Revision: April 4, 2017, 8:19 a.m.
HB 580-FN-A - AS AMENDED BY THE HOUSE
8Mar2017... 0657h
2017 SESSION
17-0527
08/10
HOUSE BILL 580-FN-A
AN ACT regulating online fantasy sports contests.
SPONSORS: Rep. Azarian, Rock. 8; Rep. Ohm, Hills. 36; Rep. Eaton, Ches. 3; Sen. Bradley, Dist 3; Sen. D'Allesandro, Dist 20; Sen. Woodburn, Dist 1; Sen. Birdsell, Dist 19
COMMITTEE: Ways and Means
-----------------------------------------------------------------
I. Allows participation in online fantasy sports contests for money.
II. Requires fantasy sports contest operators to register with the lottery commission for a fee.
III. Levies a tax on the revenue of fantasy sports contest operators and allows the amount of such tax to be credited against the business profits tax and the business enterprise tax.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
8Mar2017... 0657h 17-0527
08/10
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Seventeen
AN ACT regulating online fantasy sports contests.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Chapter; Fantasy Sports Contests. Amend RSA by inserting after chapter 287-G the following new chapter:
CHAPTER 287-H
FANTASY SPORTS CONTESTS
287-H:1 Definitions. In this chapter:
I. "Beginner" means a fantasy sports contest player who has entered fewer than 51 contests offered by a single fantasy sports contest operator and who does not otherwise meet the definition of highly-experienced player.
II. "Commission" means the New Hampshire lottery commission.
III. "Confidential information" means information related to the play of a fantasy sports contest by fantasy sports contest players obtained as a result of or by virtue of a person's employment.
IV. "Entry fee" means cash or cash equivalent that is required to be paid by a fantasy sports contest player to a fantasy sports contest operator to participate in a fantasy sports contest.
V. "Fantasy sports contest" means a fantasy or simulated game or contest in which one or more players compete against each other and winning outcomes reflect the relative knowledge and skill of the players and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events.
VI. "Fantasy sports contest operator" means a person that offers fantasy sports contests with an entry fee for a cash prize to the general public.
VII. "Fantasy sports contest player" means a person who participates in a fantasy sports contest offered by a fantasy sports contest operator.
VIII. "Gross fantasy sports contest revenues" means the amount equal to the total of all entry fees that a fantasy sports contest operator collects from all fantasy sports contest players, less the total of all sums paid out as prizes to all fantasy sports contest players, multiplied by the resident percentage for New Hampshire.
IX.(a) "Highly experienced player" means a person who has either:
(1) Entered more than 1,000 fantasy contests offered by a single fantasy sports contest operator; or
(2) Won more than 3 fantasy sports contest prizes valued at $1,000 or more from a single fantasy sports contest operator.
(b) Upon making a determination that a player is a highly experienced player, the fantasy sports contest operator shall continue to classify the player as a highly experienced player indefinitely.
X. "Residence percentage" means, for each fantasy sports contest, the percentage, rounded to the nearest tenth of a percent, of the total of entry fees collected from fantasy sports contest players located in New Hampshire, divided by the total entry fees collected from all fantasy sports contest players in fantasy sports contests.
XI. "Script" means a list of commands that a computer program can execute to automate processes with respect to a fantasy sports contest.
287-H:2 Registration with the Commission.
I. No fantasy sports contest operator shall offer any fantasy sports contests with an entry fee in this state without first being registered with the commission. However, a fantasy sports contest operator that offered fantasy sports contests in this state prior to the effective date of this chapter may continue to offer fantasy sports contests with an entry fee in this state, provided such operator files an application for registration with the commission within 60 days of the application's availability, and may continue to offer fantasy sports contests until such application for registration has been approved or denied.
II. Before obtaining a registration to offer fantasy sports contests in this state, a fantasy sports contest operator shall:
(a) Be authorized to transact business in this state; and
(b) Pay to the commission the annual fee of $5,000 or 10 percent of the applicant's gross fantasy sports contest revenue from the previous calendar year, whichever is lower.
III. On the anniversary date of the payment made under this section, a fantasy sports contest operator shall pay to the commission an annual registration renewal fee in an amount determined in accordance with subparagraph II(b).
IV. In addition to the registration fee, a fantasy sports contest operator shall annually pay to the commission a tax of 5 percent of the fantasy sports contest operator's gross fantasy sports contest revenues for the preceding 12 months of registration.
V. An application for registration pursuant to this section shall include the following information:
(a) The name of the applicant;
(b) The location of the applicant’s principal place of business;
(c) The place where and the date when the applicant was legally established and the form of its organization;
(d) The names and addresses of all principal salaried executive officers;
(e) The name and address of any shareholder holding 5 percent or more of the equity interests of the applicant;
(f) The applicant’s criminal record, if any, or, if the applicant is a business entity, the criminal records, if any, of all principal salaried executive officers; and
(g) Information sufficient to show that the applicant is in good standing with the department of revenue administration.
