SSB 1081 (LSB 1459XC (7) 88)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON STATE GOVERNMENT BILL BY CHAIRPERSON SMITH)

A BILL FOR

An Act relating to wagering, by providing for fantasy sports contests and sports wagering, providing for taxes and fees, making penalties applicable, and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

DIVISION I
SPORTS WAGERING

    Section 1.  NEW SECTION.  99C.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Applicant” means a person applying for a license as an interactive sports wagering platform.
   2.  “Commission” means the state racing and gaming commission created under section 99D.5.
   3.  “Division” means the division of criminal investigation of the department of public safety as provided in section 80.17.
   4.  “Gaming licensee” means any person licensed under section 99F.4A or 99F.7 to conduct gambling games under chapter 99F.
   5.  “Interactive sports wagering platform” means a person licensed by the commission to conduct sports wagering pursuant to this chapter via a telephone-type device or any other electronic means to include an interactive internet site.
   6.  “Official league data” means statistics, results, outcomes, and other data relating to a sporting event obtained pursuant to an agreement with the relevant sports governing body, or an entity expressly authorized by the sports governing body to provide such information to sports wagering operators, which authorizes the use of such data for determining the outcome of tier two sports wagers. 
   7.  “Registered sports governing body” means a sports governing body that is headquartered in the United States and has registered with the commission pursuant to this chapter.
   8.  “Sporting event” includes portions of a sporting event or sporting events, and any individual performance statistics of athletes in a sporting event or combination of sporting events.
   9.  “Sports governing body” means the organization that prescribes final rules and enforces codes of conduct with respect to a sporting event and participants therein.
   10.  “Sports wagering” means accepting wagers on a sporting event, by any system or method of wagering, including but not limited to in-person, over the internet through websites, and on mobile devices. “Sports wagering” includes but is not limited to single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets. “Sports wagering” does not include entering a fantasy sports contest as defined in section 99E.1.
   11.  “Sports wagering operator” means an interactive sports wagering platform who has entered into an agreement with a gaming licensee to conduct sports wagering on behalf of the gaming licensee or a gaming licensee that conducts sports wagering as provided by this chapter.
   12.  “Tier one sports wager” means a sports wager that is determined solely by the final score or final outcome of the sporting event and is placed before the sporting event has begun. 
   13.  “Tier two sports wager” means a sports wager that is not a tier one sports wager.
   14.  “Wager” or “bet” means the staking or risking by a person of something of value upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome. “Wager” or “bet” does not include any activity governed by the securities laws of the United States or this state, any contract of indemnity or guarantee, any contract for insurance, or participation in any game or contest in which the participants do not stake or risk anything of value other than personal efforts of the participants in playing the game or contest or obtaining access to the internet, or points or credits that the sponsor of the game or contest provides to participants free of charge and that can be used or redeemed only for participation in games or contests offered by the sponsor.
    Sec. 2.  NEW SECTION.  99C.2  Sports wagering authorized.
   The system of sports wagering as provided by this chapter is legal, when conducted by a sports wagering operator as provided in this chapter.
    Sec. 3.  NEW SECTION.  99C.3  Commission —— powers.
   1.  The commission shall have full jurisdiction over and shall supervise sports wagering and sports wagering operators as governed by this chapter.
   2.  The commission shall have the following powers and shall adopt rules pursuant to chapter 17A to administer and implement this chapter:
   a.  To review and investigate applicants and determine the eligibility of applicants for a license as an interactive sports wagering platform, pursuant to rules adopted by the commission.
   b.  To license interactive sports wagering platforms and to regulate sports wagering operators subject to the requirements of this chapter.
   c.  To provide for the prevention of practices detrimental to the public and to provide for the best interests of sports wagering.
   d.  To investigate alleged violations of this chapter or the commission rules, orders, or final decisions and to take appropriate disciplinary action against a sports wagering operator, or institute appropriate legal action for enforcement, or both. Information gathered during an investigation is confidential during the pendency of the investigation.
   e.  To assess fines and revoke or suspend licenses and to impose penalties for violations of this chapter.
   f.  To establish procedures for allowing a sports governing body, upon notification of the commission, to restrict, limit, or exclude wagers on sporting events, or portions of sporting events, regulated by the sports governing body from sports wagering as provided by this chapter and to, without limitation, restrict the sources of data and associated video upon which a sports wagering operator may rely in offering and paying wagers and the bet types that may be offered on a sporting event regulated by the sports governing body. The procedures will provide that the commission shall only deny a request made by a sports governing body pursuant to this paragraph if the commission deems such request arbitrary and capricious and shall provide a sports governing body with an opportunity for a hearing under chapter 17A if a request is denied. The procedures shall also provide that the administrator of the commission may temporarily grant a request by a sports governing body pending a final decision on whether to grant the request.
   g.  To provide for a sports governing body to register with the commission if the sports governing body is headquartered in the United States upon completion of such registration form as the commission may require.
   h.  To provide that advertisements for sports wagering by a sports wagering operator does not target minors or other persons who are ineligible to place wagers, problem gamblers, or other vulnerable persons, which may include limitations on the form, content, quantity, timing, and location of advertisements; discloses the identity of the sports wagering operator; provides information about or links to resources relating to gambling addiction; and are not false, misleading, or deceptive to a reasonable consumer.
   i.  To take any other action as may be reasonable or appropriate to enforce this chapter and the commission rules.
