FANTASY SPORTS REGULATION.

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View NCGA Bill Details2017-2018 Session
House Bill 279 (Public) Filed Wednesday, March 8, 2017
AN ACT TO REQUIRE REGISTRATION OF FANTASY SPORTS CONTEST OPERATORS WITH THE DEPARTMENT OF THE SECRETARY OF STATE.
Intro. by Saine, Hardister, Hanes, Duane Hall.

Status: Re-ref Com On Judiciary IV (House Action) (Jun 7 2017)

SOG comments (1):

Identical bill

Identical to S 589, filed 4/4/17.

H 279

Bill Summaries:

  • Summary date: Mar 8 2017 - View Summary

    Enacts new GS 78E­1, and captions new GS Chapter 78E as Fantasy Sports Contests.

    Defines several terms, including  fantasy contest  (an online fantasy or simulated game or contest in which an entry fee is charged and the value of prizes offered to winners is established and made known to the participants in advance, winning outcomes reflect the relative knowledge and skill of the participants, determined by accumulated statistical results of the performance of individuals, and winning outcomes are not based on the score, point spread, or any performance of any single actual team or combination of teams or any individual athlete or player in any single actual event) and  operator  (a person or entity that offers fantasy contests to members of the public, not including internet service providers or mobile data service providers merely as a result of that entity's transporting general traffic).

    Prohibits fantasy contests from being offered unless the operator has been registered with the Department of the Secretary of State (Department).

    Directs the Department to register applicants if the applicant (1) submits an application including six specified pieces of identifying information; (2) submits evidence that the operator has established commercially reasonable procedures for fantasy contests that are intended to achieve eight listed goals, including preventing participation in the contest by the operator and its employees and family and preventing the co­mingling of player funds from operational funds; and (3) submits an initial registration fee of 10% of the operator's gross fantasy contest revenues from the previous calendar year, not to exceed $10,000, and not to be less than $2,500. Directs that registrations expire five years after issuance or renewal, and directs the Department to renew the registration of an operator that submits a completed application and renewal fee equal to the lesser of $5,000 or 10% of the operator's net revenue from the previous calendar year. Authorizes operators applying for registration who have been in continuous operation in the State for at least 180 days as of the effective date of the act to continue to offer fantasy contests until 60 days after applications for registration are published by the Department, and authorizes operators who have applied for registration during that 60­day period to continue to operate while registration is pending. Authorizes the Department to require an applicant to suspend operations upon reasonable cause to believe that the operator may be in violation of GS Chapter 78E until registration is issued or denied. Directs the Department to issue a registration within 60 days of receipt of application, or to provide the operator with justification for not issuing a registration within that time.

    Authorizes the Department to deny, revoke, or suspend a registration upon determination that an operator, or any of its officers, partners, principal stockholders, or directors, has (1) knowingly made a false statement of material fact or has deliberately failed to disclose requested information; (2) committed an illegal, corrupt, or fraudulent act, practice, or conduct in connection with any fantasy contest in any jurisdiction, or has been convicted of a felony, crime of moral turpitude, or any criminal offense involving dishonesty or breach of trust within 10 years prior to the date of application; (3) knowingly failed to comply with GS Chapter 78E or Department requirements; (4) defaulted on any obligation or debt to the State; or (5) failed to be qualified to do business in the State or is not subject to the jurisdiction of State courts. Authorizes the Department to suspend or revoke an operator's registration after hearing with 30 days' notice, where a violation of GS Chapter 78E is found by a preponderance of the evidence. Authorizes the Department to assess a civil penalty up to $1,000 for any violation of GS Chapter 78E, limited to $10,000 for a continuing violation, to be remitted to the Civil Penalty and Forfeiture Fund. Authorizes the Department to revoke a registration if it finds that facts not known by it at the time of application indicate that a registration should not have been issued. Authorizes the Department take emergency action to suspend a registration for a period not to exceed seven business days to protect the public health, safety, and welfare, pending a hearing and final determination, and directs the Department to give the operator five business days' notice of the date, time, and place of the hearing. Directs the Department to give written notice of any denial, suspension, or revocation of registration, or of any civil penalty. Authorizes an operator to seek review under GS Chapter 150B.

    Directs a registered operator to file an annual report with the Department indicating compliance with GS Chapter 78E, conduct an independent financial audit and submit a copy to the Department at least every two years, notify the Department of material changes to information provided in registration applications, and notify the Department if the operator ceases to offer fantasy contests in the State.

    Directs any person who acquires a controlling interest of a registered operator to register with the Department. Authorizes the operator to continue to operate during the registration period. Authorizes the Department to suspend the operation of any fantasy contest until the registration is issued or denied.

    Authorizes the Department to carry out the provisions of GS Chapter 78E, and to adopt rules necessary to carry out GS Chapter 78E. Authorizes the Department to apply to superior court for an injunction to restrain persons from violating GS Chapter 78E or the Department's rules. Directs the Department to bring actions under this statute in the county where the operator maintains its principal place of business or where the alleged acts occurred. Authorizes the Department to investigate any operator, upon reasonable cause, to determine whether a violation of GS Chapter 78E has occurred.

    Directs that reports, data, or documents submitted to the Department under the audit requirements, and records containing information about the character or financial responsibility of the operator or its principal stockholders submitted under the application requirements, are confidential and not public records.

    Clarifies that fantasy contests under GS Chapter 78E are not gambling, lotteries, gaming, or any activity prohibited by GS Chapter 14, GS Chapter 16, or GS Chapter 19, or any other provision of law, and that prize money for a fantasy contest is not part of a gaming contract under GS Chapter 16.

    Clarifies that the statute does not limit an operator from controlling or conducting its contests, or from providing uniform gameplay platforms for players in multiple jurisdictions.

    Amends GS 18B­500 to authorize alcohol law­enforcement agents to enforce GS Chapter 78E, and to serve and execute notices, orders, or demands issued by the Secretary of State under GS Chapter 78E.

    Effective January 1, 2018.