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Linda Kenney Baden Discusses Fantasy Sports, DraftKings, FanDuel: NY Litigation & Legislation


Posted On: March 27, 2016 | By Linda Kenney Baden

Steve Overmyer and Linda Kenney Baden CBSLinda Kenney Baden recently appeared on the Emmy Award winning show Sports Desk hosted by Steve Overmyer on CBS-2 NY  (CBS local in NY Twitter https://twitter.com/CBSNewYork).

Here is the link to the appearance: http://newyork.cbslocal.com/2016/03/27/steve-overmyer-sits-down-with-famed-trial-lawyer-linda-kenney-baden/

And here is the follow up story:

The topic of their discussion was the recent announcement by FanDuel and DraftKings to suspend  operations in New York (even though there was a ruling that allowed them to temporarily operate) until September when the appeal of the fantasy leagues lawsuit would be heard. In return for the suspension by two of the biggest fantasy sports operators- DraftKings and FanDuel, the Attorney General (AG) of New York Eric Schneiderman agreed to stay part of the litigation filed by NY state against the sites- that having to do with the underlying restitution claims.  The AG is allowed to continue the false advertising and false practices part of the litigation, commonly known as consumer fraud. Yahoo said it was leaving the NY market this week and is not involved in this agreement. This stay does not affect the civil suits for fraud.

This deal may have been reached because of a legislative bill that not only seems to have a good chance of becoming law, but one that is has immediate favorable outcome for the fantasy sports companies. It would legalize fantasy sports in New York State, to be followed by governmental regulation.

What does this immediately mean for the contestant as the fantasy sites call their customers, or the consumer the AG calls fantasy sports “victims?”

Senate Bill  S6793 will:

1) Let those fantasy sites operating prior to November 10, 2015 (which of course includes DraftKings and FanDuel) immediately restart operations once they pay a $500,000 registration fee to the State of NY, which will be an offset to the gross taxing revenue the state receives yearly. This means contestants could be back in action fairly quickly,since it is likely this bill would pass during the next two months during Albany’s budget hearings. NY would then put in regulations to protect contestants/consumers as provided by the legislation if it passes and becomes law. This registration fee is quite large and any small business who would try to get into this area would not likely be able to meet this fee. But the current fantasy sites are well funded by owners or though marketing fees, so it is not a concern to ongoing sites such as FanDuel or Draft Kings. If litigation arises because of this fee by small businesses arguing that it is discriminatory, current operators would not be participants in that litigation. In fact, since current NY FS sites are so monetarily well established and since such a high fee could limit new competition it may be suggested that they may even be unopposed to same. In any event current, fantasy sports sites will leave it to others to litigate that requirement.

2) Require fantasy site operators to pay the State 15 percent  of gross revenues yearly over the next ten years . This of course, is likely to cause contestant/consumer fees to rise.

3) This bill is more lenient than the pending regulations in other states, Massachusetts, for example. Under the MA proposal a contestant must be 21 to play if they are physically located in that state. NY keeps the age at 18. About 30 states still have legislation/regulations pending concerning fantasy sports, this bill could become a template for other states.

4) This bill seeks to protects contestants/consumers by various requirements including putting their money in segregated accounts. It is likely that the consumer fraud regulatory part of the lawsuit or the regulations will seek to prevent professionals from using algorithms coupled with unlimited multiple entries to dominate outcomes.The NYS Division of Financial Services will set standards to try to prevent fraud, underage or compulsive gamblers from participating.

5) A new section will be created  in the Financial Frauds and Consumer Protection Services Unit dedicated to fantasy sports. It will be required to set up a  mediation process  for complaints from a consumer. This will inevitably create the issue as to whether such a process will preempt lawsuits from being filed in court. If if does, it is a big plus for the site operators.

6) The bill exempts non-commercial fantasy sports leagues- so your office fantasy pool is legal as long as no one takes any money for running ( the “VIG”).

