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 and no winning outcome is based on the score, point spread, or 18 any performance or performances of any single actual team or 19 solely on any single performance of an individual athlete or 20 player in any single actual event. 21 4. “Internet fantasy sports contest” means a method of 22 entering a fantasy sports contest by which a person may 23 establish an account with an internet fantasy sports contest 24 service provider, deposit money into the account, and use 25 the account balance for entering a fantasy sports contest by 26 utilizing electronic communication. 27 5. “Internet fantasy sports contest adjusted revenues” means, 28 for each internet fantasy sports contest, the amount equal to 29 the total charges and fees collected from all participants 30 entering the internet fantasy sports contest less winnings paid 31 to participants in the contest, multiplied by the location 32 percentage. 33 6. “Internet fantasy sports contest player” means a person 34 who is at least twenty-one years of age and participates in an 35 -1- LSB 1635XC (3) 87 ec/nh 1/ 14

S.F. _____ internet fantasy sports contest operated by an internet fantasy 1 sports contest service provider. 2 7. “Internet fantasy sports contest service provider” means 3 a person, including a licensee under chapter 99D or 99F, who 4 conducts an internet fantasy sports contest as authorized by 5 this chapter. 6 8. “Location percentage” means, for each internet fantasy 7 sports contest, the percentage, rounded to the nearest tenth of 8 a percent, equal to the total charges and fees collected from 9 all internet fantasy sports contest players located in this 10 state divided by the total charges and fees collected from all 11 participants in the internet fantasy sports contest. 12 Sec. 2. NEW SECTION . 99E.2 Internet fantasy sports contests 13 authorized. 14 The system of entering an internet fantasy sports contest as 15 provided by this chapter is legal when conducted by a licensed 16 internet fantasy sports contest service provider as provided in 17 this chapter. 18 Sec. 3. NEW SECTION . 99E.3 Commission —— powers. 19 1. The commission shall have full jurisdiction over and 20 shall supervise internet fantasy sports contests and internet 21 fantasy sports contest service providers as governed by this 22 chapter. 23 2. The commission shall have the following powers and shall 24 adopt rules pursuant to chapter 17A to administer and implement 25 this chapter: 26 a. To review and investigate applicants and determine the 27 eligibility of applicants for a license to conduct internet 28 fantasy sports contests, pursuant to rules adopted by the 29 commission. 30 b. To license and regulate internet fantasy sports contest 31 service providers subject to the requirements of this chapter. 32 c. To provide for the prevention of practices detrimental to 33 the public and to provide for the best interests of internet 34 fantasy sports contests. 35 -2- LSB 1635XC (3) 87 ec/nh 2/ 14

S.F. _____ d. To investigate alleged violations of this chapter 1 or the commission rules, orders, or final decisions and to 2 take appropriate disciplinary action against a licensee, or 3 institute appropriate legal action for enforcement, or both. 4 Information gathered during an investigation is confidential 5 during the pendency of the investigation. 6 e. To assess fines and revoke or suspend licenses and to 7 impose penalties for violations of this chapter. 8 f. To require, beginning July 1, 2019, licensees to 9 establish a process with the state for licensees to have 10 electronic access to names and social security numbers of 11 debtors of claimant agencies through a secured interactive 12 internet site maintained by the state. 13 g. To take any other action as may be reasonable or 14 appropriate to enforce this chapter and the commission rules. 15 Sec. 4. NEW SECTION . 99E.4 Requirements of applicant —— fee 16 —— penalty. 17 1. An applicant for a license to conduct internet fantasy 18 sports contests shall complete and sign an application on 19 the form prescribed and published by the commission. The 20 application shall include such information of the applicant 21 that the commission deems necessary for purposes of issuing a 22 license pursuant to this chapter. 23 2. An applicant shall submit fingerprints and information 24 that the commission deems necessary to the commission in the 25 manner prescribed on the application forms. The fingerprints 26 may be submitted to the federal bureau of investigation by the 27 department of public safety through the state criminal history 28 repository for the purpose of a national criminal history 29 check. 30 3. The commission shall charge the applicant a fee set 31 by the department of public safety, division of criminal 32 investigation, to defray the costs associated with any 33 investigations conducted pursuant to the requirements of this 34 section concerning the applicant. This fee is in addition 35 -3- LSB 1635XC (3) 87 ec/nh 3/ 14