VI. The commission shall adopt rules under RSA 541-A implementing the provisions of this chapter, which shall include the adoption of an application form for registration. The commission shall not adopt rules limiting the digital platforms offered by registered fantasy sports contest operators, or the type or structure of fantasy sports contests offered by registered fantasy sports contest operators, to the extent that such fantasy sports contests are otherwise offered in a manner consistent with this chapter.
287-H:3 Consumer Protection.
I. As a condition of registration, a fantasy sports contest operator shall submit evidence satisfactory to the commission that the operator has established and shall implement commercially reasonable procedures for fantasy sports contests with an entry fee that:
(a) Prevent employees of the fantasy sports contest operator, and relatives living in the same household as such employees, from competing in any fantasy sports contest offered by any fantasy sports contest operator in which the operator offers a prize to the general public;
(b) Prevent sharing of confidential information that could affect such fantasy sports contest play with third parties until the information is made publicly available;
(c) Prevent the fantasy sports contest operator from participating in such fantasy sports contest he or she offers;
(d) 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;
(e) Prohibit the following persons from participating in any fantasy sports contest:
(1) Athletes and individuals who participate or officiate in a game or competition that is the subject of the fantasy sports contest;
(2) Any sports agent, team employee, referee, or league official associated with a sport or athletic event that is the subject of the fantasy sports contest.
(f) Verify that a fantasy sports contest player in such a fantasy sports contest is 18 years of age or older;
(g) Provide fantasy sports contest players with access to information on responsible play;
(h) Provide fantasy sports contest players with access to information on seeking assistance for compulsive behavior;
(i) Provide fantasy sports contest players with access to the fantasy sports contest player's play history and account details;
(j) Allow individuals to restrict themselves from entering such a fantasy sports contest upon request and provide reasonable steps to prevent the person from entering such fantasy sports contests offered by the fantasy sports contest operator;
(k) Disclose the number of entries that a fantasy sports contest player may submit to each such fantasy sports contest and provide reasonable steps to prevent players from submitting more than the allowable number; and
(l) Take reasonable steps to not advertise or run promotional activities at elementary or secondary schools or on college campuses.
II. The information required to be submitted pursuant to paragraph I shall be exempt from disclosure pursuant to RSA 91-A:5, IV.
III. A fantasy sports contest operator shall not offer fantasy sports contests based on the performances of participants in collegiate, high school, or youth athletic events.
IV. A fantasy sports contest operator offering fantasy sports contests with an entry fee in this state shall:
(a) Contract with a third party to annually perform an independent audit to confirm compliance with the provisions of RSA 287-H:3, VIII, consistent with the standards established by the American Institute of Certified Public Accountants, and submit the results of such audit to the commission; and
(b) Contract with a third party annually to perform an independent audit to confirm compliance with RSA 287-H:3, I, and submit the results of such audit to the commission.
V. A fantasy sports contest operator shall not offer a fantasy sports contest to the general public that does not establish and make known all prizes and awards offered to winning participants in advance of the game or contest.
VI. A fantasy sports contest operator offering fantasy sports contests with an entry fee in this state shall not target minors or individuals who have requested a restriction pursuant to paragraph I(j).
VII. A fantasy sports contest operator offering fantasy sports contests with an entry fee in this state shall:
(a) Prohibit the use of scripts in fantasy sports contests that give any fantasy sports contest player an unfair advantage over other fantasy sports contest players;
(b) Monitor fantasy sports contests to detect the use of unauthorized scripts and restrict fantasy sports contest players found to have used such scripts from participation in further fantasy sports contests;
(c) Make all authorized scripts readily available to all fantasy sports contest players; provided, that a licensed operator shall clearly and conspicuously publish its rules on what types of scripts may be authorized in a fantasy sports contest.