The history of how this all came about was the adoption of the UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006 (UIGEA). The act made it illegal for banks or similar financial funding institutions to transact with online gambling sites.The UIGEA exempted fantasy sports from this federal law’s reach with the following: that it does not apply to such that “has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participant’s individual performances in such sporting events…” Fantasy sports sites such as Fan Duel and Draft Kings argued that they are not subject to any state internet gambling law because contestants use skill- analyzing statistics, facts, game theory and their own knowledge to compete. Since fantasy sports were specifically exempted from the above federal law,they have argued therefore, no state has no power to regulate them under gambling statutes. This fight has been a losing one so far in part, bought on my the amount of money the sites generate, and the recent allegations of fraud. Since states can regulate consumer affairs, the argument about whether  fantasy competitions are internet gambling has been relegated to a second tier argument in litigation between the states and the sites.

 

For those of you interested into text of the entire bill- here it is:

S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                  6793

                            I N  S E N A T E

                            February 23, 2016
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Racing, Gaming and  Wager-
  ing

AN  ACT  to  amend the racing, pari-mutuel wagering and breeding law and
  the financial services law, in relation to interactive fantasy sports

  THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section  1.  The  racing,  pari-mutuel  wagering  and  breeding law is
amended by adding a new article 15 to read as follows:
                               ARTICLE 15
                       INTERACTIVE FANTASY SPORTS
SECTION 1500. LEGISLATIVE FINDINGS AND PURPOSE.
        1501. DEFINITIONS.
        1502. REGISTRATION.
        1503. REQUIRED SAFEGUARDS/MINIMUM STANDARDS.
        1504. SCOPE OF REGISTRATION REVIEW.
        1505. STATE TAX.
  S 1500. LEGISLATIVE FINDINGS AND PURPOSE. THE LEGISLATURE HEREBY FINDS
AND DECLARES THAT:
  1. UNDER THE NEW YORK PENAL LAW A PERSON ENGAGES IN GAMBLING  WHEN  HE
OR  SHE STAKES OR RISKS SOMETHING OF VALUE UPON THE OUTCOME OF A CONTEST
OF CHANCE OR A FUTURE CONTINGENT EVENT NOT UNDER HIS OR HER  CONTROL  OR
INFLUENCE,  UPON  AN  AGREEMENT  OR  UNDERSTANDING  THAT  HE OR SHE WILL
RECEIVE SOMETHING OF VALUE IN THE EVENT OF A CERTAIN OUTCOME;
  2. INTERACTIVE FANTASY SPORTS IN MANY INSTANCES HAVE BEEN DEFINED AS A
GAME OF SKILL AND WERE EXEMPTED FROM THE DEFINITION OF UNLAWFUL INTERNET
GAMBLING UNDER THE UNLAWFUL INTERNET GAMBLING ENFORCEMENT  ACT  OF  2006
(31 U.S.C. S 5362);
  3.  INTERACTIVE FANTASY SPORTS CONSIST OF FANTASY OR SIMULATION SPORTS
GAMES OR EDUCATIONAL GAMES OR CONTESTS IN WHICH  THE  FANTASY  OR  SIMU-
LATION  SPORTS  TEAMS ARE SELECTED BASED UPON THE SKILL AND KNOWLEDGE OF
THE PARTICIPANTS AND NOT BASED ON THE CURRENT MEMBERSHIP  OF  AN  ACTUAL
TEAM THAT IS A MEMBER OF AN AMATEUR OR PROFESSIONAL SPORTS ORGANIZATION.
AS GAMES OF SKILL, INTERACTIVE FANTASY SPORTS CONTESTS DO NOT FALL UNDER
THE DEFINITION OF GAMBLING AS PROHIBITED BY THE PENAL LAW; AND
  4.  THE  LEGISLATURE  FURTHER FINDS THAT AS THE INTERNET HAS BECOME AN
INTEGRAL PART OF SOCIETY, AND INTERACTIVE FANTASY SPORTS A MAJOR FORM OF