S.F. _____ to any other license fee charged by the commission. The fee 1 may be retained by the department of public safety, division 2 of criminal investigation, and shall be considered repayment 3 receipts as defined in section 8.2. 4 4. A license shall not be granted to an applicant if there 5 is substantial evidence that any of the following apply: 6 a. A license issued to the applicant to conduct internet 7 fantasy sports contests in another jurisdiction has been 8 revoked by an entity licensing persons to conduct such contests 9 in that jurisdiction. 10 b. The applicant has not demonstrated financial 11 responsibility sufficient to adequately meet the requirements 12 of the enterprise proposed. 13 c. The applicant does not adequately disclose the true 14 owners of the enterprise proposed. 15 d. The applicant has knowingly made a false statement of a 16 material fact to the commission. 17 e. The applicant has failed to meet a monetary obligation in 18 connection with conducting an internet fantasy sports contest. 19 f. The applicant is not of good repute and moral character 20 or the applicant has pled guilty to, or has been convicted of, 21 a felony. 22 g. Any member of the board of directors of the applicant is 23 not twenty-one years of age or older. 24 5. A person who knowingly makes a false statement on the 25 application is guilty of an aggravated misdemeanor. 26 6. For the purposes of this section, “applicant” includes 27 each member of the board of directors of an internet fantasy 28 sports contest service provider. 29 Sec. 5. NEW SECTION . 99E.5 Licenses —— fees —— terms and 30 conditions —— revocation. 31 1. If the commission is satisfied that the requirements 32 of this chapter and its rules adopted under this chapter 33 applicable to licensees have been or will be complied with, the 34 commission shall issue a license for a period of not more than 35 -4- LSB 1635XC (3) 87 ec/nh 4/ 14

S.F. _____ three years to an applicant to conduct internet fantasy sports 1 contests in this state. 2 2. A licensed internet fantasy sports contest service 3 provider shall comply with all of the following requirements: 4 a. Prevent employees of the internet fantasy sports contest 5 service provider and relatives living in the same household of 6 such employees from competing in any internet fantasy sports 7 contest on the service provider’s digital platform in which the 8 service provider offers a cash prize to the public. 9 b. Verify that an internet fantasy sports contest player 10 located in this state is twenty-one years of age or older. 11 c. Ensure that coaches, officials, players, contestants, 12 or other individuals who participate in a game or contest 13 that is the subject of an internet fantasy sports contest are 14 restricted from entering an internet fantasy sports contest in 15 which the outcome is determined, in whole or in part, by the 16 accumulated statistical results of a team of individuals in the 17 game or contest in which they participate. 18 d. Prohibit internet fantasy sports contests based upon any 19 extracurricular interscholastic athletic contest or competition 20 which is sponsored or administered by an organization as 21 defined in section 280.13, any amateur athletic contest or 22 competition in which all participants are under the age of 23 twenty-one, or any intercollegiate sport as defined in section 24 9A.102. 25 e. Allow individuals to restrict themselves from entering 26 an internet fantasy sports contest conducted by the internet 27 fantasy sports contest service provider upon request and take 28 reasonable steps to prevent those individuals from entering 29 any internet fantasy sports contests conducted by the internet 30 fantasy sports contest service provider. 31 f. Disclose the number of entries a single internet fantasy 32 sports contest player may submit to each internet fantasy 33 sports contest and take reasonable steps to prevent players 34 from submitting more than the allowable number of entries for 35 -5- LSB 1635XC (3) 87 ec/nh 5/ 14

S.F. _____ that internet fantasy sports contest. 1 g. Segregate internet fantasy sports contest player funds 2 from operational funds and maintain a reserve in the form 3 of cash, cash equivalents, an irrevocable letter of credit, 4 payment processor reserves and receivables, a bond, or a 5 combination thereof in the amount of the deposits in internet 6 fantasy sports contest player accounts for the benefit and 7 protection of internet fantasy sports contest player funds held 8 in internet fantasy sports contest accounts by the internet 9 fantasy sports contest service provider. 10 h. Annually contract with a third party to perform an 11 independent audit, consistent with the standards established 12 by the American institute of certified public accountants, 13 to ensure compliance with all of the requirements in this 14 chapter and submit the results of the independent audit to the 15 commission. 16 i. Pay the tax as provided in section 99E.6. 17 3. The annual license fee to conduct internet fantasy sports 18 contests shall be five hundred dollars. Moneys collected by 19 the commission from the annual license fee paid under this 20 subsection shall be considered repayment receipts as defined 21 in section 8.2. 22 4. Upon a violation of any of the conditions listed in 23 section 99E.4 or this section by a licensee, the commission 24 shall immediately revoke the license. 25 Sec. 6. NEW SECTION . 99E.6 Internet fantasy sports contest 26 tax —— rate —— allocations. 27 1. A tax of seven and one-half percent is imposed on 28 internet fantasy sports contest adjusted revenues. The tax 29 imposed by this section shall be paid by the internet fantasy 30 sports contest service provider to the commission as provided 31 by the commission. 32 2. Of the revenues collected pursuant to this section, an 33 amount equal to one-half of one percent of internet fantasy 34 sports contest adjusted revenues is transferred to a special 35 -6- LSB 1635XC (3) 87 ec/nh 6/ 14

