teams or solely on any single performance of an individual athlete or participant in any single actual event.

(8) Ensure that an individual who is a player in a real-world game or sporting event is restricted from participating in such a fantasy contest that is determined, in whole or in part, on the accumulated statistical results of that player, the player's real-world team, or the sport of competition for which he or she is a player.

(9) Allow individuals to restrict themselves from entering a fantasy contest upon request and provide reasonable steps to prevent the person from entering fantasy contests offered by the fantasy contest operator.

(10) Disclose the number of entries that a fantasy contest player may submit to each such fantasy contest and provide reasonable steps to prevent players from submitting more than the allowable number.

(11) Segregate fantasy contest player funds from operational funds or maintain a reserve that equals or exceeds the amount of player funds on deposit, which reserve may not be used for operational activities. These reserve funds may take the form of cash, cash equivalents, an irrevocable letter of credit, a bond, or a combination thereof, in the amount that must exceed the total balances of the fantasy contest players' accounts.

(12) A fantasy contest operator offering fantasy contests with an entry fee in this state shall contract with a third party to annually perform an independent audit, consistent with the standards established by the American Institute of Certified Public Accountants, to ensure compliance with this act and shall submit the results of the audit to the Office of the Attorney General within 270 days of the end of the operator's fiscal year.

(13) A fantasy contest operator offering fantasy contests with an entry fee in this state shall not target minors or other excluded players in any advertising.

Section 6. A violation of this act is a deceptive trade practice under the Deceptive Trade Practices Act, Chapter 19 of Title 8, Code of Alabama 1975.

Section 7. The provisions of this act shall be construed liberally to promote the general welfare of the public and integrity of the fantasy sports industry.

Section 8. The Office of the Attorney General shall have the authority to adopt rules to implement and administer this act.

Section 9. Article 2 of Chapter 12 of Title 13A, Code of Alabama 1975, does not apply to a fantasy contest.

Section 10. Although this bill would have as its purpose or effect the requirement of a new or increased expenditure of local funds, the bill is excluded from further requirements and application under Amendment 621, now appearing as Section 111.05 of the Official Recompilation of the Constitution of Alabama of 1901, as amended, because the bill defines a new crime or amends the definition of an existing crime.

Section 11. This act shall become effective immediately following its passage and approval by the Governor, or its otherwise becoming law.


Fantasy Contest
Gambling
Consumers and Consumer Protection
Business and Commerce
Attorney General
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