S.F. _____ Section 1. NEW SECTION . 99E.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Applicant” means an internet fantasy sports contest 4 service provider applying for a license to conduct internet 5 fantasy sports contests under this chapter. 6 2. “Commission” means the state racing and gaming commission 7 created under section 99D.5. 8 3. “Fantasy sports contest” includes any fantasy or 9 simulated game or contest in which the fantasy sports contest 10 operator is not a participant in the game or contest, the value 11 of all prizes and awards offered to winning participants are 12 established and made known to the participants in advance 13 of the contest, all winning outcomes reflect the relative 14 knowledge and skill of the participants and shall be determined 15 by accumulated statistical results of the performance of 16 individuals, including athletes in the case of sporting events, 17 in a fully completed game or contest, and no winning outcome 18 is based on the score, point spread, or any performance or 19 performances of any single actual team or solely on any single 20 performance of an individual athlete or player in any single 21 actual event. For purposes of this subsection, “athlete” does 22 not include an athlete participating in any extracurricular 23 interscholastic athletic contest or competition which is 24 sponsored or administered by an organization as defined 25 in section 280.13, an athlete participating in any amateur 26 athletic contest or competition in which all participants are 27 under the age of twenty-one, or an athlete participating in 28 any intercollegiate sport as defined in section 9A.102. In 29 addition, for purposes of this subsection, “fully completed game 30 or contest” means the entirety of the game or contest, and not 31 merely any portion thereof, and includes the entirety of a game 32 or contest that has been suspended or shortened on account of 33 weather or other natural or unforeseen event. 34 4. “Internet fantasy sports contest” means a method of 35 -1- LSB 6075XC (2) 86 ec/nh 1/ 13

S.F. _____ entering a fantasy sports contest by which a person may 1 establish an account with an internet fantasy sports contest 2 service provider, deposit money into the account, and use 3 the account balance for entering a fantasy sports contest by 4 utilizing electronic communication. 5 5. “Internet fantasy sports contest adjusted revenues” means, 6 for each internet fantasy sports contest, the amount equal to 7 the total charges and fees collected from all participants 8 entering the internet fantasy sports contest less winnings paid 9 to participants in the contest, multiplied by the resident 10 percentage. 11 6. “Internet fantasy sports contest player” means a person 12 who is at least twenty-one years of age, is a resident of 13 this state, and participates in an internet fantasy sports 14 contest operated by an internet fantasy sports contest service 15 provider. 16 7. “Internet fantasy sports contest service provider” means 17 a person, including a licensee under chapter 99D or 99F, who 18 conducts an internet fantasy sports contest as authorized by 19 this chapter. 20 8. “Resident percentage” means, for each internet fantasy 21 sports contest, the percentage, rounded to the nearest tenth 22 of a percent, equal to the total charges and fees collected 23 from all internet fantasy sports contest players divided by the 24 total charges and fees collected from all participants in the 25 internet fantasy sports contest. 26 Sec. 2. NEW SECTION . 99E.2 Internet fantasy sports contests 27 authorized. 28 The system of entering an internet fantasy sports contest as 29 provided by this chapter is legal when conducted by a licensed 30 internet fantasy sports contest service provider as provided in 31 this chapter. 32 Sec. 3. NEW SECTION . 99E.3 Commission —— powers. 33 The commission shall have full jurisdiction over and shall 34 supervise internet fantasy sports contests and internet fantasy 35 -2- LSB 6075XC (2) 86 ec/nh 2/ 13

