85R4906 GCB-F     By: Raymond H.B. No. 1422       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of fantasy games; authorizing a civil   penalty; requiring a fee.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 13, Business & Commerce Code, is amended by   adding Chapter 623 to read as follows:   CHAPTER 623. FANTASY GAMES          Sec. 623.001.  DEFINITIONS. In this chapter:                (1)  "Confidential information" means information   related to the play of a fantasy game by a fantasy game participant   that is obtained solely by virtue of a person's employment.                (2)  "Fantasy game" means any fantasy or simulation   game or contest that meets the following conditions:                      (A)  the values of all prizes and awards offered   to winning fantasy game participants are established and made known   to the fantasy game participants in advance of the game or contest;                      (B)  all winning outcomes reflect the relative   knowledge and skill of the fantasy game participants and are   determined predominantly by accumulated statistical results of the   performance of individuals, including athletes in fantasy or   simulation games or contests based on real sporting events;                      (C)  no winning outcome is based on the score,   point spread, or performance or performances of any single team or   combination of teams, or solely on any single performance of an   individual athlete or player in any single event; and                      (D)  the outcomes of the fantasy or simulation   game or contest are not based on the statistical results of the   performance of athletes playing college or high school sports.                (3)  "Fantasy game operator" means a person who:                      (A)  is engaged in the business of professionally   conducting fantasy games for cash prizes for members of the general   public; and                      (B)  charges a member of the general public who   participates in a fantasy game as a fantasy game participant an   entry fee of cash or a cash equivalent.                (4)  "Fantasy game participant" means an individual who   participates in a fantasy game offered by a fantasy game operator.          Sec. 623.002.  POWERS AND DUTIES OF SECRETARY OF STATE;   CIVIL PENALTY; ENFORCEMENT. (a) The secretary of state may   promulgate rules under this chapter only as necessary to enforce   the provisions of this chapter.          (b)  The secretary of state may impose on a fantasy game   operator for a violation of this chapter a civil penalty in an   amount not to exceed $1,000 for any particular violation.          (c)  The secretary of state may take appropriate enforcement   or disciplinary action against a person who violates this chapter,   including the suspension or revocation of a registration issued   under Section 623.003.          (d)  Chapter 2001, Government Code, applies to a proceeding   for an enforcement or disciplinary action under this section.          Sec. 623.003.  REGISTRATION OF FANTASY GAME OPERATORS. (a)   A person may not offer a fantasy game as a fantasy game operator in   this state unless the person is registered with the secretary of   state under this section, except that the person may offer fantasy   games in this state during the time the person's application for   registration under this section is pending before the secretary of   state. A person may apply for registration under this section on   forms prescribed by the secretary of state.          (b)  A person may be registered as a fantasy game operator   under this section only if the person:                (1)  is authorized to transact business in this state;   and                (2)  pays to the secretary of state the annual fee   imposed under Subsection (c).          (c)  A fantasy game operator shall pay to the secretary of   state:                (1)  an annual registration fee of $5,000 to obtain   initial registration under this section; and                (2)  an annual registration renewal fee of $5,000 on   the anniversary of the date the operator obtains the initial   registration.          Sec. 623.004.  CONSUMER PROTECTION PROVISIONS. (a) A   fantasy game operator shall implement procedures intended to:                (1)  prevent the fantasy game operator, an employee of   the operator, or a relative of the operator who is living in the   same household as the operator from competing in any fantasy game   offered by the operator that awards a cash prize;                (2)  prevent the sharing with third parties of   confidential information that could affect fantasy game play until   the information is made publicly available;                (3)  verify that a fantasy game participant is 18 years   of age or older;                (4)  ensure that an individual who is a player in a real   game or competition is restricted from participating in a fantasy   game that is determined, wholly or partly, on the accumulated   statistical results of that player, the player's real team, or the   game or contest in which the individual is a player;                (5)  allow individuals on request to restrict   themselves from entering a fantasy game and take reasonable steps   to prevent those individuals from entering the fantasy game   operator's fantasy game;                (6)  disclose the maximum number of entries a fantasy   game participant may submit to each fantasy game and take   reasonable steps to prevent fantasy game participants from   submitting a number of entries that exceeds that allowable number;                (7)  segregate fantasy game participant funds from   operational funds of the fantasy game operator or maintain a   reserve in the form of cash, cash equivalents, credit card and   payment processor reserves and receivables, an irrevocable letter   of credit, a bond, or any combination of these forms in an amount   equal to the deposits made to the accounts of fantasy game   participants for the benefit and protection of the funds held in   those accounts;                (8)  provide fantasy game participants with access to   information on responsible play; and                (9)  provide fantasy game participants with access to   the participant's play history and account details.          (b)  A fantasy game operator offering fantasy games may not   target minors or other excluded players in any advertising of the   operator's fantasy games.          Sec. 623.005.  ANNUAL AUDIT. A fantasy game operator must   contract annually with a certified public accountant to perform an   independent financial audit of the operator's fantasy game   operations under this chapter to ensure compliance with this   chapter. The operator must annually submit the results of the audit   to the secretary of state.          Sec. 623.006.  CLASSIFICATION OF FANTASY GAMES. A fantasy   game operator or fantasy game participant that owns, operates,   provides, or participates in fantasy games in a manner consistent   with this chapter is not subject to prosecution for an offense under   the Penal Code that prohibits gaming or related activities.          SECTION 2.  This Act takes effect September 1, 2017.