    Sec. 4.  NEW SECTION.  99C.4  Authority to conduct sports wagering —— licenses —— fees.
   1.  a.  An applicant for a license as an interactive sports wagering platform shall complete and sign an application on the form prescribed and published by the commission. The application shall include such information regarding the applicant that the commission deems necessary for purposes of issuing a license pursuant to this chapter.
   b.  If the commission is satisfied that the requirements of this chapter and its rules adopted under this chapter applicable to licensees have been or will be complied with, the commission may issue a license to an applicant as an interactive sports wagering platform to conduct sports wagering in this state. A licensed interactive sports wagering platform may enter into agreements to offer sports wagering on behalf of one or more gaming licensees without limitation. However, a gaming licensee authorized to conduct sports wagering pursuant to this section may enter into agreements with no more than two licensed interactive sports wagering platforms to offer sports wagering on behalf of the gaming licensee. The interactive sports wagering platform shall pay an initial license fee of ten thousand dollars and shall pay an annual renewal fee of five thousand dollars. Moneys collected by the commission from the license fees paid under this section shall be considered repayment receipts as defined in section 8.2.
   2.  The commission shall grant a gaming licensee, upon written request and agreement to conduct sports wagering in accordance with the requirements of this chapter, the authority to conduct sports wagering as a sports wagering operator under this chapter.
    Sec. 5.  NEW SECTION.  99C.5  Sports wagering operators —— terms and conditions.
   1.  A sports wagering operator shall use commercially reasonable methods to comply with all of the following requirements:
   a.  Prevent employees of the sports wagering operator and relatives living in the same household of such employees from sports wagering.
   b.  Verify that a person placing a wager on a sporting event with a sports wagering operator is twenty-one years of age or older.
   c.  Ensure that coaches, officials, players, contestants, or other individuals who participate in a sporting event sanctioned by a sports governing body that is the subject of sports wagering are restricted from placing a wager on any sporting event sanctioned by that sports governing body.
   d.  Restrict, limit, or exclude wagering on a sporting event regulated by a sports governing body, to include restricting sources of data and associated video upon which a sports wagering operator may rely in offering and paying wagers, pursuant to procedures established by the commission pursuant to section 99C.3.
   e.  Allow individuals to restrict themselves from placing a wager on a sporting event with a sports wagering operator conducted by the sports wagering operator upon request and take reasonable steps to prevent those individuals from placing a wager on a sporting event with a sports wagering operator conducted by the sports wagering operator.
   f.  Allow individuals to establish an account with an interactive sports wagering platform by utilizing electronic communication.
   g.  Conduct background checks on newly hired employees, and annual background checks on all existing employees utilized to conduct sports wagering. Background checks shall search for criminal history, and any charges or convictions involving corruption or manipulation of sporting events and association with organized crime.
   h.  Prohibit any individual with access to nonpublic confidential information held by the sports wagering operator from placing wagers with the sports wagering operator, prohibit persons from placing wagers as agents or proxies for others; and maintain the security of wagering data, customer data, and other confidential information from unauthorized access and dissemination; provided, however, that nothing in this chapter shall preclude the use of internet or cloud-based hosting of such data and information or disclosure as required by court order, other law, or this chapter.
   i.  Report to the commission and a sports governing body any information relating to criminal or disciplinary proceedings commenced against the sports wagering operator in connection with its operations, abnormal betting activity or patterns that may indicate a concern with the integrity of a sporting event, any potential breach of the relevant sports governing body’s internal rules and codes of conduct pertaining to sports wagering, any other conduct that corrupts a betting outcome of a sporting event or events for purposes of financial gain to include match fixing, and suspicious or illegal wagering activities, including use of funds derived from illegal activity, wagers to conceal or launder funds derived from illegal activity, using agents to place wagers, and using false identification.
   j.  Maintain the confidentiality of information provided by a sports governing body to the sports wagering operator, unless disclosure is required by the commission, by law, or court order.
   k.  Except as provided in section 99C.6, sports wagering operators may use any data source to determine the results of wagers on a sporting event, provided the data is not obtained directly or indirectly from live sporting event attendees who collect the data in violation of the terms of admittance to a sporting event or through automated computer programs that compile data from the internet in violation of the terms of service of the relevant website or other internet platform.
   l.  Pay the sports wagering royalty fee as provided in section 99C.6.
   2.  A sports wagering operator shall be authorized to enter into an agreement with a sports governing body to share revenues derived from sports wagering on sporting events conducted by a sports governing body. 
    Sec. 6.  NEW SECTION.  99C.6  Sports wagering requirements —— royalty fee.
   1.  A sports governing body may notify the commission, in a form and manner as the commission may require, that the sports governing body desires to supply official league data to sports wagering operators for determining the results of tier two sports wagers. On or after thirty days following such notification by a sports governing body to the commission, sports wagering operators shall use only official league data to determine the results of tier two sports wagers, unless the sports wagering operator can demonstrate to the commission that the sports governing body or its designee cannot provide a feed of official league data to the sports wagering operator on commercially reasonable terms. 
