HF 1415

3rd Engrossment - 90th Legislature (2017 - 2018) Posted on 04/24/2018 11:33am

A bill for an act
relating to commerce; authorizing and regulating fantasy sports; appropriating
money; amending Minnesota Statutes 2016, sections 541.20; 541.21; 609.761, by
adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter
325F.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [325F.9901] CONSUMER PROTECTION; FANTASY SPORTS.
new text end

new text begin Subdivision 1. new text end

new text begin Fantasy game operation requirements. new text end

new text begin A game operator offering a
fantasy game with an entry fee in this state must implement commercially reasonable
procedures to:
new text end

new text begin (1) prevent employees of the game operator and relatives living in the same household
as employees of the game operator from competing in any public fantasy game with an
entry fee offered by any game operator in which the operator offers a cash prize to the
general public;
new text end

new text begin (2) prevent disclosure of confidential information that could affect fantasy game play
with third parties before the information is made publicly available;
new text end

new text begin (3) prevent a game operator from participating in a fantasy game offered by the game
operator;
new text end

new text begin (4) 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 sporting event;
new text end

new text begin (5) prohibit the following persons from participating in fantasy contests based on the
sport or competition in which the person participates or is otherwise associated:
new text end

new text begin (i) athletes and individuals who participate or officiate in a game or competition that is
the subject of a fantasy sports contest;
new text end

new text begin (ii) any sports agent, team employee, referee, or league official associated with a sport
or athletic event;
new text end

new text begin (6) verify that contest participants are 18 years of age or older using commercially
reasonable technology;
new text end

new text begin (7) make available on the operator's Web site information about resources relating to
responsible play and where to seek assistance for responsible play;
new text end

new text begin (8) make available via Web site, telephone, or online chat means to allow individuals
to irrevocably restrict their ability to enter a fantasy game on the operator's platform and
select the length of time restrictions will be in place;
new text end

new text begin (9) disclose the number of entries a single fantasy game player may submit to each
fantasy game with an entry fee and take reasonable steps to prevent a player from submitting
more than the allowable number;
new text end

new text begin (10) provide fantasy game players with access to the fantasy game player's play history
and account details, including all deposit amounts, withdrawal amounts, a summary of entry
fees expended, and bonus or promotion information, including how much is left on any
pending bonus or promotion and how much has been released to the fantasy game player;
new text end

new text begin (11) allow individuals to restrict themselves from entering a fantasy game upon request
and provide reasonable steps to prevent the person from entering fantasy games offered by
the fantasy game operator;
new text end

new text begin (12) segregate fantasy contest player funds, including amounts in live contests that have
not been paid out yet, from operational funds or maintain a reserve that equals the amount
of the value of players' account balances including amounts in live contests that have not
been paid out yet, which reserve may not be used for operational activities. These segregated
and reserve funds, including amounts in live contests that have not been paid out yet, may
take the form of cash, cash equivalents, payment processor reserves, payment processor
receivables, an irrevocable letter of credit, a bond, or a combination thereof, in the amount
that must equal the total balances of the fantasy contest players' accounts;
new text end

new text begin (13) ensure any prize won by a registered player from participating in a fantasy sports
contest is deposited into the registered player's account within 72 hours of winning the prize;
new text end

new text begin (14) ensure registered players can withdraw the funds maintained in their individual
accounts, whether such accounts are open or closed, within five business days of the request
being made, unless the game operator believes in good faith that the registered player
engaged in either fraudulent conduct or other conduct that would put the game operator in
violation of this section, in which case the licensed operator may decline to honor the request
for withdrawal for a reasonable investigatory period until its investigation is resolved if it
provides notice of the nature of the investigation to the registered player. If the investigation
exceeds 60 days, the game operator shall notify the commissioner. For the purposes of this
provision, a request for withdrawal will be considered honored if it is processed by the
licensed operator but delayed by a payment processor, credit card issuer, or by the custodian
of a financial account;
new text end

new text begin (15) prominently publish the rules governing each fantasy game with an entry fee;
new text end

new text begin (16) prohibit the use of third-party scripts that give players an unfair advantage over
other players;
new text end

new text begin (17) develop and prominently publish procedures by which a person may file a complaint
with the operator and the commissioner; and
new text end