S.F. _____ sports contest service providers as governed by this chapter. 1 The commission shall have the following powers and shall adopt 2 rules pursuant to chapter 17A to implement this chapter: 3 1. To investigate applicants and determine the eligibility 4 of applicants for a license to conduct internet fantasy sports 5 contests. 6 2. To license and regulate internet fantasy sports contest 7 service providers subject to the requirements of this chapter. 8 3. To investigate alleged violations of this chapter 9 or the commission rules, orders, or final decisions and to 10 take appropriate disciplinary action against a licensee, or 11 institute appropriate legal action for enforcement, or both. 12 Information gathered during an investigation is confidential 13 during the pendency of the investigation. 14 4. To assess fines and revoke or suspend licenses. 15 5. To require, beginning July 1, 2018, licensees to 16 establish a process with the state for licensees to have 17 electronic access to names and social security numbers of 18 debtors of claimant agencies through a secured interactive 19 internet site maintained by the state. 20 6. To take any other action as may be reasonable or 21 appropriate to enforce this chapter and the commission rules. 22 Sec. 4. NEW SECTION . 99E.4 Requirements of applicant —— fee 23 —— penalty. 24 1. An applicant for a license to conduct internet fantasy 25 sports contests shall complete and sign an application on 26 the form prescribed and published by the commission. The 27 application shall include such information of the applicant 28 that the commission deems necessary for purposes of issuing a 29 license pursuant to this chapter. 30 2. An applicant shall submit fingerprints and information 31 that the commission deems necessary to the commission in the 32 manner prescribed on the application forms. The fingerprints 33 may be submitted to the federal bureau of investigation by the 34 department of public safety through the state criminal history 35 -3- LSB 6075XC (2) 86 ec/nh 3/ 13

S.F. _____ repository for the purpose of a national criminal history 1 check. 2 3. The commission shall charge the applicant a fee set 3 by the department of public safety, division of criminal 4 investigation, to defray the costs associated with any 5 investigations conducted pursuant to the requirements of this 6 section concerning the applicant. This fee is in addition 7 to any other license fee charged by the commission. The fee 8 may be retained by the department of public safety, division 9 of criminal investigation, and shall be considered repayment 10 receipts as defined in section 8.2. 11 4. A license shall not be granted to an applicant if there 12 is substantial evidence that any of the following apply: 13 a. A license issued to the applicant to conduct internet 14 fantasy sports contests in another jurisdiction has been 15 revoked by an entity licensing persons to conduct such contests 16 in that jurisdiction. 17 b. The applicant has not demonstrated financial 18 responsibility sufficient to adequately meet the requirements 19 of the enterprise proposed. 20 c. The applicant does not adequately disclose the true 21 owners of the enterprise proposed. 22 d. The applicant has knowingly made a false statement of a 23 material fact to the commission. 24 e. The applicant has failed to meet a monetary obligation in 25 connection with conducting an internet fantasy sports contest. 26 f. The applicant is not of good repute and moral character 27 or the applicant has pled guilty to, or has been convicted of, 28 a felony. 29 g. Any member of the board of directors of the applicant is 30 not twenty-one years of age or older. 31 5. A person who knowingly makes a false statement on the 32 application is guilty of an aggravated misdemeanor. 33 6. For the purposes of this section, “applicant” includes 34 each member of the board of directors of an internet fantasy 35 -4- LSB 6075XC (2) 86 ec/nh 4/ 13

S.F. _____ sports contest service provider. 1 Sec. 5. NEW SECTION . 99E.5 Licenses —— fees —— terms and 2 conditions —— revocation. 3 1. If the commission is satisfied that the requirements 4 of this chapter and its rules adopted under this chapter 5 applicable to licensees have been or will be complied with, the 6 commission shall issue a license for a period of not more than 7 three years to an applicant to conduct internet fantasy sports 8 contests in this state. 9 2. A licensed internet fantasy sports contest service 10 provider shall comply with all of the following requirements: 11 a. Prevent employees of the internet fantasy sports contest 12 service provider and family members related within the second 13 degree of affinity or consanguinity of such employees from 14 competing in any internet fantasy sports contest conducted by 15 the service provider in which the service provider offers a 16 cash prize over five dollars. 17 b. Verify that an internet fantasy sports contest player is 18 twenty-one years of age or older and is a resident of Iowa. 19 c. Ensure that coaches, officials, players, contestants, 20 or other individuals who participate in a game or contest 21 that is the subject of an internet fantasy sports contest are 22 restricted from entering an internet fantasy sports contest in 23 which the outcome is determined, in whole or in part, by the 24 accumulated statistical results of a team of individuals in the 25 game or contest in which they participate. 26 d. Allow individuals to restrict themselves from entering 27 an internet fantasy sports contest conducted by the internet 28 fantasy sports contest service provider upon request and take 29 reasonable steps to prevent those individuals from entering 30 any internet fantasy sports contests conducted by the internet 31 fantasy sports contest service provider. 32 e. Disclose the number of entries a single internet fantasy 33 sports contest player may submit to each internet fantasy 34 sports contest and take reasonable steps to prevent players 35 -5- LSB 6075XC (2) 86 ec/nh 5/ 13