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD14229-01-6

S. 6793                             2

ENTERTAINMENT  FOR  MANY  CONSUMERS,  ANY  INTERACTIVE  FANTASY   SPORTS
ENFORCEMENT AND REGULATORY STRUCTURE MUST BEGIN FROM THE BEDROCK PREMISE
THAT  PARTICIPATION  IN A LAWFUL AND LICENSED INTERACTIVE FANTASY SPORTS
INDUSTRY  IS  A PRIVILEGE AND NOT A RIGHT, AND THAT REGULATORY OVERSIGHT
IS INTENDED TO SAFEGUARD THE INTEGRITY OF THE GAMES AND PARTICIPANTS AND
TO ENSURE ACCOUNTABILITY AND THE PUBLIC TRUST.
  S 1501. DEFINITIONS. AS USED IN THIS ARTICLE THE FOLLOWING TERMS SHALL
HAVE THE FOLLOWING MEANINGS:
  1. "COLLEGIATE SPORT OR ATHLETIC EVENT"  MEANS  A  SPORT  OR  ATHLETIC
EVENT  OFFERED  OR SPONSORED BY OR PLAYED IN CONNECTION WITH A PUBLIC OR
PRIVATE INSTITUTION THAT OFFERS EDUCATION SERVICES BEYOND THE  SECONDARY
LEVEL.
  2.  "DIVISION"  MEANS  THE FANTASY SPORTS CONTESTS DIVISION WITHIN THE
FINANCIAL FRAUDS AND CONSUMER PROTECTION UNIT ESTABLISHED UNDER  SECTION
FOUR HUNDRED THREE OF THE FINANCIAL SERVICES LAW.
  3.  "ENTRY  FEE"  MEANS CASH OR CASH EQUIVALENT THAT IS REQUIRED TO BE
PAID BY A FANTASY CONTEST PLAYER TO A REGISTRANT  TO  PARTICIPATE  IN  A
FANTASY CONTEST.
  4. "HORSE RACING EVENT" MEANS ANY ATHLETIC OR SPORTING EVENT CONDUCTED
IN  NEW  YORK  STATE  SUBJECT  TO THE PROVISIONS OF THIS CHAPTER, OR ANY
ATHLETIC OR SPORTING EVENT CONDUCTED OUTSIDE OF NEW  YORK  STATE,  WHICH
WOULD  IF CONDUCTED IN NEW YORK STATE WOULD BE SUBJECT TO THE PROVISIONS
OF THIS CHAPTER.
  5. "INTERACTIVE FANTASY SPORTS" MEANS ANY FANTASY OR SIMULATED GAME OR
CONTEST, IN WHICH:
  (A) THE VALUE OF ALL PRIZES AND AWARDS OFFERED TO WINNING PARTICIPANTS
ARE ESTABLISHED AND MADE KNOWN TO THE PARTICIPANTS  IN  ADVANCE  OF  THE
CONTEST  AND  SUCH VALUE IS NOT DETERMINED BY THE NUMBER OF PARTICIPANTS
OR THE AMOUNT OF ANY FEES PAID BY THOSE PARTICIPANTS;
  (B) ALL WINNING OUTCOMES REFLECT THE RELATIVE KNOWLEDGE AND  SKILL  OF
THE  PARTICIPANTS  AND  SHALL BE DETERMINED PREDOMINANTLY BY ACCUMULATED
STATISTICAL  RESULTS  OF  THE  PERFORMANCE  OF  INDIVIDUALS,   INCLUDING
ATHLETES IN THE CASE OF SPORTS EVENTS; AND
  (C)  NO  WINNING  OUTCOME  IS BASED ON THE SCORE, POINT SPREAD, OR ANY
PERFORMANCE OR PERFORMANCES OF ANY SINGLE ACTUAL TEAM OR COMBINATION  OF
SUCH  TEAMS OR SOLELY ON ANY SINGLE PERFORMANCE OF AN INDIVIDUAL ATHLETE
OR PLAYER IN ANY SINGLE ACTUAL EVENT.
  NO INTERACTIVE FANTASY SPORTS GAME OR CONTEST SHALL BE OFFERED INVOLV-
ING FANTASY OR SIMULATION SPORTS TEAMS BASED UPON  A  PROHIBITED  SPORTS
EVENT.
  6.  "INTERACTIVE  FANTASY SPORTS GROSS REVENUE" MEANS THE TOTAL OF ALL
SUMS PAID TO A REGISTRANT  FROM  INTERACTIVE  FANTASY  SPORTS  INVOLVING
AUTHORIZED  PARTICIPANTS,  LESS  ONLY THE TOTAL OF ALL CASH, CASH EQUIV-
ALENTS, AND PROMOTIONAL FANTASY SPORTS CREDITS PAID OUT TO PATRONS.
  7. "INTERACTIVE FANTASY SPORTS  PLATFORM"  MEANS  THE  COMBINATION  OF
HARDWARE,  SOFTWARE  AND  DATA  NETWORKS  USED  TO MANAGE, ADMINISTER OR
CONTROL ENTRY FEES ON INTERACTIVE FANTASY SPORTS OR  THE  CONTESTS  WITH
WHICH THOSE ENTRY FEES ARE ASSOCIATED.
  8.    "INTERNET"   MEANS   A   COMPUTER   NETWORK   OF   INTEROPERABLE
PACKET-SWITCHED DATA NETWORKS.
  9. "REGISTRANT" MEANS A PERSON WHO IS  LICENSED  BY  THE  DIVISION  TO
OFFER  INTERACTIVE  FANTASY  SPORTS, USING AN INTERACTIVE FANTASY SPORTS
PLATFORM TO AUTHORIZED PARTICIPANTS. A REGISTRANT MAY  UTILIZE  MULTIPLE
INTERACTIVE  FANTASY  SPORTS  PLATFORMS  PROVIDED  THAT EACH PLATFORM IS
APPROVED BY THE DIVISION.