   2.  a.  Within thirty days of the end of each calendar quarter, a sports wagering operator shall remit to the commission a royalty fee of one-quarter of one percent of the amounts wagered on sporting events conducted by registered sports governing bodies. 
   b.  The royalty fee shall be remitted on a form as the commission may require, on which the sports wagering operator shall identify the percentage of wagering during the reporting period attributable to each registered sports governing body’s sporting events. 
   c.  No later than the thirtieth of April of each year, a registered sports governing body may submit a request for disbursement of funds remitted by sports wagering operators in the previous calendar year. The commission shall disburse the funds to the registered sports governing body in pro rata proportion of the total amount wagered on its sporting events. A registered sports governing body is not required to obtain a license from the commission in order to lawfully accept the funds provided for in this subsection. 
   d.  The commission shall annually publish a report stating the amount received from sports wagering operators in royalty fees and the amount paid to registered sports governing bodies. 
   e.  Any unclaimed royalty fees shall be distributed to the sports wagering operators that timely remitted the royalty fees required under this subsection to the commission. Such royalty fees shall be distributed to the eligible sports wagering operators on a pro rata basis. 
   f.  The commission shall cooperate with a registered sports governing body and sports wagering operators to ensure the timely, efficient, and accurate sharing of information and the remittance of the royalty fee to the registered sports governing body or its designee. 
    Sec. 7.  NEW SECTION.  99C.7  Records —— confidentiality.
   1.  Sports wagering operators shall maintain records of all bets and wagers placed, including personally identifiable information of the bettor, amount and type of bet, time the bet was placed, location of the bet, including internet protocol address if applicable, the outcome of the bet, records of abnormal betting activity, and video camera recordings in the case of in-person wagers for at least three years after the sporting event occurs and make such data available for inspection upon request of the commission or as required by court order. In addition, if a sports governing body has notified the commission that real-time information sharing for wagers placed on its sporting events is necessary and desirable, the commission shall require sports wagering operators to share in real time the information required to be retained pursuant to this subsection, other than video camera recordings, with the sports governing body or its designee with respect to wagers on its sporting events.
   2.  Records provided to the commission pursuant to this chapter shall be governed by the provisions of chapter 22, provided that, in addition to records that may be kept confidential pursuant to section 22.7, the following records provided by a sports wagering operator to the commission shall be kept confidential, except as otherwise provided in this section, unless otherwise ordered by a court, by the lawful custodian of the records, or by another person duly authorized to release such information:
   a.  Patron and customer records.
   b.  Surveillance records.
   c.  Security reports and network audits.
   d.  Internal control and compliance records.
   e.  Employee records.
   f.  Marketing expenses.
   g.  Any information specifically requested for inspection by the commission or a representative of the commission.
   3.  Information provided by a sports governing body to a sports wagering operator shall be kept confidential unless otherwise ordered by a court or disclosure is otherwise required by law or the commission.
    Sec. 8.  NEW SECTION.  99C.8  Investigations.
   1.  If the commission has reasonable cause to believe that a sports wagering operator has committed a violation of this chapter, the commission may request the division of criminal investigation of the department of public safety to investigate to determine compliance with the requirements of this chapter. The criminal investigation division and the commission shall cooperate to the maximum extent possible on an investigation. The commission shall assess the sports wagering operator the reasonable costs of the investigation. The costs may be retained by the division and shall be considered repayment receipts as defined in section 8.2.
   2.  The commission and sports wagering operators shall cooperate with investigations conducted by sports governing bodies or the division, including but not limited to providing or facilitating the provision of account-level betting information and audio or video files relating to persons placing wagers.
    Sec. 9.  NEW SECTION.  99C.9  Penalties —— liability.
   1.  A person who willfully fails to comply with the requirements of this chapter and the rules adopted pursuant to chapter 17A under this chapter shall be liable for a civil penalty of not more than one thousand dollars for each violation, not to exceed ten thousand dollars 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.
   2.  A person is guilty of a class “C” felony for any of the following:
   a.  Placing, or causing to be placed, a bet or wager on the basis of material nonpublic information relating to that bet or wager. For purposes of this paragraph, a bet or wager is “on the basis of material nonpublic information relating to that bet or wager” if the person placing the bet or wager, or causing it to be placed, was aware of the material nonpublic information when such person placed the bet or wager or caused it to be placed.
   b.  Knowingly engaging in, facilitating, or concealing conduct that intends to improperly influence a betting outcome of a sporting event for purposes of financial gain, in connection with betting or wagering on a sporting event.
   3.  A person who violates subsection 2, paragraph “b”, shall be liable to the relevant sports governing body, which sports governing body may sue either at law or in equity in any court of competent jurisdiction.
    Sec. 10.  Section 99G.3, subsection 7, Code 2019, is amended to read as follows:
   7.  “Lottery”, “lotteries”, “lottery game”, “lottery games”, or “lottery products” means any game of chance approved by the board and operated pursuant to this chapter and games using mechanical or electronic devices, provided that the authority shall not authorize a monitor vending machine or a player-activated gaming machine that utilizes an internal randomizer to determine winning and nonwinning plays and that upon random internal selection of a winning play dispenses coins, currency, or a ticket, credit, or token to the player that is redeemable for cash or a prize, and excluding gambling or gaming conducted pursuant to chapter 99B, 99C, 99D, or 99F.
    Sec. 11.  Section 123.49, subsection 2, paragraph a, Code 2019, is amended to read as follows:
   a.  Knowingly permit any gambling, except in accordance with chapter 99B, 99C, 99D, 99F, or 99G, or knowingly permit solicitation for immoral purposes, or immoral or disorderly conduct on the premises covered by the license or permit.