S.F. _____ revenue account in the general fund of the state to be used, 1 subject to an appropriation by the general assembly, by the 2 department of public health for purposes of the gambling 3 treatment program established pursuant to section 135.150. The 4 remaining amount of the revenues collected pursuant to this 5 section shall be deposited in the rebuild Iowa infrastructure 6 fund created in section 8.57. 7 Sec. 7. NEW SECTION . 99E.7 Internet fantasy sports contests 8 —— age restrictions. 9 A person under the age of twenty-one years shall not enter an 10 internet fantasy sports contest. A person who violates this 11 section with respect to entering an internet fantasy sports 12 contest commits a scheduled violation under section 805.8C, 13 subsection 11. 14 Sec. 8. NEW SECTION . 99E.8 Division of criminal 15 investigation. 16 The division of criminal investigation of the department of 17 public safety may investigate to determine licensee compliance 18 with the requirements of this chapter . Investigations may be 19 conducted either on the criminal investigation division’s own 20 initiative or at the request of the commission. The criminal 21 investigation division and the commission shall cooperate to 22 the maximum extent possible on an investigation. 23 Sec. 9. NEW SECTION . 99E.9 Setoff. 24 1. A licensee or a person acting on behalf of a licensee 25 shall be provided electronic access to the names of the 26 persons indebted to a claimant agency pursuant to the process 27 established pursuant to section 99E.3, subsection 5 . The 28 electronic access provided by the claimant agency shall 29 include access to the names of the debtors, their social 30 security numbers, and any other information that assists the 31 licensee in identifying the debtors. If an internet fantasy 32 sports contest player located in this state makes an account 33 balance withdrawal equal to one thousand two hundred dollars 34 or greater, the licensee shall perform an electronic records 35 -7- LSB 1635XC (3) 87 ec/nh 7/ 14

S.F. _____ search of persons indebted to a claimant agency. If the name 1 of the internet fantasy sports contest player is retrieved by 2 the licensee pursuant to the records search, the retrieval of 3 such a name shall constitute a valid lien upon and claim of 4 lien against the account balance withdrawal of the internet 5 fantasy sports contest player whose name is electronically 6 retrieved from the claimant agency. If an internet fantasy 7 sports contest player’s account balance withdrawal is equal 8 to or greater than one thousand two hundred dollars per 9 occurrence, the full amount of the debt shall be collectible 10 from any account balance withdrawal due the internet fantasy 11 sports contest player without regard to limitations on the 12 amounts that may be collectible in increments through setoff or 13 other proceedings. 14 2. The licensee is authorized and directed to withhold 15 any account balance withdrawal of an internet fantasy sports 16 contest player which is paid out directly by the licensee 17 subject to the lien created by this section and provide notice 18 of such withholding to the internet fantasy sports contest 19 player making the account balance withdrawal. The licensee 20 shall pay the funds over to the collection entity which 21 administers the setoff program pursuant to section 8A.504 . 22 3. Notwithstanding any other provision of law to the 23 contrary, the licensee may provide to a claimant agency all 24 information necessary to accomplish and effectuate the intent 25 of this section , and likewise the claimant agency may provide 26 all information necessary to accomplish and effectuate the 27 intent of this section . 28 4. The information obtained by a claimant agency from the 29 licensee in accordance with this section shall retain its 30 confidentiality and shall only be used by a claimant agency in 31 the pursuit of its debt collection duties and practices. An 32 employee or prior employee of a claimant agency who unlawfully 33 discloses any such information for any other purpose, except 34 as otherwise specifically authorized by law, shall be subject 35 -8- LSB 1635XC (3) 87 ec/nh 8/ 14