S. 6793                             3

  10. "NONCOMMERCIAL CONTEST OPERATOR" MEANS A PERSON WHO ORGANIZES  AND
CONDUCTS  AN  INTERACTIVE FANTASY SPORTS CONTEST, OR WHO MAKES AVAILABLE
AN INTERACTIVE FANTASY SPORTS PLATFORM, WHEREBY CONTEST PARTICIPANTS MAY
BE CHARGED ENTRY FEES FOR THE RIGHT TO PARTICIPATE THEREIN AND THE ENTRY
FEES  ARE  COLLECTED,  MAINTAINED  AND  DISTRIBUTED  BY THE SAME PERSON,
PROVIDED ALL ENTRY FEES ARE RETURNED TO  THE  PLAYERS  IN  THE  FORM  OF
PRIZES OR OTHER EQUIVALENT.
  11.  "PROHIBITED PARTICIPANTS" MEANS: EMPLOYEES OF INTERACTIVE FANTASY
SPORTS REGISTRANTS; OR INDIVIDUALS WHO HAVE ACCESS TO NON-PUBLIC  CONFI-
DENTIAL  INFORMATION  ABOUT  INTERACTIVE FANTASY SPORTS CONTESTS; OR ANY
PROFESSIONAL OR AMATEUR ATHLETE WHOSE PERFORMANCE MAY BE USED TO  DETER-
MINE  THE OUTCOME OF A FANTASY SPORTS CONTEST; OR ANY SPORTS AGENT, TEAM
EMPLOYEE, REFEREE, OR LEAGUE OFFICIAL ASSOCIATED WITH ANY SPORT UTILIZED
FOR INTERACTIVE FANTASY SPORTS CONTESTS; OR INDIVIDUALS IN STATES  WHERE
THE CONDUCT OF INTERACTIVE FANTASY SPORTS IS PROHIBITED.
  12.  "PROHIBITED  SPORTS EVENT" MEANS ANY COLLEGIATE SPORT OR ATHLETIC
EVENT OR ANY HORSE RACING EVENT.
  S 1502. REGISTRATION. 1. THE DIVISION SHALL, WITHIN ONE HUNDRED EIGHTY
DAYS OF THE DATE THIS ARTICLE BECOMES  LAW,  PROMULGATE  REGULATIONS  TO
IMPLEMENT  INTERACTIVE  FANTASY  SPORTS  IN  THIS STATE AND SHALL PERMIT
APPLICANTS TO OPERATE INTERACTIVE FANTASY  SPORTS  INVOLVING  AUTHORIZED
PARTICIPANTS, SUBJECT TO THE PROVISIONS OF THIS ARTICLE AND OTHER APPLI-
CABLE PROVISIONS OF LAW.
  2.  NO  PERSON, OTHER THAN A NONCOMMERCIAL CONTEST OPERATOR, MAY OPER-
ATE, MANAGE OR MAKE AVAILABLE AN  INTERACTIVE  FANTASY  SPORTS  PLATFORM
THAT  IS  OFFERED  TO PERSONS LOCATED IN THIS STATE UNLESS REGISTERED BY
THE DIVISION PURSUANT TO THIS ARTICLE AND ONLY  THOSE  GAMES  REGISTERED