    Sec. 12.  Section 232C.4, subsection 3, Code 2019, is amended to read as follows:
   3.  An emancipated minor shall remain subject to voting restrictions under chapter 48A, gambling restrictions under chapter 99B, 99C, 99D, 99F, 99G, or 725, alcohol restrictions under chapter 123, compulsory attendance requirements under chapter 299, and cigarette tobacco restrictions under chapter 453A.
    Sec. 13.  Section 537A.4, subsection 2, Code 2019, is amended to read as follows:
   2.  This section does not apply to a contract for the operation of or for the sale or rental of equipment for games of skill or games of chance, if both the contract and the games are in compliance with chapter 99B.  This section does not apply to wagering authorized by chapter 99C.This section does not apply to wagering under the pari-mutuel method of wagering authorized by chapter 99D. This section does not apply to the sale, purchase, or redemption of a ticket or share in the state lottery in compliance with chapter 99G. This section does not apply to wagering authorized by chapter 99F. This section does not apply to the sale, purchase, or redemption of any ticket or similar gambling device legally purchased in Indian lands within this state.
    Sec. 14.  Section 714B.10, subsection 1, Code 2019, is amended to read as follows:
   1.  Advertising by sponsors registered pursuant to chapter 557B, licensed pursuant to chapter 99B, or regulated pursuant to chapter 99C, 99D, 99F, or 99G.
    Sec. 15.  Section 725.13, Code 2019, is amended to read as follows:
   725.13  Definition of bookmaking.
   “Bookmaking” means advancing gambling activity by accepting bets upon the outcome of future contingent events as a business other than as permitted in chapters 99B, 99C, 99D, and 99F. These events include, but are not limited to, the results of a trial or contest of skill, speed, power, or endurance of a person or beast or between persons, beasts, fowl, motor vehicles, or mechanical apparatus or upon the result of any chance, casualty, unknown, or contingent event.
    Sec. 16.  Section 725.15, Code 2019, is amended to read as follows:
   725.15  Exceptions for legal gambling.
   Sections 725.5 through 725.10 and 725.12 do not apply to a game, activity, ticket, or device when lawfully possessed, used, conducted, or participated in pursuant to chapter 99B, 99C, 99F, or 99G.
    Sec. 17.  TRANSITIONAL LICENSE.  Notwithstanding any provisions of chapter 99C as enacted by this Act to the contrary, a person granted a license or registration by two or more states to conduct sports wagering as an interactive sports wagering platform may apply for and shall be granted a transitional license by the racing and gaming commission as an interactive sports wagering platform in this state subject to the requirements of chapter 99C, as enacted by this Act. The transitional license shall be valid until the earlier of the date the racing and gaming commission grants or denies a license under section 99C.4 to the person as an interactive sports wagering platform, or twelve months from the date the racing and gaming commission accepts applications for issuance of a license as an interactive sports wagering platform under section 99C.4.
    Sec. 18.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
DIVISION II
FANTASY SPORTS CONTESTS

    Sec. 19.  NEW SECTION.  99E.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Applicant” means an internet fantasy sports contest service provider applying for a license to conduct internet fantasy sports contests under this chapter.
   2.  “Commission” means the state racing and gaming commission created under section 99D.5.
   3.  “Fantasy sports contest” includes any fantasy or simulated game or contest in which the fantasy sports contest operator is not a participant in the game or contest, the value of all prizes and awards offered to winning participants are established and made known to the participants in advance of the contest, all winning outcomes reflect the relative knowledge and skill of the participants and shall be determined by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events, and no winning outcome is based on the score, point spread, or any performance or performances of any single actual team or solely on any single performance of an individual athlete or player in any single actual event.
   4.  “Internet fantasy sports contest” means a method of entering a fantasy sports contest by which a person may establish an account with an internet fantasy sports contest service provider, deposit money into the account, and use the account balance for entering a fantasy sports contest by utilizing electronic communication.
   5.  “Internet fantasy sports contest adjusted revenues” means, for each internet fantasy sports contest, the amount equal to the total charges and fees collected from all participants entering the internet fantasy sports contest less winnings paid to participants in the contest, multiplied by the location percentage.
   6.  “Internet fantasy sports contest player” means a person who is at least twenty-one years of age and participates in an internet fantasy sports contest operated by an internet fantasy sports contest service provider.
   7.  “Internet fantasy sports contest service provider” means a person, including a licensee under chapter 99D or 99F, who conducts an internet fantasy sports contest as authorized by this chapter.
   8.  “Location percentage” means, for each internet fantasy sports contest, the percentage, rounded to the nearest tenth of a percent, equal to the total charges and fees collected from all internet fantasy sports contest players located in this state divided by the total charges and fees collected from all participants in the internet fantasy sports contest.
    Sec. 20.  NEW SECTION.  99E.2  Internet fantasy sports contests authorized.
   The system of entering an internet fantasy sports contest as provided by this chapter is legal when conducted by a licensed internet fantasy sports contest service provider as provided in this chapter.
    Sec. 21.  NEW SECTION.  99E.3  Commission —— powers.
   1. The commission shall have full jurisdiction over and shall supervise internet fantasy sports contests and internet fantasy sports contest service providers as governed by this chapter.