new text begin (18) disclose the terms of all promotional offers at the time the offers are advertised,
and provide full disclosures of limitations on the offer before a person provides financial
consideration in exchange for the offer.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin For purposes of this section, "game operator," "fantasy game,"
"confidential information," "script," and "entry fee" have the meanings given them under
section 609.761, subdivision 7. "Commissioner" means the commissioner of public safety.
"Script" means commands that a computer program can execute to automate processes on
a game operator's Web site or application.
new text end

new text begin Subd. 3. new text end

new text begin Registration. new text end

new text begin (a) A game operator shall register with the Department of Public
Safety within 30 days of offering a fantasy game to a person in Minnesota. The registration
statement must include:
new text end

new text begin (1) the business name, address, and contact information of the game operator;
new text end

new text begin (2) the game operator's Web site address;
new text end

new text begin (3) the names and addresses of the game operator's officers, directors, and any stakeholder
with more than 15 percent interest in the operator;
new text end

new text begin (4) the game operator's tax identification number; and
new text end

new text begin (5) proof of the game operator's financial security in an amount sufficient to comply
with the provisions of subdivision 1, clause (12).
new text end

new text begin (b) The registration must be submitted by January 15 of every year, and within 30 days
if there is a material change in the operator's registration information. The commissioner
may not issue a registration under this chapter or may revoke a registration if the operator
fails to comply with the requirements of this section or the applicant has ever been convicted
of a felony-level theft or fraud.
new text end

new text begin (c) The commissioner may charge an annual registration fee of $1,500 that adequately
covers the cost of issuing the registration and other registration duties. The fees shall be
deposited in an account in the special revenue fund and are appropriated to the commissioner
for the purposes of this subdivision.
new text end

new text begin (d) Before a registration under this section is granted, the commissioner of public safety
may conduct a criminal history records check of an officer, director, or stakeholder with
more than 15 percent interest in the operator. The commissioner may charge a fee that covers
the cost of the fingerprint recording and review along with the fees for the records checks
at the Bureau of Criminal Apprehension, the Alcohol and Gambling Enforcement Division,
and Federal Bureau of Investigation. The check must consist of a criminal history check of
the state criminal records repository and a national criminal history records check. The
commissioner shall accept the signed informed consent for the national criminal history
records check request, the fingerprints of the applicant, and the fees. The commissioner
shall submit the signed informed consent, fingerprints, and Bureau of Criminal Apprehension
and Federal Bureau of Investigation fees to the superintendent of the Bureau of Criminal
Apprehension who is authorized to exchange the fingerprints with the Federal Bureau of
Investigation to obtain the applicant's national criminal history record information. The
superintendent will also retrieve Minnesota criminal history data and will provide the results
of both checks to the commissioner for a determination whether the officer, director, or
stakeholder is disqualified.
new text end

new text begin Subd. 4. new text end

new text begin Audits. new text end

new text begin A game operator shall contract annually with a third party to perform
an independent audit, consistent with the standards established by the Public Company
Accounting Oversight Board or using the Statements on Accounting Standards issued by
the Audit Standards Board of the American Institute of Certified Public Accountants, to
ensure compliance with this section. The game operator must submit the audit to the
commissioner for examination and inspection by November 1 of each year.
new text end

new text begin Subd. 5. new text end

new text begin Civil penalty. new text end

new text begin Any person, firm, corporation, association, or agent who
knowingly violates any requirement under this section is liable for a civil penalty of not
more than $1,000 for each violation, not to exceed $50,000 for violations arising out of the
same transaction or occurrence, which shall accrue to the state and may be recovered in a
civil action brought by the commissioner.
new text end

new text begin Subd. 6. new text end

new text begin Criminal penalty. new text end

new text begin It is unlawful for any person to accept an entry fee or cash
equivalent from a Minnesota resident unless the person is an authorized game operator as
defined in section 609.761, subdivision 7, clause (6). Any person who knowingly violates
the provisions of this section shall be guilty of a gross misdemeanor and shall not be eligible
for registration as a game operator by the commissioner for a period of five years.
Notwithstanding the foregoing, a person offering fantasy sports for an entry fee or cash
equivalent from a Minnesota resident prior to enactment of this act shall be allowed to
continue to operate until the earlier of the date that they file a registration statement with
the commissioner or 60 days after the commissioner makes a form suitable for registration
available to the public.
new text end

new text begin Subd. 7. new text end

new text begin Investigations and powers. new text end

new text begin The commissioner may designate certain division
employees who are authorized to investigate any person who is suspected of violating any
provision of this section and to conduct searches and seizures to enforce any of those laws.
Nothing in this section limits the authority of the division to exercise any other power
specified under chapter 240, 299L, 340A, 349, or 349A.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2018, and applies to crimes
committed on or after that date.
new text end

Sec. 2.