WITH  THE  DIVISION  SHALL BE PERMITTED. HOWEVER, IF AN APPLICANT FOR AN
INTERACTIVE FANTASY SPORTS  LICENSE  WAS  OFFERING  INTERACTIVE  FANTASY
SPORTS CONTESTS TO NEW YORK RESIDENTS PRIOR TO NOVEMBER TENTH, TWO THOU-
SAND  FIFTEEN,  THEY MAY CONTINUE TO OFFER THE SAME CONTESTS TO NEW YORK
RESIDENTS DURING THE PENDENCY OF THEIR APPLICATION FOR REGISTRATION.
  3. THE DIVISION SHALL REQUIRE ALL REGISTRANTS TO PAY A ONE-TIME FEE OF
FIVE HUNDRED THOUSAND DOLLARS. SUCH FEE PAID BY EACH REGISTRANT SHALL BE
APPLIED TO SATISFY, IN WHOLE OR IN  PART,  AS  APPLICABLE,  THAT  REGIS-
TRANT'S  TAX OBLIGATION PURSUANT TO SECTION FIFTEEN HUNDRED FIVE OF THIS
ARTICLE IN THIRTY-SIX EQUAL MONTHLY INSTALLMENTS, ALLOCATED TO  EACH  OF
THE  FIRST  THIRTY-SIX MONTHS OF TAX OWED AFTER THE REGISTRANT HAS BEGUN
OPERATION OF INTERACTIVE FANTASY SPORTS PURSUANT  TO  THIS  ARTICLE.  NO
AMOUNTS  NOT  REQUIRED  TO BE USED TO SATISFY SUCH TAX OBLIGATION DURING
THAT PERIOD SHALL BE ALLOCATED TO PAYMENT OF SUCH TAX  OBLIGATION  AFTER
THAT PERIOD.
  4. REGISTRATIONS ISSUED BY THE DIVISION SHALL REMAIN IN EFFECT FOR TEN
YEARS.
  5.  THE  DIVISION  MAY DELEGATE ITS RESPONSIBILITIES TO ADMINISTER THE
PROVISIONS OF THIS ARTICLE TO THE DIVISION, AS IT SEES FIT,  EXCEPT  FOR
ITS RESPONSIBILITIES TO APPROVE REGISTRATIONS.
  6.  NOTHING  CONTAINED IN ARTICLE TWO HUNDRED TWENTY-FIVE OF THE PENAL
LAW SHALL BE APPLICABLE TO AN INTERACTIVE FANTASY SPORTS CONTEST OFFERED
BY A REGISTRANT IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE.
  S 1503. REQUIRED  SAFEGUARDS/MINIMUM  STANDARDS.  THE  DIVISION  SHALL
REQUIRE  REGISTRANTS TO IMPLEMENT THE FOLLOWING MEASURES FOR INTERACTIVE
FANTASY SPORTS WITH AN ENTRY FEE:
  1. PREVENT EMPLOYEES OF THE REGISTRANT, AND RELATIVES  LIVING  IN  THE
SAME  HOUSEHOLD  AS  SUCH  EMPLOYEES,  FROM COMPETING IN ANY SUCH PUBLIC
FANTASY SPORTS CONTEST.

