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Minnesota Legislature

Office of the Revisor of Statutes

HF 2540

1st Unofficial Engrossment - 89th Legislature (2015 - 2016) Posted on 05/09/2016 09:15am

KEY: stricken = removed, old language.
underscored = added, new language.
1.1A bill for an act
1.2relating to commerce; authorizing fantasy sports;amending Minnesota Statutes
1.32014, sections 541.20; 541.21; 609.761, by adding a subdivision; proposing
1.4coding for new law in Minnesota Statutes, chapter 325F.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6    Section 1. [325F.9901] CONSUMER PROTECTION; FANTASY SPORTS.
1.7    Subdivision 1. Fantasy game operation requirements. A game operator offering
1.8a fantasy game with an entry fee in this state must implement commercially reasonable
1.9procedures to:
1.10(1) prevent employees of the game operator and relatives living in the same
1.11household as employees of the game operator from competing in any fantasy game with an
1.12entry fee offered by any game operator in which the operator offers a cash prize over $5;
1.13(2) prevent disclosure of gaming information that could affect fantasy game play
1.14before the information is made publicly available;
1.15(3) prevent a game operator employee from being a participant in a fantasy game
1.16the game operator offers;
1.17(4) verify that contest participants are 18 years of age through the use of a
1.18commercially available database or aggregate of databases that is regularly used
1.19by government and businesses for the purpose of age and identity verification and
1.20authentication;
1.21(5) ensure that an individual who participates as a player or official in a game or
1.22contest that is the subject of a fantasy game will be restricted from entering a fantasy game
1.23that is determined, in whole or in part, on the accumulated statistical results of a team of
1.24individuals in the game or contest in which the individual is a participant;
2.1(6) make available on the operator's Web site information about resources relating to
2.2compulsive behavior and where to seek assistance for compulsive behavior;
2.3(7) make available via Web site, telephone, or online chat means to allow individuals
2.4to irrevocably restrict their ability to enter a fantasy game and select the length of time
2.5restrictions will be in place;
2.6(8) disclose the number of entries a single fantasy game player may submit to
2.7each fantasy game with an entry fee and take reasonable steps to prevent a player from
2.8submitting more than the allowable number;
2.9(9) for the benefit and protection of fantasy game players' funds held in fantasy game
2.10accounts, segregate player funds from operational funds and maintain a reserve in the
2.11form of cash, cash equivalents, an irrevocable letter of credit, a bond, security deposits
2.12at merchant banks and payment processors, or a combination thereof in the amount of
2.13the balance available for withdrawal in player accounts;
2.14(10) offer access to the fantasy game player's play history, including a summary of
2.15entry fees expended, games played and previous line-ups, and prizes awarded;
2.16(11) offer access to account details, including all deposit amounts, withdrawal
2.17amounts, and bonus or promotion information, including how much is left on any pending
2.18bonus or promotion and how much has been released to the fantasy game player;
2.19(12) prevent a player from using a proxy server to enter the game operator's platform;
2.20(13) prominently publish the rules governing each fantasy game with an entry fee;
2.21(14) prohibit the use of third-party scripts, and prohibit a person found to be using
2.22a third-party script from playing in a fantasy game offered by the operator for a period
2.23of not less than one year;
2.24(15) develop and prominently publish procedures by which a person may file a
2.25complaint with the operator; and
2.26(16) disclose the terms of all promotional offers at the time the offers are advertised,
2.27and provide full disclosures of limitations on the offer before a person provides financial
2.28consideration in exchange for the offer.
2.29    Subd. 2. Definitions. For purposes of this section, "game operator," "fantasy game,"
2.30and "entry fee" have the meanings given them under section 609.761, subdivision 7.
2.31"Commissioner" means the commissioner of public safety. "Script" means commands
2.32that a computer program can execute to automate processes on a game operator's Web
2.33site or application.
2.34    Subd. 3. Registration. (a) A game operator shall register with the Department of
2.35Public Safety within 30 days of offering a fantasy game to a person in Minnesota. The
2.36registration statement must include:
3.1(1) the business name, address, and contact information of the game operator;
3.2(2) the game operator's Web site address;
3.3(3) the names and addresses of the game operator's officers, directors, and any
3.4stakeholder with more than 15 percent interest in the operator;
3.5(4) the name and contact information of the game operator's independent auditor;
3.6(5) the game operator's tax identification number; and
3.7(6) proof of the game operator's financial security in an amount sufficient to comply
3.8with the provisions of subdivision 1, clause (9).
3.9(b) The registration must be submitted by January 15 of every year, and within
3.1030 days if there is a material change in the operator's registration information. The
3.11commissioner may not issue a registration under this chapter or may revoke a registration
3.12if the operator fails to comply with the requirements of this section.
3.13(c) The commissioner may charge an annual registration fee of $500 that adequately
3.14covers the cost of issuing the registration and other registration duties. The fees shall
3.15be deposited in an account in the special revenue fund and are appropriated to the
3.16commissioner for the purposes of this subdivision.
3.17    Subd. 4. Audits. A game operator shall contract annually with a third party to
3.18perform an independent audit, consistent with the standards established by the Public
3.19Company Accounting Oversight Board or using the Statements on Accounting Standards
3.20issued by the Audit Standards Board of the American Institute of Certified Public
3.21Accountants, to ensure compliance with this section. The game operator must submit the
3.22audit to the commissioner by March 15 each year for examination and inspection.
3.23    Subd. 5. Civil remedies. Any person injured by a violation of this section may bring
3.24a civil action and recover actual damages, together with costs and disbursements, including
3.25reasonable attorney fees, and receive other equitable relief as determined by the court.
3.26    Subd. 6. Criminal penalty. Any person who knowingly violates the provisions of
3.27this section is guilty of a gross misdemeanor.
3.28    Subd. 7. Investigations and powers. The commissioner may designate certain
3.29division employees who are authorized to investigate and arrest any person who is
3.30suspected of violating any provision of this section and to conduct searches and seizures
3.31to enforce any of those laws. Any employee authorized by this subdivision to make an
3.32arrest must be licensed under sections 626.84 to 626.863. Nothing in this section limits
3.33the authority of the division to exercise any other power specified under chapter 240,
3.34299L, 340A, 349, or 349A.

