HB3980 - Relating to the regulation of fantasy contests; requiring an occupational license; imposing an administrative penalty; authorizing fees; imposing a tax.

  89R4049 BEE-F     By: Patterson H.B. No. 3980       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of fantasy contests; requiring an   occupational license; imposing an administrative penalty;   authorizing fees; imposing a tax.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle B, Title 13, Occupations Code, is   amended by adding Chapter 2053 to read as follows:   CHAPTER 2053. FANTASY CONTESTS   SUBCHAPTER A. GENERAL PROVISIONS           Sec. 2053.001.  DEFINITIONS. In this chapter:                 (1)     "Adjusted gross fantasy contest receipts" means an   amount equal to the sum of all entry fees a fantasy contest operator   collects from participants less the sum of all prizes paid to   participants multiplied by the location percentage.                 (2)     "Athlete" means a professional or amateur   competitor in an actual sporting event that is:                       (A)  regulated by a governing body; and                       (B)     held between competitors who play   individually or as teams.                 (3)  "Commission" means the Texas Lottery Commission.                 (4)     "Entry fee" means the amount of cash or cash   equivalent a participant pays in advance to participate in a   fantasy contest offered by a fantasy contest operator.                 (5)     "Fantasy contest" means an online fantasy or   simulated game or a contest of skill:                       (A)  that charges an entry fee; and                       (B)  in which:                             (i)     the value of all prizes offered to a   winning participant are established and disclosed to the   participant in advance of the contest;                             (ii)     all winning outcomes reflect the   participant's relative knowledge and skill;                             (iii)     the participant assembles, owns, or   manages a fictional roster of actual athletes;                             (iv)     the participant competes for prizes a   fantasy contest operator awards based on terms the fantasy contest   operator publishes and discloses to the participant in advance of   the contest;                             (v)     participants compete against each other   or a single participant competes against a target score the fantasy   contest operator establishes;                             (vi)     a winning outcome is determined solely   by clearly established scoring criteria based on statistical   results of athlete performance, including a fantasy score; and                             (vii)     a winning outcome is not based on the   score, the point spread, or any performance of one actual team or a   combination of teams or solely on one performance of an individual   athlete in one actual sporting event.                 (6)     "Fantasy contest operator" means a person who   offers fantasy contests to the public. The term does not include an   Internet service or mobile data service provider who digitally   transfers general information that may include a fantasy contest.                 (7)     "Location percentage" means the percentage   rounded to the nearest 0.1 percent of the total amount of entry fees   a fantasy contest operator collects from participants located in   this state, divided by the total amount of entry fees the operator   collects from all participants in the fantasy contest.                 (8)     "Participant" means an individual who   participates in a fantasy contest offered by a fantasy contest   operator. The term does not include an operator who only:                       (A)  sets house rules for a fantasy contest;                       (B)     assigns a salary or target score to any   eligible athlete;                       (C)     accepts an entry fee from an individual who   participates in a fantasy contest; or                       (D)     awards or disburses prizes in accordance with   this chapter.                 (9)  "Prohibited participant" means:                       (A)     an individual who has self-excluded from   participation in fantasy contests under this chapter; or                       (B)     an athlete, coach, referee, trainer, or staff   member of a sports team, if a fantasy contest entry includes an   athlete selection from a sporting event overseen by the same sports   governing body that oversees the athlete, coach, referee, trainer,   or member.                 (10)     "Sporting event" means an actual athletic event,   an organized video game competition, or other event the commission   approves that is regulated by a sports governing body and is held as   a competition between athletes who play individually or as teams.                 (11)     "Sports governing body" means the organization   that prescribes rules and enforces codes of conduct for a sporting   event and the athletes competing in the sporting event.           Sec.   2053.002.     FANTASY CONTEST NOT GAMBLING. A fantasy   contest conducted under this chapter does not constitute gambling   for any purpose, including under Chapter 47, Penal Code.           Sec.   2053.003.     CONSTRUCTION OF CHAPTER. (a) This chapter   shall be construed liberally to promote the general welfare of the   public and the integrity of the fantasy contest industry.           (b)  The commission may not:                 (1)  adopt rules limiting or regulating:                       (A)     the house rules or administration of a single   fantasy contest;                       (B)     the statistical composition of a fantasy   contest; or                       (C)     the digital platform of a fantasy contest   operator; or                 (2)     in any way limit or restrict the types of fantasy   contests allowed under this chapter by labelling the contest as   gambling.           (c)     Notwithstanding any other law, the operation of a   fantasy contest is lawful only when conducted in accordance with   this chapter and rules adopted under this chapter.   SUBCHAPTER B. COMMISSION POWERS AND DUTIES           Sec.   2053.051.     REGULATION OF FANTASY CONTEST OPERATORS.   The commission shall regulate the conduct of fantasy contest   operators under this chapter.           Sec.   2053.052.     GENERAL POWERS. The commission may exercise   the powers necessary to enforce this chapter and rules adopted   under this chapter.           Sec.   2053.053.     RULES. (a) The commission shall adopt the   rules the commission considers necessary for the implementation,   administration, and enforcement of this chapter.           (b)     Rules the commission proposed under this chapter may be   adopted as emergency rules under Section 2001.034, Government Code.           Sec.   2053.054.     REVENUE COLLECTION. The commission shall   assess and collect each fee or tax imposed under this chapter.           Sec.   2053.055.     ENFORCEMENT. (a) The commission shall   require fantasy contest operators to implement procedures to   prevent fraud, abuse, and money laundering in the operation of   fantasy contests.           (b)     The commission shall verify each fantasy contest   operator implements:                 (1)     technology and procedures to prevent   participation in a fantasy contest by an individual who is under 18   years of age;                 (2)     identity verification procedures, including as   necessary the use of a reputable independent third-party in the   business of verifying individuals' personally identifiable   information to detect potential prohibited participants;                 (3)     mechanisms on the operator's platform designed to   detect and prevent unauthorized accounts, fraud, money laundering,   and collusion; and                 (4)     geolocation technology to verify a participant   does not enter a fantasy contest from a restricted jurisdiction, as   determined by commission rule.           (c)     The commission may cooperate with an investigation   conducted by a law enforcement agency, including providing and   facilitating the provision of account-level entry and   participation information.           Sec.   2053.056.     COMPULSIVE AND PROBLEM GAMING STANDARDS.   The commission by rule shall establish compulsive and problem   gaming standards consistent with this chapter for fantasy contest   operators.   SUBCHAPTER C. FANTASY CONTEST OPERATOR LICENSE           Sec.   2053.101.     FANTASY CONTEST OPERATOR LICENSE REQUIRED.   A person may not offer or operate a fantasy contest in this state   unless the person holds a fantasy contest operator license issued   by the commission.           Sec.   2053.102.     LICENSE APPLICATION. (a) An applicant for a   fantasy contest operator license shall submit an application in   accordance with commission rules.           (b)     An application for a fantasy contest operator license   must include:                 (1)  the applicant's:                       (A)  name;                       (B)  principal place of business;                       (C)  contact information; and                       (D)     social security number or any applicable   federal t [Text truncated for display. Full text available on Congress.gov.]