Substitute For

HOUSE BILL NO. 4916

A bill to create the lawful sports betting act; to require licensing of persons to engage in sports betting via the internet, including through mobile applications; to impose requirements for such sports betting; to impose tax and other payment obligations on the conduct of licensed sports betting; to create the internet sports betting fund; to prohibit certain acts in relation to sports betting and to prescribe penalties for those violations; to require the promulgation of rules; and to provide remedies.

The people of the state of michigan enact:

Sec. 1. This act shall be known and may be cited as the "lawful sports betting act".

Sec. 2. The legislature finds and declares all of the following:

(a) Operating, conducting, and offering for play sports betting on the internet, including through mobile application, involves gaming activity that already occurs in this state illegally.

(b) This act is consistent and complies with the unlawful internet gambling enforcement act of 2006, 31 USC 5361 to 5367, and with 18 USC 1084, and permits the use of the internet, including through mobile application, to place, receive, or otherwise knowingly transmit a sports bet or wager if that use complies with this act and rules promulgated under this act.

(c) This act is consistent and complies with the state constitution of 1963 by ensuring that internet sports betting may only be offered by licensed sports betting operators who are lawfully operating casinos in this state.

(d) In order to protect residents of this state who wager on sports through the internet, including through mobile application, and to capture revenues generated from such sports betting, it is in the best interest of this state and its citizens to regulate this activity by authorizing and establishing a secure, responsible, fair, and legal system of internet sports betting.

Sec. 3. As used in this act:

(a) "Adjusted gross sports betting receipts" means the total value of all internet sports betting wagers received by a sports betting operator under this act, less all of the following:

(i) Winnings.

(ii) Excise tax payments on internet sports betting remitted to the federal government.

(iii) Voided internet sports betting wagers.

(b) "Affiliate" means a person that, directly or indirectly, through 1 or more intermediaries, controls or is controlled by a sports betting operator.

(c) "Applicant" means a person that applies for a license or for registration under this act. As used in section 6(2), applicant includes an affiliate, director, or managerial employee of the applicant that performs the function of principal executive officer, principal operations officer, or principal accounting officer, or a person who holds more than 5% ownership interest in the applicant. As used in this subdivision, affiliate does not include a partnership, a joint venture, a co-shareholder of a corporation, a co-member of a limited liability company, or a co-partner in a limited liability partnership that has 5% or less ownership interest in the applicant and is not involved in the internet sports betting operation.

(d) "Athletic event" means a sports activity that involves the athletic skill of 1 or more players or participants. Athletic event does not include any of the following:

(i) Horse racing if sports betting on that race is pari-mutuel.

(ii) Any sport or athletic event played by individuals that are at the high school level or below. However, athletic event does include other athletic events where the majority of participants are 18 years of age or older.

(iii) Roulette, poker, blackjack, a card game, a dice game, or any other game or contest typically offered in a casino other than sports betting.

(iv) A fantasy contest.

(e) "Authorized participant" means an individual who has a valid internet sports betting account with a sports betting operator and is at least 21 years of age.

(f) "Board" means the Michigan gaming control board created under section 4 of the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.204.

(g) "Casino" means a building or buildings in which gaming is lawfully conducted under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, or in which class III gaming is lawfully conducted by an Indian tribe in this state under a facility license issued in accordance with a tribal gaming ordinance approved by the chair of the National Indian Gaming Commission.

(h) "Class III gaming" means that term as defined in 25 USC 2703.

(i) "Compact" means a tribal-state compact governing the conduct of gaming activities in this state that is negotiated under the Indian gaming regulatory act, Public Law 100-497, 102 Stat 2467.

(j) "Fantasy contest" means a simulated game or contest with an entry fee that meets all of the following conditions:

(i) No fantasy contest team is composed of the entire roster of a real-world sports team.

(ii) No fantasy contest team is composed entirely of individual athletes who are members of the same real-world sports team.