   2.  The commission shall have the following powers and shall adopt rules pursuant to chapter 17A to administer and implement this chapter:
   a.  To review and investigate applicants and determine the eligibility of applicants for a license to conduct internet fantasy sports contests, pursuant to rules adopted by the commission.
   b.  To license and regulate internet fantasy sports contest service providers subject to the requirements of this chapter.
   c.  To provide for the prevention of practices detrimental to the public and to provide for the best interests of internet fantasy sports contests.
   d.  To investigate alleged violations of this chapter or the commission rules, orders, or final decisions and to take appropriate disciplinary action against a licensee, or institute appropriate legal action for enforcement, or both. Information gathered during an investigation is confidential during the pendency of the investigation.
   e.  To assess fines and revoke or suspend licenses and to impose penalties for violations of this chapter.
   f.  To take any other action as may be reasonable or appropriate to enforce this chapter and the commission rules.
    Sec. 22.  NEW SECTION.  99E.4  Requirements of applicant —— fee.
   1.  An applicant for a license to conduct internet fantasy sports contests shall complete and sign an application on the form prescribed and published by the commission. The application shall include such information of the applicant that the commission deems necessary for purposes of issuing a license pursuant to this chapter.
   2.  An applicant shall submit fingerprints and information that the commission deems necessary to the commission in the manner prescribed on the application forms. The fingerprints may be submitted to the federal bureau of investigation by the department of public safety through the state criminal history repository for the purpose of a national criminal history check. The results of a criminal history record check conducted pursuant to this subsection shall be considered a confidential record under chapter 22.
   3.  If the commission is not satisfied that it can determine if an applicant meets the requirements necessary for issuing a license pursuant to this chapter, the commission may request the department of public safety, division of criminal investigation, to investigate and obtain the information necessary for the commission to make a determination on whether to issue the applicant a license.
   4.  The commission shall charge the applicant a reasonable fee set by the department of public safety, division of criminal investigation, to defray those costs associated with the fingerprint and national criminal history check requirements of subsection 2 concerning the applicant. In addition, if the commission requests that an additional investigation be conducted by the division of criminal investigation as provided in subsection 3, the commission shall charge the applicant the reasonable costs of this additional investigation. These fees and costs are in addition to any other license fees and costs charged by the commission. The fees and costs may be retained by the department of public safety, division of criminal investigation, and shall be considered repayment receipts as defined in section 8.2.
   5.  The commission shall not grant a license to an applicant if there is substantial evidence that any of the following apply:
   a.  A license issued to the applicant to conduct internet fantasy sports contests in another jurisdiction has been revoked by an entity licensing persons to conduct such contests in that jurisdiction.
   b.  The applicant has not demonstrated financial responsibility sufficient to adequately meet the requirements of the enterprise proposed.
   c.  The applicant does not adequately disclose the true owners of the enterprise proposed.
   d.  The applicant has knowingly made a false statement of a material fact to the commission.
   e.  The applicant has failed to meet a monetary obligation in connection with conducting an internet fantasy sports contest.
   f.  The applicant is not of good repute and moral character or the applicant has pled guilty to, or has been convicted of, a felony.
   g.  Any member of the board of directors of the applicant is not twenty-one years of age or older.
   6.  A person who knowingly makes a false statement on the application is guilty of an aggravated misdemeanor.
   7.  For the purposes of this section, “applicant” includes each member of the board of directors of an internet fantasy sports contest service provider.
    Sec. 23.  NEW SECTION.  99E.5  Licenses —— fees —— terms and conditions —— revocation.
   1.  If the commission is satisfied that the requirements of this chapter and its rules adopted under this chapter applicable to licensees have been or will be complied with, the commission shall issue a license for a period of not more than three years to an applicant to conduct internet fantasy sports contests in this state.
   2.  A licensed internet fantasy sports contest service provider shall use commercially reasonable methods to comply with all of the following requirements:
   a.  Prevent employees of the internet fantasy sports contest service provider and relatives living in the same household of such employees from competing in any internet fantasy sports contest on the service provider’s digital platform in which the service provider offers a cash prize to the public.
   b.  Verify that an internet fantasy sports contest player located in this state is twenty-one years of age or older.
   c.  Ensure that coaches, officials, players, contestants, or other individuals who participate in a game or contest that is the subject of an internet fantasy sports contest are restricted from entering an internet fantasy sports contest in which the outcome is determined, in whole or in part, by the accumulated statistical results of a team of individuals in the game or contest in which they participate.
   d.  Allow individuals to restrict themselves from entering an internet fantasy sports contest conducted by the internet fantasy sports contest service provider upon request and take reasonable steps to prevent those individuals from entering any internet fantasy sports contests conducted by the internet fantasy sports contest service provider.
   e.  Allow individuals to establish an account with an internet fantasy sports contest service provider by utilizing electronic communication.
   f.  Disclose the number of entries a single internet fantasy sports contest player may submit to each internet fantasy sports contest and take reasonable steps to prevent players from submitting more than the allowable number of entries for that internet fantasy sports contest.
   g.  Segregate internet fantasy sports contest player funds from operational funds or maintain a reserve in the form of cash, cash equivalents, an irrevocable letter of credit, payment processor reserves and receivables, a bond, or a combination thereof in the amount of the deposits in internet fantasy sports contest player accounts for the benefit and protection of internet fantasy sports contest player funds held in internet fantasy sports contest accounts by the internet fantasy sports contest service provider.
   h.  Annually contract with a third party to perform an independent examination, consistent with the attestation standards established by the American institute of certified public accountants, to ensure compliance with all of the requirements in this chapter and submit the results of the independent audit to the commission. The audit shall be submitted to the commission by July 1 of the year following the year subject to the audit. 
   i.  Pay the tax as provided in section 99E.6.