Minnesota Statutes 2016, section 541.20, is amended to read:

541.20 RECOVERY OF MONEY LOST.

Every person who, by playing at cards, dice, or other game, or by betting on the hands
or sides of such as are gambling, shall lose to any person so playing or betting any sum of
money or any goods, and pays or delivers the same, or any part thereof, to the winner, may
sue for and recover such money by a civil action, before any court of competent jurisdiction.
For purposes of this section, gambling shall not include pari-mutuel wagering conducted
under a license issued pursuant to chapter 240, purchase or sale of tickets in the State Lottery,
deleted text begin or deleted text end gambling authorized under chapters 349 and 349A new text begin , or participation in a fantasy game as
defined under section 609.761, subdivision 7 new text end .

Sec. 3.

Minnesota Statutes 2016, section 541.21, is amended to read:

541.21 COMMITMENTS FOR GAMBLING DEBT VOID.

Every note, bill, bond, mortgage, or other security or conveyance in which the whole or
any part of the consideration shall be for any money or goods won by gambling or playing
at cards, dice, or any other game whatever, or by betting on the sides or hands of any person
gambling, or for reimbursing or repaying any money knowingly lent or advanced at the
time and place of such gambling or betting, or lent and advanced for any gambling or betting
to any persons so gambling or betting, shall be void and of no effect as between the parties
to the same, and as to all persons except such as hold or claim under them in good faith,
without notice of the illegality of the consideration of such contract or conveyance. The
provisions of this section shall not apply to: (1) pari-mutuel wagering conducted under a
license issued pursuant to chapter 240; (2) purchase of tickets in the State Lottery under
chapter 349A; (3) gaming activities conducted pursuant to the Indian Gaming Regulatory
Act, United States Code, title 25, section 2701 et seq.; deleted text begin or deleted text end (4) lawful gambling activities
permitted under chapter 349 new text begin ; or (5) participation in a fantasy game as defined under section
609.761, subdivision 7 new text end .

Sec. 4.

Minnesota Statutes 2016, section 609.761, is amended by adding a subdivision to
read:

new text begin Subd. 7. new text end

new text begin Fantasy games. new text end

new text begin (a) For purposes of this subdivision, the following terms have
the meanings given them:
new text end

new text begin (1) "Athlete" means a human individual who participates in a real world sports contest
or event.
new text end

new text begin (2) "entry fee" means cash or cash equivalent that is required to be paid by a fantasy
game player to a game operator to participate in a fantasy game;
new text end

new text begin (3) "commissioner" means the commissioner of public safety or a person to whom the
commissioner has delegated authority;
new text end

new text begin (4) "confidential information" means 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;
new text end

new text begin (5) "fantasy sports game" means any online fantasy sports or simulated sports game or
contest with an entry fee in which one or more players compete against each other in which:
(i) the value of all prizes and awards offered to winning participants is established and made
known to the participants in advance of a contest that is open to the general public; (ii) all
winning outcomes reflect the relative knowledge and skill of the participants and shall be
determined by accumulated statistical results of the performance of individuals, including
athletes in the case of sports events; and (iii) no winning outcome is based on the score,
point spread, any performance of any single actual team or combination of teams, or solely
on any single performance of an individual athlete or player in any single actual event;
new text end

new text begin (6) "game operator" means a person or entity that offers a platform for the playing of
fantasy games, administers one or more fantasy games with an entry fee, and awards a prize
of value; and
new text end

new text begin (7) "script" means a list of commands that a computer program related to a fantasy game
can execute and that is created by a fantasy game player, or by a third party for a fantasy
game player, to automate processes on a fantasy game platform.
new text end

new text begin (b) A fantasy game operator shall not offer fantasy games based on the performances
of participants in collegiate, high school, or youth athletic events.
new text end

new text begin (c) A fantasy game conducted by a game operator registered with the commissioner of
public safety under section 325F.9901, subdivision 3, is not a bet or a lottery within the
meaning of sections 609.75, 609.755, and 609.76, if it is conducted under this chapter.
new text end

new text begin (d) Sections 609.755 and 609.76 do not prohibit a game operator registered with the
commissioner of public safety under section 325F.9901, subdivision 3, from offering a
fantasy game.
new text end