S. 6793                             4

  2. PROHIBIT THE REGISTRANT FROM BEING A CONTEST PARTICIPANT IN SUCH  A
FANTASY SPORTS CONTEST THAT HE OR SHE OFFERS.
  3.  PREVENT  THE  EMPLOYEES  OR  AGENTS OF THE REGISTRANT FROM SHARING
CONFIDENTIAL INFORMATION THAT COULD AFFECT SUCH FANTASY SPORTS PLAY WITH
THIRD PARTIES UNTIL THE INFORMATION IS MADE PUBLICLY AVAILABLE.
  4. VERIFY THAT CONTEST PARTICIPANT IS EIGHTEEN YEARS OF AGE OR OLDER.
  5. RESTRICT AN INDIVIDUAL WHO IS A PLAYER, GAME  OFFICIAL,  COACH,  OR
OTHER PARTICIPANT IN A REAL-WORLD GAME OR COMPETITION FROM PARTICIPATING
IN  SUCH A FANTASY SPORTS CONTEST THAT IS DETERMINED IN WHOLE OR IN PART
ON THE PERFORMANCE OF THAT INDIVIDUAL, THE INDIVIDUAL'S REAL-WORLD TEAM,
OR THE ACCUMULATED STATISTICAL RESULTS OF THE SPORT  OR  COMPETITION  IN
WHICH HE OR SHE IS A PLAYER, GAME OFFICIAL, OR OTHER PARTICIPANT.
  6. ALLOW INDIVIDUALS TO RESTRICT OR PREVENT THEIR OWN ACCESS TO SUCH A
FANTASY  SPORTS CONTEST AND TAKE REASONABLE STEPS TO PREVENT THOSE INDI-
VIDUALS FROM ENTERING A FANTASY SPORTS CONTEST.
  7. DISCLOSE THE NUMBER OF ENTRIES  A  SINGLE  FANTASY  SPORTS  CONTEST
PLAYER  MAY  SUBMIT TO EACH SUCH FANTASY SPORTS CONTEST AND TAKE REASON-
ABLE STEPS TO PREVENT PLAYERS FROM SUBMITTING MORE  THAN  THE  ALLOWABLE
NUMBER.
  8. ENSURE PARTICIPANTS' FUNDS ARE HELD IN ACCOUNTS SEGREGATED FROM THE
FUNDS  OF REGISTRANTS AND OTHERWISE PROTECTED FROM CORPORATE INSOLVENCY,
FINANCIAL RISK OR CRIMINAL OR CIVIL ACTIONS AGAINST THE REGISTRANT.
  9. PROTECT, TO A REASONABLE  DEGREE  OF  CERTAINTY,  THE  PRIVACY  AND
ONLINE SECURITY OF PARTICIPANTS IN SUCH INTERACTIVE FANTASY SPORTS.
  10.  ENSURE,  TO  A  REASONABLE  DEGREE OF CERTAINTY, THE FAIRNESS AND
HONESTY OF SUCH INTERACTIVE FANTASY SPORTS AND THAT APPROPRIATE MEASURES