   3.  The annual license fee to conduct internet fantasy sports contests shall be five hundred dollars. Moneys collected by the commission from the annual license fee paid under this subsection shall be considered repayment receipts as defined in section 8.2.
   4.  a.  A licensed internet fantasy sports contest service provider shall pay a regulatory fee to the commission. The regulatory fee shall be established by the commission based on the costs of administering and enforcing this chapter.
   b.  A licensed internet fantasy sports contest service provider shall receive a credit for the amount of the regulatory fee paid by the provider against the taxes to be paid pursuant to section 99E.6.
   c.  Moneys collected by the commission from the regulatory fees paid under this subsection shall be considered repayment receipts as defined in section 8.2.
   5.  Upon a violation of any of the conditions listed in section 99E.4 or this section by a licensee, the commission shall immediately revoke the license.
    Sec. 24.  NEW SECTION.  99E.6  Internet fantasy sports contest tax —— rate —— allocations.
   1.  A tax of seven and one-half percent is imposed on internet fantasy sports contest adjusted revenues. The tax imposed by this section shall be paid by the internet fantasy sports contest service provider to the commission as provided by the commission.
   2.  Of the revenues collected pursuant to this section, an amount equal to one-half of one percent of internet fantasy sports contest adjusted revenues is transferred to a special revenue account in the general fund of the state to be used, subject to an appropriation by the general assembly, by the department of public health for purposes of the gambling treatment program established pursuant to section 135.150. The remaining amount of the revenues collected pursuant to this section shall be deposited in the rebuild Iowa infrastructure fund created in section 8.57.
    Sec. 25.  NEW SECTION.  99E.7  Internet fantasy sports contests —— age restrictions.
   A person under the age of twenty-one years shall not enter an internet fantasy sports contest. A person who violates this section with respect to entering an internet fantasy sports contest commits a scheduled violation under section 805.8C, subsection 12.
    Sec. 26.  NEW SECTION.  99E.8  Division of criminal investigation.
   If the commission has reasonable cause to believe that a licensee has committed a violation of this chapter, the commission may request the division of criminal investigation of the department of public safety to investigate to determine licensee compliance with the requirements of this chapter. The criminal investigation division and the commission shall cooperate to the maximum extent possible on an investigation. The commission shall assess the licensee the reasonable costs of the investigation conducted by the division of criminal investigation pursuant to a request by the commission under this section. The costs may be retained by the department of public safety, division of criminal investigation, and shall be considered repayment receipts as defined in section 8.2.
    Sec. 27.  NEW SECTION.  99E.9  Civil penalty.
   A person who willfully fails to comply with the requirements of this chapter and the rules adopted pursuant to chapter 17A under this chapter shall be liable for a civil penalty of not more than one thousand dollars for each violation, not to exceed ten thousand dollars 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. 
    Sec. 28.  Section 232C.4, subsection 3, Code 2019, is amended to read as follows:
   3.  An emancipated minor shall remain subject to voting restrictions under chapter 48A, gambling restrictions under chapter 99B, 99D, 99F, 99G, or 725, internet fantasy sports contest restrictions under chapter 99E, alcohol restrictions under chapter 123, compulsory attendance requirements under chapter 299, and cigarette tobacco restrictions under chapter 453A.
    Sec. 29.  Section 714B.10, subsection 1, Code 2019, is amended to read as follows:
   1.  Advertising by sponsors registered pursuant to chapter 557B, licensed pursuant to chapter 99B, or regulated pursuant to chapter 99D, 99E, 99F, or 99G.
    Sec. 30.  Section 725.15, Code 2019, is amended to read as follows:
   725.15  Exceptions for legal gambling.
   Sections 725.5 through 725.10 and 725.12 do not apply to a game, activity, ticket, or device when lawfully possessed, used, conducted, or participated in pursuant to chapter 99B, 99E, 99F, or 99G.
    Sec. 31.  Section 805.8C, Code 2019, is amended by adding the following new subsection:
   NEW SUBSECTION.  12.  Internet fantasy sports contest violations.  For violations of legal age for entering an internet fantasy sports contest under section 99E.7, the scheduled fine is five hundred dollars. Failure to pay the fine by a person under the age of eighteen shall not result in the person being detained in a secure facility.
    Sec. 32.  TRANSITIONAL LICENSE.  Notwithstanding any provisions of chapter 99E as enacted by this Act to the contrary, a person granted a license or registration by two or more states to conduct internet fantasy sports contests may apply for and shall be granted a transitional license by the racing and gaming commission to conduct internet fantasy sports contests in this state subject to the requirements of chapter 99E, as enacted by this Act. The transitional license shall be valid until the earlier of the date the racing and gaming commission grants or denies a license under section 99E.5 to the person to conduct internet fantasy sports contests, or twelve months from the date the racing and gaming commission accepts applications for issuance of a license to conduct internet fantasy sports contests under section 99E.5.