S.F. _____ to the penalties specified by law for unauthorized disclosure 1 of confidential information by an agent or employee of the 2 claimant agency. 3 5. The information obtained by a licensee from a claimant 4 agency in accordance with this section shall retain its 5 confidentiality and only be used by the licensee in the 6 pursuit of debt collection duties and practices. An employee 7 or prior employee of a licensee who unlawfully discloses any 8 such information for any other purpose, except as otherwise 9 specifically authorized by law, shall be subject to the 10 same penalties specified by law for unauthorized disclosure 11 of confidential information by an agent or employee of the 12 licensee. 13 6. Except as otherwise provided in this chapter , 14 attachments, setoffs, or executions authorized and issued 15 pursuant to law shall be withheld if timely served upon the 16 licensee. 17 7. A claimant agency or licensee, acting in good faith, 18 shall not be liable to any person for actions taken pursuant to 19 this section . 20 Sec. 10. NEW SECTION . 99E.10 Penalties. 21 In addition to any other penalty specified in this chapter, 22 a person who willfully fails to comply with the requirements 23 of this chapter and the rules adopted pursuant to chapter 17A 24 commits a class “D” felony and, in addition, shall be barred 25 for life from internet fantasy sports contests. 26 Sec. 11. Section 232C.4, subsection 3, Code 2017, is amended 27 to read as follows: 28 3. An emancipated minor shall remain subject to voting 29 restrictions under chapter 48A , gambling restrictions under 30 chapter 99B , 99D , 99F , 99G , or 725 , internet fantasy sports 31 contest restrictions under chapter 99E, alcohol restrictions 32 under chapter 123 , compulsory attendance requirements under 33 chapter 299 , and cigarette tobacco restrictions under chapter 34 453A . 35 -9- LSB 1635XC (3) 87 ec/nh 9/ 14

S.F. _____ Sec. 12. Section 714B.10, subsection 1, Code 2017, is 1 amended to read as follows: 2 1. Advertising by sponsors registered pursuant to chapter 3 557B , licensed pursuant to chapter 99B , or regulated pursuant 4 to chapter 99D , 99E, 99F , or 99G . 5 Sec. 13. Section 805.8C, Code 2017, is amended by adding the 6 following new subsection: 7 NEW SUBSECTION . 11. Internet fantasy sports contest 8 violations. For violations of legal age for entering an 9 internet fantasy sports contest under section 99E.7, the 10 scheduled fine is five hundred dollars. Failure to pay the 11 fine by a person under the age of eighteen shall not result in 12 the person being detained in a secure facility. 13 Sec. 14. TRANSITIONAL LICENSE. Notwithstanding any 14 provisions of Code chapter 99E as enacted by this Act to the 15 contrary, a person granted a license or registration by two 16 or more states to conduct internet fantasy sports contests 17 may apply for and shall be granted a transitional license by 18 the racing and gaming commission to conduct internet fantasy 19 sports contests in this state subject to the requirements of 20 Code chapter 99E, as enacted by this Act. The transitional 21 license shall be valid until the earlier of the date the 22 racing and gaming commission grants or denies a license under 23 section 99E.5 to the person to conduct internet fantasy sports 24 contests, or twelve months from the date the racing and gaming 25 commission accepts applications for issuance of a license to 26 conduct internet fantasy sports contests under section 99E.5. 27 Sec. 15. IMPLEMENTATION DATE. The following provision or 28 provisions of this Act shall not be implemented until July 1, 29 2019: 30 1. The section of this Act enacting section 99E.9. 31 EXPLANATION 32 The inclusion of this explanation does not constitute agreement with 33 the explanation’s substance by the members of the general assembly. 34 This bill authorizes internet fantasy sports contests 35 -10- LSB 1635XC (3) 87 ec/nh 10/ 14

S.F. _____ and provides for the licensing, regulation, and taxation of 1 internet fantasy sports contests. 2 New Code section 99E.1 provides for definitions. A “fantasy 3 sports contest” is defined as any fantasy or simulated game 4 or contest in which all prizes and awards offered to winning 5 participants are established and made known in advance of the 6 contest, all winning outcomes reflect the relative knowledge 7 and skill of the participants and are determined predominantly 8 by accumulated statistical results of the performance of 9 individuals, and no winning outcome is based on the score, or 10 performance of any single actual team or combination of such 11 teams or solely on any single performance of an individual 12 athlete in any single actual sporting or other event. An 13 “internet fantasy sports contest” is defined as a method of 14 entering a fantasy sports contest by establishing an account 15 with an internet fantasy sports contest service provider. An 16 “internet fantasy sports contest player” is defined as a person 17 who is at least 21 years of age who participates in an internet 18 fantasy sports contest. The bill also defines internet fantasy 19 sports contest adjusted revenues, internet fantasy sports 20 contest service provider, and location percentage. 21 New Code section 99E.2 provides that the system of entering 22 an internet fantasy sports contest is legal when conducted by a 23 licensed internet fantasy sports contest service provider as 24 provided in the new Code chapter. 25 New Code section 99E.3 establishes the powers of the racing 26 and gaming commission in relation to internet fantasy sports 27 contests and internet fantasy sports contest service providers. 28 Specifically, the new Code section authorizes the commission 29 to investigate and license internet fantasy sports contest 30 service providers, assess fines and revoke or suspend licenses, 31 impose penalties for violations of the new Code chapter, and 32 take any other action to enforce the requirements of the new 33 Code chapter. 34 New Code section 99E.4 establishes the requirements for an 35 -11- LSB 1635XC (3) 87 ec/nh 11/ 14