VIII. Funds in fantasy sports contest operator consumer accounts shall be:
(a) Held in trust for the consumer in a segregated account, in which case the fantasy sports contest operator shall segregate fantasy sports contest player funds from operational funds or maintain a reserve that exceeds the amount of player funds on deposit, which reserve shall not be used for operational activities. These reserve funds 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 shall exceed the total balances of the fantasy sports contest players' accounts; or
(b) Held in a special purpose account that is maintained and controlled by a properly constituted corporate entity that is not the fantasy sports contest operator and whose governing board includes one or more corporate directors who are independent of the fantasy sports contest operator and of any corporation related to or controlled by the fantasy sports contest operator. Said corporate entity shall require a unanimous vote of all corporate directors to file bankruptcy and shall have articles of incorporation that prohibit commingling of funds with those of the fantasy sports contest operator except as necessary to reconcile the accounts of fantasy sports contest players with sums owed by those fantasy sports contest players to the fantasy sports contest operator. Said special purpose corporate entity shall also be:
(1) Restricted from incurring debt other than to fantasy sports contest players pursuant to the rules that govern their accounts with fantasy sports contest operators;
(2) Restricted from taking on obligations of the fantasy sports contest operator other than obligations to fantasy sports contest players pursuant to the rules that govern their accounts with fantasy sports contest operators; and
(3) Prohibited from dissolving, merging, or consolidating with another company, other than a special purpose corporate entity established by another fantasy sports contest operator that meets the requirements of this section, while there are unsatisfied obligations to fantasy sports contest players.
IX. Fantasy sports contest operators shall clearly and conspicuously identify highly experienced players in fantasy sports contests by a symbol attached to a player's username, or by other easily visible means. Fantasy sports contest operators shall offer some fantasy sports contests that are open exclusively to beginner players and that exclude highly experienced players.
287-H:4 Penalty. Any person who violates any provision of this chapter shall be subject to a civil penalty of not more than $1,000 for each violation, not to exceed $5,000 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 commission.
287-H:5 Authorization of Fantasy Sports Contests. Notwithstanding any law to the contrary, the conduct of fantasy sports contests shall be authorized in accordance with the provisions of this chapter.
287-H:6 Exemptions. Fantasy sports contests with or without an entry fee, conducted in accordance with this chapter, shall be exempt from RSA 647 and RSA 338.
287-H:7 Applicability of RSA 358-A. Nothing contained in this section shall be construed as limiting the applicability of RSA 358-A to fantasy sports contest operators.
2 New Paragraph; Business Profits Tax Credit for Fantasy Sports Contest. Amend RSA 77-A:5 by inserting after paragraph XV the following new paragraph:
XVI. Taxes paid pursuant to RSA 287-H:2, IV. The credit for these taxes may be utilized against the business profits tax due pursuant to RSA 77-A, or against the business enterprise tax due pursuant to RSA 77-E, or apportioned against both provided the total credit granted against both shall not exceed the total amount of taxes paid pursuant to RSA 287-H:2, IV.
3 New Section; Business Enterprise Tax; Credit for Fantasy Sports Contest. Amend RSA 77-E be inserting after section 3-d the following new section:
77-E:3-e Credit for Fantasy Sports Contests. Taxes paid pursuant to RSA 287-H:2, IV shall be allowed as a credit against tax due under this chapter. The credit for these taxes may be utilized against the business profits tax due pursuant to RSA 77-A, or against the business enterprise tax due pursuant to RSA 77-E, or apportioned against both provided the total credit granted against both shall not exceed the total amount of taxes paid pursuant to RSA 287-H:2, IV.
4 Effective Date. This act shall take effect 60 days after its passage.
17-0527
Amended 3/31/17
HB 580-FN-A- FISCAL NOTE
AS AMENDED BY THE HOUSE (AMENDMENT #2017-0657h)
AN ACT (New Title) regulating online fantasy sports contests.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
|
| |||
| Estimated Increase / (Decrease) | |||
STATE: | FY 2018 | FY 2019 | FY 2020 | FY 2021 |
Appropriation | $0 | $0 | $0 | $0 |
Revenue | Indeterminable | Indeterminable | Indeterminable | Indeterminable |
Expenditures | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase |
Funding Source: | [ X ] General [ ] Education [ ] Highway [ X ] Other - Lottery Fund | |||
METHODOLOGY:
This bill regulates online fantasy sports contests by requiring fantasy contest operators to register and pay an annual fee up to $5,000 to operate within the State as well as pay an annual tax of five percent on gross fantasy contest revenues which may be credited against the business profit tax and business enterprise tax. Fantasy operators not in compliance with legislation would be subject to civil penalties of $1,000 per each violation not to exceed $5,000 if arising from the same transaction. The Lottery Commission states it does not have empirical data to estimate increased revenues from registration fees, taxes, and penalties, and anticipates increased expenditures for regulation purposes. Lottery and charitable gaming revenue is credited to the lottery fund, with net revenues after Lottery Commission expenditures being credited to the state education trust fund. The Department of Revenue Administration states this bill allows the 5 percent tax on gross fantasy contest revenues to be used as a credit against the business profits tax and business enterprise tax. The Department assumes this may result in a decrease in revenue, however it does not have adequate information to determine the exact impact on the business profit tax or business enterprise tax.
AGENCIES CONTACTED:
Lottery Commission and Department of Revenue Administration