    Sec. 33.  EFFECTIVE DATE.  This division of this Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill authorizes wagering on sporting events and fantasy sports contests.
   SPORTS WAGERING. Division I of the bill authorizes wagering on sporting events and certain sporting contests and provides for the licensing and regulation of sports wagering.
   New Code section 99C.1 provides for definitions. “Sporting event” is defined to include portions of a sporting event and individual performance statistics of athletes in a sporting event or combination of sporting events. “Interactive sports wagering platform” is defined to mean a person licensed to conduct sports wagering via any electronic means to include an internet site. “Official league data” is defined to mean any data related to a sporting event obtained and authorized for use through the relevant sports governing body of that sporting event. “Sports governing body” is defined to mean the organization that prescribes final rules and codes of conduct with respect to a sporting event and “registered sports governing body” is defined to mean a sports governing body that is headquartered in the United States and has registered with the racing and gaming commission. “Sports wagering operator” is defined to mean an interactive sports wagering platform that has entered into an agreement with a gaming licensee to conduct sports wagering and a gaming licensee that conducts sports wagering pursuant to the requirements of the new Code chapter. “Gaming licensee” is defined as a person licensed to conduct gambling games under Code chapter 99F. “Sports wagering” is defined to exclude entering a fantasy sports contest as defined in new Code section 99E.1. “Tier one sports wager” means a sports wager that is solely determined by the final score or outcome of a sporting event that is placed before the sporting event begins and “tier two sports wager” means a sports wager that is not a tier one sports wager.
   New Code section 99C.2 provides that the system of sports wagering is legal when conducted by a sports wagering operator as provided in the new Code chapter.
   New Code section 99C.3 establishes the powers of the racing and gaming commission to license and regulate sports wagering. The Code section authorizes the commission to investigate applicants for a license as an interactive sports wagering platform, assess fines and revoke or suspend licenses, impose penalties for violations of the new Code chapter, regulate advertisements for sports wagering and sports wagering operators, and to take any other action to enforce the requirements of the new Code chapter. The Code section also authorizes the commission to establish procedures for sports governing bodies to register with the commission and to restrict, limit, or exclude wagers on certain sporting events and to restrict sources of data that may be utilized for purposes of sports wagering. 
   New Code section 99C.4 establishes requirements for an applicant receiving a license as an interactive sports wagering platform and for authorizing a gaming licensee to conduct sports wagering. The Code section sets the initial fee for a license as an interactive sports wagering platform at $10,000 with an annual renewal fee of $5,000.
   New Code section 99C.5 establishes terms and conditions for sports wagering operators. The Code section provides that a sports wagering operator shall use commercially reasonable methods to prevent any employees and certain family members from participating in sports wagering, verify that a person placing a wager on a sporting event is age 21 or older, ensure that participants in a sporting event sanctioned by a sports governing body shall not be allowed to place a wager on any sporting event sanctioned by that sports governing body, permit individuals to establish an account with an interactive sports wagering platform by utilizing electronic communication and to restrict themselves from wagering on a sporting event with a sports wagering operator, conduct background checks on employees involved in sports wagering, prevent individuals with nonpublic confidential information from placing wagers, report criminal and disciplinary proceedings and abnormal betting activity to the racing and gaming commission and the relevant sports governing body, maintain the confidentiality of information provided by a sports governing body to the sports wagering operator, and pay the royalty fee imposed by the new Code chapter. In addition, the Code section authorizes a sports wagering operator to share revenue with a sports governing body.
   New Code section 99C.6 establishes sports wagering requirements and a royalty fee. The Code section provides that 30 days after notification by a sports governing body, a sports wagering operator shall use only official league data for tier two sports wagers unless the sports governing body is unable to provide the data on commercially reasonable terms. The Code section also requires sports wagering operators to remit to the racing and gaming commission a royalty fee of one-quarter of one percent of amounts wagered on sporting events conducted by registered sports governing bodies. The Code section provides the mechanism for distributing royalty fee funds remitted to the commission to registered sports governing bodies.
   New Code section 99C.7 concerns records and confidentiality. The Code section requires sports wagering operators to maintain records of all bets and wagers and to provide information on bets and wagers on sporting events sanctioned by a sports governing body to the sports governing body upon notice to the racing and gaming commission. The Code section provides that certain records provided by a sports wagering operator to the racing and gaming commission shall be kept confidential by the commission, except as otherwise provided by the Code section, unless otherwise ordered by a court, by the lawful custodian of the records, or by another person duly authorized to release such information. The bill lists the records to be kept confidential as promotional play receipts records, patron and customer records, surveillance records, security reports and network audits, internal control records, employee records, marketing expenses, and any information specifically requested for inspection by the commission.
   New Code section 99C.8 authorizes the division of criminal investigation of the department of public safety to investigate compliance by sports wagering operators with the requirements of the new Code chapter.
   New Code section 99C.9 establishes civil and criminal penalties for certain violations. The Code section provides that a person who willfully fails to comply with the requirements of this new Code chapter shall be liable for a civil penalty of not more than $1,000 for each violation, not to exceed $10,000 for violations arising out of the same transaction or occurrence. The bill also establishes that a person is guilty of a class “C” felony for placing a bet or wager on the basis of material nonpublic information relating to the bet or wager or knowingly engaging in or concealing conduct intended to improperly influence a betting outcome. A class “C” felony is punishable by confinement for no more than 10 years and a fine of at least $1,000 but not more than $10,000.
