85R7005 GCB-F
By: Raymond H.B. No. 1418
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of fantasy games; authorizing a civil
penalty; requiring the registration of fantasy game operators;
requiring a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 13, Business & Commerce Code, is amended by
adding Chapter 623 to read as follows:
CHAPTER 623. FANTASY GAMES
Sec. 623.001. DEFINITIONS. In this chapter:
(1) "Confidential information" means information
related to the play of a fantasy game by a fantasy game participant
that is obtained solely by virtue of a person's employment.
(2) "Fantasy game" means any fantasy or simulation
game or contest that meets the following conditions:
(A) the values of all prizes and awards offered
to winning fantasy game participants are established and made known
to the fantasy game participants in advance of the game or contest;
(B) all winning outcomes reflect the relative
knowledge and skill of the fantasy game participants and are
determined predominantly by accumulated statistical results of the
performance of individuals, including athletes in fantasy or
simulation games or contests based on real sporting events;
(C) no winning outcome is based on the score,
point spread, or performance or performances of any single team or
combination of teams, or solely on any single performance of an
individual athlete or player in any single event; and
(D) the outcomes of the fantasy or simulation
game or contest are not based on the statistical results of the
performance of athletes playing college or high school sports.
(3) "Fantasy game operator" means a person who:
(A) is engaged in the business of professionally
conducting fantasy games for cash prizes for members of the general
public; and
(B) charges a member of the general public who
participates in a fantasy game as a fantasy game participant an
entry fee of cash or a cash equivalent.
(4) "Fantasy game participant" means an individual who
participates in a fantasy game offered by a fantasy game operator.
Sec. 623.002. POWERS AND DUTIES OF SECRETARY OF STATE;
CIVIL PENALTY; ENFORCEMENT. (a) The secretary of state may
promulgate rules under this chapter only as necessary to enforce
the provisions of this chapter.
(b) The secretary of state may impose on a fantasy game
operator for a violation of this chapter a civil penalty in an
amount not to exceed $1,000 for any particular violation.
(c) The secretary of state may take appropriate enforcement
or disciplinary action against a person who violates this chapter,
including the suspension or revocation of a registration issued
under Section 623.003.
(d) Chapter 2001, Government Code, applies to a proceeding
for an enforcement or disciplinary action under this section.
Sec. 623.003. REGISTRATION OF FANTASY GAME OPERATORS. (a)
A person may not offer a fantasy game as a fantasy game operator in
this state unless the person is registered with the secretary of
state under this section, except that the person may offer fantasy
games in this state during the time the person's application for
registration under this section is pending before the secretary of
state. A person may apply for registration under this section on
forms prescribed by the secretary of state.
(b) A person may be registered as a fantasy game operator
under this section only if the person:
(1) is authorized to transact business in this state;
and
(2) pays to the secretary of state the annual fee
imposed under Subsection (c).
(c) A fantasy game operator shall pay to the secretary of
state:
(1) an annual registration fee of $5,000 to obtain
initial registration under this section; and
(2) an annual registration renewal fee of $5,000 on
the anniversary of the date the operator obtains the initial
registration.
Sec. 623.004. CONSUMER PROTECTION PROVISIONS. (a) A
fantasy game operator shall implement procedures intended to:
(1) prevent the fantasy game operator, an employee of
the operator, or a relative of the operator who is living in the
same household as the operator from competing in any fantasy game
offered by the operator that awards a cash prize;
(2) prevent the sharing with third parties of
confidential information that could affect fantasy game play until
the information is made publicly available;
(3) verify that a fantasy game participant is 18 years
of age or older;
(4) ensure that an individual who is a player in a real
game or competition is restricted from participating in a fantasy
game that is determined, wholly or partly, on the accumulated
statistical results of that player, the player's real team, or the
game or contest in which the individual is a player;
(5) allow individuals on request to restrict
themselves from entering a fantasy game and take reasonable steps
to prevent those individuals from entering the fantasy game
operator's fantasy game;
(6) disclose the maximum number of entries a fantasy
game participant may submit to each fantasy game and take
reasonable steps to prevent fantasy game participants from
submitting a number of entries that exceeds that allowable number;
(7) segregate fantasy game participant funds from
operational funds of the fantasy game operator or maintain a
reserve in the form of cash, cash equivalents, credit card and
payment processor reserves and receivables, an irrevocable letter
of credit, a bond, or any combination of these forms in an amount
equal to the deposits made to the accounts of fantasy game
participants for the benefit and protection of the funds held in
those accounts;
(8) provide fantasy game participants with access to
information on responsible play; and
(9) provide fantasy game participants with access to
the participant's play history and account details.
(b) A fantasy game operator offering fantasy games may not
target minors or other excluded players in any advertising of the
operator's fantasy games.
Sec. 623.005. ANNUAL AUDIT. A fantasy game operator must
contract annually with a certified public accountant to perform an
independent financial audit of the operator's fantasy game
operations under this chapter to ensure compliance with this
chapter. The operator must annually submit the results of the audit
to the secretary of state.
Sec. 623.006. CLASSIFICATION OF FANTASY GAMES. A fantasy
game operator or fantasy game participant that owns, operates,
provides, or participates in fantasy games in a manner consistent
with this chapter is not subject to prosecution for an offense under
the Penal Code that prohibits gaming or related activities.
SECTION 2. This Act takes effect September 1, 2017.