S.F. _____ from submitting more than the allowable number of entries for 1 that internet fantasy sports contest. 2 f. Segregate internet fantasy sports contest player funds 3 from operational funds and maintain a reserve in the form of 4 cash, cash equivalents, an irrevocable letter of credit, a 5 bond, or a combination thereof in the amount of the deposits in 6 internet fantasy sports contest player accounts for the benefit 7 and protection of internet fantasy sports contest player 8 funds held in internet fantasy sports contest accounts by the 9 internet fantasy sports contest service provider. 10 g. Annually contract with a third party to perform an 11 independent audit, consistent with the standards established 12 by the public company accounting oversight board, to ensure 13 compliance with all of the requirements in this chapter and 14 submit the results of the independent audit to the commission. 15 h. Pay the tax as provided in section 99E.6. 16 3. The annual license fee to conduct internet fantasy sports 17 contests shall be five hundred dollars. Moneys collected by 18 the commission from the annual license fee paid under this 19 subsection shall be considered repayment receipts as defined 20 in section 8.2. 21 4. Upon a violation of any of the conditions listed in 22 section 99E.4 or this section by a licensee, the commission 23 shall immediately revoke the license. 24 Sec. 6. NEW SECTION . 99E.6 Internet fantasy sports contest 25 tax —— rate —— allocations. 26 1. A tax of seven and one-half percent is imposed on 27 internet fantasy sports contest adjusted revenues. The tax 28 imposed by this section shall be paid by the internet fantasy 29 sports contest service provider to the commission as provided 30 by the commission. 31 2. Of the revenues collected pursuant to this section, an 32 amount equal to one-half of one percent of internet fantasy 33 sports contest adjusted revenues is appropriated to the 34 department of public health for purposes of the gambling 35 -6- LSB 6075XC (2) 86 ec/nh 6/ 13

S.F. _____ treatment program established pursuant to section 135.150. The 1 remaining amount of the revenues collected pursuant to this 2 section shall be deposited in the rebuild Iowa infrastructure 3 fund created in section 8.57. 4 Sec. 7. NEW SECTION . 99E.7 Internet fantasy sports contests 5 —— age restrictions. 6 A person under the age of twenty-one years shall not enter an 7 internet fantasy sports contest. A person who violates this 8 section with respect to entering an internet fantasy sports 9 contest commits a scheduled violation under section 805.8C, 10 subsection 11. 11 Sec. 8. NEW SECTION . 99E.8 Division of criminal 12 investigation. 13 The division of criminal investigation of the department of 14 public safety may investigate to determine licensee compliance 15 with the requirements of this chapter . Investigations may be 16 conducted either on the criminal investigation division’s own 17 initiative or at the request of the commission. The criminal 18 investigation division and the commission shall cooperate to 19 the maximum extent possible on an investigation. 20 Sec. 9. NEW SECTION . 99E.9 Setoff. 21 1. A licensee or a person acting on behalf of a licensee 22 shall be provided electronic access to the names of the 23 persons indebted to a claimant agency pursuant to the process 24 established pursuant to section 99E.3, subsection 5 . The 25 electronic access provided by the claimant agency shall include 26 access to the names of the debtors, their social security 27 numbers, and any other information that assists the licensee 28 in identifying the debtors. If the name of a debtor provided 29 to the licensee through electronic access is retrieved by the 30 licensee and the winnings are equal to or greater than one 31 thousand two hundred dollars per occurrence, the retrieval 32 of such a name shall constitute a valid lien upon and claim 33 of lien against the winnings of the debtor whose name is 34 electronically retrieved from the claimant agency. If a 35 -7- LSB 6075XC (2) 86 ec/nh 7/ 13