4.1    Sec. 2. Minnesota Statutes 2014, section 541.20, is amended to read:
4.2541.20 RECOVERY OF MONEY LOST.
4.3Every person who, by playing at cards, dice, or other game, or by betting on the
4.4hands or sides of such as are gambling, shall lose to any person so playing or betting
4.5any sum of money or any goods, and pays or delivers the same, or any part thereof, to
4.6the winner, may sue for and recover such money by a civil action, before any court
4.7of competent jurisdiction. For purposes of this section, gambling shall not include
4.8pari-mutuel wagering conducted under a license issued pursuant to chapter 240, purchase
4.9or sale of tickets in the state lottery, or gambling authorized under chapters 349 and 349A,
4.10or participation in a fantasy game as defined under section 609.761, subdivision 7.

4.11    Sec. 3. Minnesota Statutes 2014, section 541.21, is amended to read:
4.12541.21 COMMITMENTS FOR GAMBLING DEBT VOID.
4.13Every note, bill, bond, mortgage, or other security or conveyance in which the whole
4.14or any part of the consideration shall be for any money or goods won by gambling or
4.15playing at cards, dice, or any other game whatever, or by betting on the sides or hands
4.16of any person gambling, or for reimbursing or repaying any money knowingly lent or
4.17advanced at the time and place of such gambling or betting, or lent and advanced for any
4.18gambling or betting to any persons so gambling or betting, shall be void and of no effect
4.19as between the parties to the same, and as to all persons except such as hold or claim under
4.20them in good faith, without notice of the illegality of the consideration of such contract or
4.21conveyance. The provisions of this section shall not apply to:
4.22(1) pari-mutuel wagering conducted under a license issued pursuant to chapter 240;
4.23(2) purchase of tickets in the state lottery under chapter 349A;
4.24(3) gaming activities conducted pursuant to the Indian Gaming Regulatory Act,
4.25United States Code, title 25, section 2701 et seq.; or
4.26(4) lawful gambling activities permitted under chapter 349; or
4.27(5) participation in a fantasy game as defined under section 609.761, subdivision 7.

4.28    Sec. 4. Minnesota Statutes 2014, section 609.761, is amended by adding a subdivision
4.29to read:
4.30    Subd. 7. Fantasy games. (a) For purposes of this subdivision, the following terms
4.31have the meanings given them:
4.32(1) "entry fee" means cash or cash equivalent that is required to be paid by a fantasy
4.33game player to a game operator to participate in a fantasy game;
5.1(2) "commissioner" means the commissioner of public safety or a person to whom
5.2the commissioner has delegated authority;
5.3(3) "fantasy game" means a fantasy contest that meets the following conditions:
5.4(i) the value of all prizes and awards offered to winning game participants are
5.5established and made known to the game participants in advance of the fantasy game;
5.6(ii) all winning outcomes are determined predominantly by the accumulated
5.7statistical results of the performance of individual athletes in sporting events;
5.8(iii) no winning outcome is based on the score, point spread, or performance or
5.9performances of a single team or combination of teams or solely on a single performance
5.10of an individual athlete or player in a single event; and
5.11(iv) the result of a fantasy game is not based on any athlete participating on a team
5.12sponsored by a secondary or postsecondary educational organization; and
5.13(4) "game operator" means a person that offers a fantasy game for a cash prize or
5.14other prize of value for commercial purposes.
5.15(b) A fantasy game conducted by a game operator registered with the commissioner
5.16of public safety under section 325F.9901, subdivision 3, is a bona fide contest for the
5.17determination of skill under section 609.75, subdivision 3, clause (3), and is not a violation
5.18of sections 609.75, 609.755, and 609.76.
5.19(c) Sections 609.755 and 609.76 do not prohibit a game operator registered with the
5.20commissioner of public safety under section 325F.9901, subdivision 3, from offering a
5.21fantasy game.