ARE IN PLACE TO DETER, DETECT AND, TO THE EXTENT REASONABLY POSSIBLE, TO
PREVENT CHEATING, INCLUDING COLLUSION,  AND  USE  OF  CHEATING  DEVICES,
INCLUDING  USE  OF SOFTWARE PROGRAMS (SOMETIMES REFERRED TO AS "BOTS" OR
"SCRIPTS") THAT PLACE ENTRY FEES OR ADJUST THE  PLAYERS  SELECTED  BY  A
FANTASY SPORTS PARTICIPANT.
  11.  PREVENT  PROHIBITED  PARTICIPANTS  FROM  MAINTAINING  ACCOUNTS OR
ENTERING SUCH INTERACTIVE FANTASY SPORTS CONTESTS OFFERED BY ANY  INTER-
ACTIVE FANTASY SPORTS REGISTRANT.
  12.  MINIMIZE  COMPULSIVE  PARTICIPATION  IN  SUCH INTERACTIVE FANTASY
SPORTS CONTESTS AND PROVIDE NOTICE TO PARTICIPANTS OF  RESOURCES  AVAIL-
ABLE TO HELP COMPULSIVE PARTICIPATION IN FANTASY SPORTS CONTESTS.
  S  1504.  SCOPE  OF REGISTRATION REVIEW. 1. THE DIVISION SHALL REQUIRE
THAT EACH APPLICANT, OTHER THAN NONCOMMERCIAL CONTEST OPERATORS,  SUBMIT
AN APPLICATION SETTING FORTH:
  (A) THE FULL NAME OF THE APPLICANT.
  (B)  IF A CORPORATION, THE NAME OF THE STATE IN WHICH INCORPORATED AND
THE NAMES AND ADDRESSES OF THE  OFFICERS,  DIRECTORS,  AND  SHAREHOLDERS
HOLDING  FIVE PERCENT OR MORE EQUITY OR, IF A BUSINESS ENTITY OTHER THAN
A CORPORATION, THE NAMES AND ADDRESSES OF THE PRINCIPALS,  PARTNERS,  OR
SHAREHOLDERS HOLDING FIVE PERCENT OR MORE EQUITY.
  (C)  THE  NAMES  AND  ADDRESSES OF THE ULTIMATE EQUITABLE OWNERS FOR A
CORPORATION OR OTHER BUSINESS ENTITY, IF DIFFERENT FROM  THOSE  PROVIDED
UNDER  PARAGRAPH (B), UNLESS THE SECURITIES OF THE CORPORATION OR ENTITY
ARE REGISTERED PURSUANT TO S 12 OF THE SECURITIES EXCHANGE ACT OF  1934,
15  U.S.C. SS 78A-78KK; AND IF SUCH CORPORATION OR ENTITY FILES WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION THE REPORTS REQUIRED BY
S 13 OF THAT ACT OR IF THE SECURITIES OF THE CORPORATION OR  ENTITY  ARE
REGULARLY  TRADED  ON  AN  ESTABLISHED  SECURITIES  MARKET IN THE UNITED
STATES.