S.F. _____ debtor’s winnings are equal to or greater than one thousand two 1 hundred dollars per occurrence, the full amount of the debt 2 shall be collectible from any winnings due the debtor without 3 regard to limitations on the amounts that may be collectible in 4 increments through setoff or other proceedings. 5 2. The licensee is authorized and directed to withhold 6 any winnings of a debtor which are paid out directly by the 7 licensee subject to the lien created by this section and 8 provide notice of such withholding to the winner. The licensee 9 shall pay the funds over to the collection entity which 10 administers the setoff program pursuant to section 8A.504 . 11 3. Notwithstanding any other provision of law to the 12 contrary, the licensee may provide to a claimant agency all 13 information necessary to accomplish and effectuate the intent 14 of this section , and likewise the claimant agency may provide 15 all information necessary to accomplish and effectuate the 16 intent of this section . 17 4. The information obtained by a claimant agency from the 18 licensee in accordance with this section shall retain its 19 confidentiality and shall only be used by a claimant agency in 20 the pursuit of its debt collection duties and practices. An 21 employee or prior employee of a claimant agency who unlawfully 22 discloses any such information for any other purpose, except 23 as otherwise specifically authorized by law, shall be subject 24 to the penalties specified by law for unauthorized disclosure 25 of confidential information by an agent or employee of the 26 claimant agency. 27 5. The information obtained by a licensee from a claimant 28 agency in accordance with this section shall retain its 29 confidentiality and only be used by the licensee in the 30 pursuit of debt collection duties and practices. An employee 31 or prior employee of a licensee who unlawfully discloses any 32 such information for any other purpose, except as otherwise 33 specifically authorized by law, shall be subject to the 34 same penalties specified by law for unauthorized disclosure 35 -8- LSB 6075XC (2) 86 ec/nh 8/ 13

S.F. _____ of confidential information by an agent or employee of the 1 licensee. 2 6. Except as otherwise provided in this chapter , 3 attachments, setoffs, or executions authorized and issued 4 pursuant to law shall be withheld if timely served upon the 5 licensee. 6 7. A claimant agency or licensee, acting in good faith, 7 shall not be liable to any person for actions taken pursuant to 8 this section . 9 Sec. 10. NEW SECTION . 99E.10 Penalties. 10 In addition to any other penalty specified in this chapter, 11 a person who willfully fails to comply with the requirements 12 of this chapter and the rules adopted pursuant to chapter 17A 13 commits a class “D” felony and, in addition, shall be barred 14 for life from internet fantasy sports contests. 15 Sec. 11. Section 232C.4, subsection 3, Code 2016, is amended 16 to read as follows: 17 3. An emancipated minor shall remain subject to voting 18 restrictions under chapter 48A , gambling restrictions under 19 chapter 99B , 99D , 99F , 99G , or 725 , internet fantasy sports 20 contest restrictions under chapter 99E, alcohol restrictions 21 under chapter 123 , compulsory attendance requirements under 22 chapter 299 , and cigarette tobacco restrictions under chapter 23 453A . 24 Sec. 12. Section 714B.10, subsection 1, Code 2016, is 25 amended to read as follows: 26 1. Advertising by sponsors registered pursuant to chapter 27 557B , licensed pursuant to chapter 99B , or regulated pursuant 28 to chapter 99D , 99E, 99F , or 99G . 29 Sec. 13. Section 805.8C, Code 2016, is amended by adding the 30 following new subsection: 31 NEW SUBSECTION . 11. Internet fantasy sports contest 32 violations. For violations of legal age for entering an 33 internet fantasy sports contest under section 99E.7, the 34 scheduled fine is five hundred dollars. Failure to pay the 35 -9- LSB 6075XC (2) 86 ec/nh 9/ 13

S.F. _____ fine by a person under the age of eighteen shall not result in 1 the person being detained in a secure facility. 2 Sec. 14. IMPLEMENTATION DATE. The following provision or 3 provisions of this Act shall not be implemented until July 1, 4 2018: 5 1. The section of this Act enacting section 99E.9. 6 EXPLANATION 7 The inclusion of this explanation does not constitute agreement with 8 the explanation’s substance by the members of the general assembly. 9 This bill authorizes internet fantasy sports contests 10 and provides for the licensing, regulation, and taxation of 11 internet fantasy sports contests. 12 New Code section 99E.1 provides for definitions. A “fantasy 13 sports contest” is defined as any fantasy or simulated game 14 or contest in which all prizes and awards offered to winning 15 participants are established and made known in advance of the 16 contest, all winning outcomes reflect the relative knowledge 17 and skill of the participants and are determined predominantly 18 by accumulated statistical results of the performance of 19 individuals in a fully completed game or contest, and no 20 winning outcome is based on the score, or performance of any 21 single actual team or combination of such teams or solely 22 on any single performance of an individual athlete in any 23 single actual sporting or other event. The bill provides that 24 for purposes of this definition, an athlete does not include 25 an athlete participating in an interscholastic athletic or 26 intercollegiate sports contest, or an athlete participating 27 in an amateur athletic contest in which all participants are 28 under 21 years of age. An “internet fantasy sports contest” 29 is defined as a method of entering a fantasy sports contest by 30 establishing an account with an internet fantasy sports contest 31 service provider. An ”internet fantasy sports contest player” 32 is defined as a person who is at least 21 years of age and a 33 resident of this state, who participates in an internet fantasy 34 sports contest. The bill also defines internet fantasy sports 35 -10- LSB 6075XC (2) 86 ec/nh 10/ 13