S.F. _____ applicant to be granted a license to conduct internet fantasy 1 sports contests. The Code section allows the commission 2 to charge the applicant a fee for the department of public 3 safety, division of criminal investigation, to defray the 4 costs associated with any investigation. The new Code 5 section provides that a license shall not be issued if there 6 is evidence that the applicant has failed to meet certain 7 qualifying requirements. A person who knowingly makes a 8 false statement on the application is guilty of an aggravated 9 misdemeanor. 10 New Code section 99E.5 establishes the terms and conditions 11 of licenses issued to conduct internet fantasy sports contests. 12 The Code section provides that a license may be issued for 13 a period of not more than three years and provides that 14 the annual license fee shall be $500. The new Code section 15 provides that a licensed internet fantasy sports contest 16 service provider shall prevent any employees and certain 17 family members from participating in internet fantasy sports 18 contests on the service provider’s digital platform, verify 19 that internet fantasy sports contest players located in this 20 state are 21 or older, ensure that participants in a game 21 or contest shall not be allowed to enter an internet fantasy 22 sports contest involving that game or contest, prohibit 23 internet fantasy sports contests based upon any interscholastic 24 or intercollegiate athletic contest or any amateur athletic 25 contest or competition in which all participants are under 26 the age of 21, permit individuals to restrict themselves 27 from entering an internet fantasy sports contest, perform an 28 independent audit, and pay the tax imposed by the new Code 29 chapter. 30 New Code section 99E.6 provides for a tax of 7.5 percent 31 to be imposed on internet fantasy sports contest adjusted 32 revenues. The bill defines, in new Code section 99E.1, 33 internet fantasy sports contest adjusted revenues as the total 34 of fees and charges collected, less winnings, in an internet 35 -12- LSB 1635XC (3) 87 ec/nh 12/ 14

S.F. _____ fantasy sports contest multiplied by the percentage of fees 1 and charges paid by participants who are located in this state 2 in that contest. The bill provides that of the revenues 3 collected, an amount equal to .5 percent of internet fantasy 4 sports contest adjusted revenues is transferred to a special 5 revenue account in the general fund to be used, subject to an 6 appropriation, by the department of public health for gambling 7 treatment with the remainder of revenues collected to be 8 deposited in the rebuild Iowa infrastructure fund. 9 New Code section 99E.7 provides that a person under the 10 age of 21 shall not enter an internet fantasy sports contest. 11 A person who violates this Code section commits a scheduled 12 violation under Code section 805.8C and is subject to a $500 13 fine. Code section 805.8C is amended to reflect this violation 14 and applicable fine. 15 New Code section 99E.8 authorizes the division of criminal 16 investigation of the department of public safety to investigate 17 licensee compliance with the requirements of the new Code 18 chapter. 19 New Code section 99E.9 requires a licensee to offset 20 account balance withdrawals of an internet fantasy sports 21 contest player who is a debtor in an amount equal to or greater 22 than $1,200, subject to the requirements of this new Code 23 section. The bill provides that this Code section shall not be 24 implemented until July 1, 2019. 25 New Code section 99E.10 provides that, in addition to any 26 other penalty specified in the new Code chapter, a person who 27 willfully fails to comply with the requirements of the Code 28 chapter commits a class “D” felony and shall be barred for life 29 from internet fantasy sports contests. 30 Code section 232C.4, concerning emancipation orders and 31 minors, is amended to reflect that an emancipated minor is 32 subject to the age restrictions for internet fantasy sports 33 contests. 34 Code section 714B.10, concerning prize promotions, is 35 -13- LSB 1635XC (3) 87 ec/nh 13/ 14

S.F. _____ amended to exempt internet fantasy sports contests from the 1 Code chapter. 2 The bill provides for the issuance of a transitional license 3 by the racing and gaming commission to a person to conduct 4 internet fantasy sports contests in this state if the person 5 has been granted a license or registration by two or more other 6 states to conduct internet fantasy sports contests. The bill 7 provides that the transitional license shall be valid until the 8 earlier of the date the commission grants or denies a license 9 to the person or twelve months from the date the commission 10 accepts applications for issuance of a license. 11 -14- LSB 1635XC (3) 87 ec/nh 14/ 14