S. 6793                             5

  (D) THE ESTIMATED NUMBER OF INTERACTIVE FANTASY SPORTS CONTESTS TO  BE
CONDUCTED ANNUALLY.
  (E) A STATEMENT OF THE ASSETS AND LIABILITIES OF THE APPLICANT.
  2.  THE  DIVISION  MAY REQUIRE THE NAMES AND ADDRESSES OF THE OFFICERS
AND DIRECTORS OF ANY DEBTOR OF THE APPLICANT, AND OF THOSE  STOCKHOLDERS
WHO HOLD MORE THAN TEN PERCENT OF THE STOCK OF THE DEBTOR.
  3.  FOR  EACH  INDIVIDUAL  LISTED  IN THE APPLICATION AS AN OFFICER OR
DIRECTOR, A COMPLETE SET OF FINGERPRINTS  THAT  HAS  BEEN  TAKEN  BY  AN
AUTHORIZED  LAW  ENFORCEMENT OFFICER. THESE SETS OF FINGERPRINTS MUST BE
SUBMITTED TO THE FEDERAL BUREAU OF INVESTIGATION FOR PROCESSING. FOREIGN
NATIONALS SHALL SUBMIT SUCH DOCUMENTS AS NECESSARY TO ALLOW THE DIVISION
TO CONDUCT CRIMINAL HISTORY RECORDS  CHECKS  IN  THE  INDIVIDUAL'S  HOME
COUNTRY. THE APPLICANT MUST PAY THE COST OF PROCESSING. THE DIVISION MAY
CHARGE A TWO DOLLAR HANDLING FEE FOR EACH SET OF FINGERPRINT RECORDS.
  4.  (A)  A PERSON OR ENTITY IS NOT ELIGIBLE FOR LICENSURE AS A CONTEST
OPERATOR OR THE RENEWAL OF A LICENSE IF THE  PERSON  OR  AN  OFFICER  OR
DIRECTOR  OF  THE ENTITY HAS BEEN CONVICTED OF A FELONY IN THIS STATE, A
FELONY IN ANY OTHER STATE WHICH WOULD BE A FELONY IF COMMITTED  IN  THIS
STATE  UNDER  THE  LAWS OF THIS STATE, OR A FELONY UNDER THE LAWS OF THE
UNITED STATES, OR IF  THE  APPLICANT  FOR  SUCH  REGISTRATION  HAS  BEEN
CONVICTED  OF A FELONY OR MISDEMEANOR IN THIS STATE, IN ANY OTHER STATE,
OR UNDER THE LAWS OF THE UNITED STATES, IF SUCH FELONY OR MISDEMEANOR IS
RELATED TO GAMBLING OR BOOKMAKING.
  (B) THE TERM "CONVICTED" MEANS HAVING BEEN FOUND GUILTY, WITH OR WITH-
OUT ADJUDICATION OF GUILT, AS A RESULT OF A JURY VERDICT, NONJURY TRIAL,
OR ENTRY OF A PLEA OF GUILTY OR NOLO CONTENDERE.
  5. THE CONTEST OPERATOR SHALL PROVIDE EVIDENCE OF A SURETY BOND IN THE
AMOUNT OF ONE MILLION DOLLARS, PAYABLE TO  THE  STATE,  FURNISHED  BY  A
CORPORATE  SURETY  AUTHORIZED TO DO BUSINESS IN THE STATE IN SUCH A FORM
AS ESTABLISHED BY DIVISION RULE. SUCH BOND SHALL BE KEPT IN  FULL  FORCE
AND  EFFECT  BY  THE CONTEST OPERATOR DURING THE TERM OF THE LICENSE AND
ANY RENEWAL THEREOF.
  S 1505. STATE TAX. REGISTRANTS ENGAGED IN THE BUSINESS  OF  CONDUCTING
INTERACTIVE  FANTASY  SPORTS PURSUANT TO THIS ARTICLE SHALL PAY A PRIVI-
LEGE TAX, BASED ON THE REGISTRANT'S PERCENTAGE  OF  INTERACTIVE  FANTASY
SPORTS  GROSS REVENUE GENERATED FROM NEW YORK PARTICIPANTS, AT A FIFTEEN
PERCENT RATE.
  S 2. Section 403 of the financial services law is amended by adding  a
new subsection (e) to read as follows:
  (E)  THE  SUPERINTENDENT IS DIRECTED TO ESTABLISH WITHIN THE FINANCIAL
FRAUDS AND CONSUMER PROTECTION UNIT A FANTASY SPORTS  CONTESTS  DIVISION
WHICH SHALL HAVE THE POWER AND DUTY TO:
  (I)  ENFORCE THE PROVISIONS OF ARTICLE FIFTEEN OF THE RACING, PARI-MU-
TUEL WAGERING AND BREEDING LAW;
  (II) ACCEPT AND INVESTIGATE COMPLAINTS OF ANY KIND FROM CONSUMERS  AND
ATTEMPT TO MEDIATE SUCH COMPLAINTS WHERE APPROPRIATE;
  (III)  INITIATE  PROPER  ENFORCEMENT  PROCEEDINGS WHERE SUCH ACTION IS
DEEMED BY THE SUPERINTENDENT TO BE NECESSARY OR APPROPRIATE; AND
  (IV) DEVELOP AND IMPLEMENT CONSUMER OUTREACH  AND  EDUCATION  PROGRAMS
CONSISTENT  WITH  THE OBLIGATIONS OF THE CONSUMER PROTECTION UNIT AS SET
FORTH IN THIS SECTION.
  S 3. This act shall take effect immediately; however, if an  applicant
for  an interactive fantasy sports registration was offering interactive
fantasy sports contests to New York  residents  prior  to  November  10,
2015, they may continue to offer the same contests to New York residents
during the pendency of their application.

 


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