S.F. _____ contest adjusted revenues, internet fantasy sports contest 1 service provider, and resident percentage. 2 New Code section 99E.2 provides that the system of entering 3 an internet fantasy sports contest is legal when conducted by a 4 licensed internet fantasy sports contest service provider as 5 provided in the new Code chapter. 6 New Code section 99E.3 establishes the powers of the racing 7 and gaming commission in relation to internet fantasy sports 8 contests and internet fantasy sports contest service providers. 9 Specifically, the new Code section authorizes the commission to 10 investigate and license internet fantasy sports contest service 11 providers, assess fines and revoke or suspend licenses, and 12 take any other action to enforce the requirements of the new 13 Code chapter. 14 New Code section 99E.4 establishes the requirements for an 15 applicant to be granted a license to conduct internet fantasy 16 sports contests. The Code section allows the commission 17 to charge the applicant a fee for the department of public 18 safety, division of criminal investigation, to defray the 19 costs associated with any investigation. The new Code 20 section provides that a license shall not be issued if there 21 is evidence that the applicant has failed to meet certain 22 qualifying requirements. A person who knowingly makes a 23 false statement on the application is guilty of an aggravated 24 misdemeanor. 25 New Code section 99E.5 establishes the terms and conditions 26 of licenses issued to conduct internet fantasy sports contests. 27 The Code section provides that a license may be issued for 28 a period of not more than three years and provides that 29 the annual license fee shall be $500. The new Code section 30 provides that a licensed internet fantasy sports contest 31 service provider shall prevent employees and certain family 32 members from participating in internet fantasy sports contests, 33 verify that internet fantasy sports contest players are 21 or 34 older and residents of this state, ensure that participants in 35 -11- LSB 6075XC (2) 86 ec/nh 11/ 13

S.F. _____ a game or contest shall not be allowed to enter an internet 1 fantasy sports contest involving that game or contest, permit 2 individuals to restrict themselves from entering an internet 3 fantasy sports contest, perform an independent audit, and pay 4 the tax imposed by the new Code chapter. 5 New Code section 99E.6 provides for a tax of 7.5 percent 6 to be imposed on internet fantasy sports contest adjusted 7 revenues. The bill defines, in new Code section 99E.1, 8 internet fantasy sports contest adjusted revenues as the total 9 of fees and charges collected, less winnings, in an internet 10 fantasy sports contest multiplied by the percentage of fees 11 and charges paid by participants who are residents of this 12 state in that contest. The bill provides that of the revenues 13 collected, an amount equal to .5 percent of internet fantasy 14 sports contest adjusted revenues is appropriated to the 15 department of public health for gambling treatment with the 16 remainder of revenues collected to be deposited in the rebuild 17 Iowa infrastructure fund. 18 New Code section 99E.7 provides that a person under the 19 age of 21 shall not enter an internet fantasy sports contest. 20 A person who violates this Code section commits a scheduled 21 violation under Code section 805.8C and is subject to a $500 22 fine. Code section 805.8C is amended to reflect this violation 23 and applicable fine. 24 New Code section 99E.8 authorizes the division of criminal 25 investigation of the department of public safety to investigate 26 licensee compliance with the requirements of the new Code 27 chapter. 28 New Code section 99E.9 requires a licensee to offset 29 winnings of a debtor in an amount equal to or greater than 30 $1,200, subject to the requirements of this new Code section. 31 The bill provides that this Code section shall not be 32 implemented until July 1, 2018. 33 New Code section 99E.10 provides that, in addition to any 34 other penalty specified in the new Code chapter, a person who 35 -12- LSB 6075XC (2) 86 ec/nh 12/ 13