   The bill also makes changes to Code sections 99G.3, 123.49, 232C.4, 537A.4, 714B.10, 725.13, and 725.15 to provide that provisions in those Code sections that list some or all Code chapters that govern lawful gambling also lists the new Code chapter provided in the bill.
   The bill provides for the issuance of a transitional license by the racing and gaming commission to a person to conduct sports wagering as an interactive sports wagering platform in this state if the person has been granted a license or registration by two or more other states to conduct sports wagering. The bill provides that the transitional license shall be valid until the earlier of the date the commission grants or denies a license to the person or 12 months from the date the commission accepts applications for issuance of a license. 
   The bill provides that this division takes effect upon enactment.
   FANTASY SPORTS CONTESTS. Division II of the bill authorizes internet fantasy sports contests and provides for the licensing, regulation, and taxation of internet fantasy sports contests.
   New Code section 99E.1 provides for definitions. A “fantasy sports contest” is defined as any fantasy or simulated game or contest in which all prizes and awards offered to winning participants are established and made known in advance of the contest, all winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals, and no winning outcome is based on the score, or performance of any single actual team or combination of such teams or solely on any single performance of an individual athlete in any single actual sporting or other event. An “internet fantasy sports contest” is defined as a method of entering a fantasy sports contest by establishing an account with an internet fantasy sports contest service provider. An “internet fantasy sports contest player” is defined as a person who is at least 21 years of age who participates in an internet fantasy sports contest. The bill also defines “internet fantasy sports contest adjusted revenues”, “internet fantasy sports contest service provider”, and “location percentage”.
   New Code section 99E.2 provides that the system of entering an internet fantasy sports contest is legal when conducted by a licensed internet fantasy sports contest service provider as provided in the new Code chapter.
   New Code section 99E.3 establishes the powers of the racing and gaming commission in relation to internet fantasy sports contests and internet fantasy sports contest service providers. Specifically, the Code section authorizes the commission to investigate and license internet fantasy sports contest service providers, assess fines and revoke or suspend licenses, impose penalties for violations of the Code chapter, and take any other action to enforce the requirements of the new Code chapter.
   New Code section 99E.4 establishes the requirements for an applicant to be granted a license to conduct internet fantasy sports contests. The Code section allows the commission to charge the applicant a fee for the department of public safety, division of criminal investigation, to defray the costs associated with any investigation. The new Code section provides that a license shall not be issued if there is evidence that the applicant has failed to meet certain qualifying requirements. The Code section provides that a person who knowingly makes a false statement on the application is guilty of an aggravated misdemeanor.
   New Code section 99E.5 establishes the terms and conditions of licenses issued to conduct internet fantasy sports contests. The Code section provides that a license may be issued for a period of not more than three years and provides that the 
annual license fee shall be $500. The Code section also provides for the payment of a regulatory fee to be set by the racing and gaming commission based on the costs of administering and enforcing the new Code chapter. The Code section further provides that each licensee shall receive a credit for the amount of the regulatory fee paid against taxes to be paid pursuant to the new Code chapter. The Code section provides that a licensed internet fantasy sports contest service provider shall use commercially reasonable methods to prevent any employees and certain family members from participating in internet fantasy sports contests on the service provider’s digital platform, verify that internet fantasy sports contest players located in this state are 21 or older, ensure that participants in a game or contest shall not be allowed to enter an internet fantasy sports contest involving that game or contest, permit individuals to establish an account with an internet fantasy sports contest service provider by electronic communication and to restrict themselves from entering an internet fantasy sports contest, perform an independent audit, and pay the tax imposed by the new Code chapter.
   New Code section 99E.6 provides for a tax of 7.5 percent to be imposed on internet fantasy sports contest adjusted revenues. The bill defines, in new Code section 99E.1, “internet fantasy sports contest adjusted revenues” as the total of fees and charges collected, less winnings, in an internet fantasy sports contest multiplied by the percentage of fees and charges paid by participants who are located in this state in that contest. The bill provides that of the revenues collected, an amount equal to .5 percent of internet fantasy sports contest adjusted revenues is transferred to a special revenue account in the general fund to be used, subject to an appropriation, by the department of public health for gambling treatment with the remainder of revenues collected to be deposited in the rebuild Iowa infrastructure fund. 
   New Code section 99E.7 provides that a person under the age of 21 shall not enter an internet fantasy sports contest. A person who violates this Code section commits a scheduled violation under Code section 805.8C and is subject to a $500 fine. Code section 805.8C is amended to reflect this violation and applicable fine.
   New Code section 99E.8 authorizes the division of criminal investigation of the department of public safety to investigate licensee compliance with the requirements of the new Code chapter.
   New Code section 99E.9 establishes civil penalties. The new Code section provides that a person who willfully fails to comply with the requirements of this new Code chapter shall be liable for a civil penalty of not more than $1,000 for each violation, not to exceed $10,000 for violations arising out of the same transaction or occurrence.
   The bill also makes changes to Code sections 232C.4, 714B.10, and 725.15 to provide that provisions in those Code sections that list some or all Code chapters that govern lawful gambling also lists the new Code chapter provided in this division of the bill.
   This division of the bill takes effect upon enactment.