(iii) Each prize and award or the value of all prizes and awards offered to winning fantasy contest players is made known to the fantasy contest players in advance of the fantasy contest.

(iv) Each winning outcome reflects the relative knowledge and skill of the fantasy contest players and is determined by the aggregated statistical results of the performance of multiple individual athletes selected by the fantasy contest player to form the fantasy contest team, whose individual performances in the fantasy contest directly correspond with the actual performance of those athletes in the athletic event in which those individual athletes participated.

(v) A winning outcome is not based on randomized or historical events, or on the score, point spread, or performance in an athletic event of a single real-world sports team, a single athlete, or any combination of real-world sports teams.

(vi) The fantasy contest does not constitute or involve and is not based on any of the following:

(A) Racing involving animals.

(B) A game or contest ordinarily offered by a horse track or casino for money, credit, or any representative of value, including any races, games, or contests involving horses, or that are played with cards or dice.

(C) A slot machine or other mechanical, electromechanical, or electric device, equipment, or machine, including computers and other cashless wagering systems.

(D) Any other game or device authorized by the board under the Michigan gaming control and revenue act, 1996 IL 1, MCL 432.201 to 432.226.

(k) "Fund" means the internet sports betting fund created under section 16.

(l) "Gaming equipment" or "sports betting equipment" means any mechanical, electronic, or other device, mechanism, or equipment used in the operation of internet sports betting that directly affects the wagering and results of sports betting offered under this act. Gaming equipment does not include a personal computer, mobile phone, or other device that is owned and used by an individual to place an internet sports betting wager.

(m) "Indian lands" means that term as defined in 25 USC 2703.

(n) "Indian tribe" means that term as defined in 25 USC 2703 and any instrumentality, political subdivision, or other legal entity through which an Indian tribe operates its existing casino in this state.

(o) "In-game betting" means placing an internet sports betting wager after an athletic event has started.

(p) "Institutional investor" means a person that is any of the following:

(i) A retirement fund administered by a public agency for the exclusive benefit of federal, state, or local public employees.

(ii) An employee benefit plan or pension fund that is subject to the employee retirement income security act of 1974, Public Law 93-406.

(iii) An investment company registered under the investment company act of 1940, 15 USC 80a-1 to 80a-64.

(iv) A collective investment trust organized by a bank under 12 CFR part 9.

(v) A closed end investment trust.

(vi) A chartered or licensed life insurance company or

property and casualty insurance company.

(vii) A chartered or licensed financial institution.

(viii) An investment advisor registered under the investment advisers act of 1940, 15 USC 80b-1 to 80b-21.

(ix) Any other person that the board determines through rulemaking should be considered to be an institutional investor for reasons consistent with this act.

(q) "Internet" means the international computer network of interoperable packet-switched data networks, inclusive of additional technological platforms, such as mobile, satellite, and other electronic distribution channels.

(r) "Internet sports betting" means operating, conducting, or offering for play sports betting through the internet.

(s) "Internet sports betting account" means an electronic ledger in which all of the following types of transactions relative to an authorized participant are recorded:

(i) Deposits and credits.

(ii) Withdrawals.

(iii) Internet sports betting wagers.

(iv) Monetary value of winnings.

(v) Service or other transaction-related charges authorized by the authorized participant, if any.

(vi) Adjustments to the account.

(t) "Internet sports betting platform" means an integrated system of hardware, software, applications, including mobile applications, and servers through which a sports betting operator operates, conducts, or offers sports betting through the internet.

(u) "Internet sports betting wager" means the cash, or cash equivalent, including free play, loyalty points, and other redeemable sports betting credits, risked by an authorized participant on sports betting through the internet.

(v) "Mobile application" means an application on a mobile phone or other device through which an individual is able to place an internet sports betting wager.

(w) "Official league data" means statistics, results, outcomes, and other data relating to an athletic event obtained by a sports betting operator under an agreement with a sports governing body, or an entity expressly authorized by the sports governing body for determining the outcome of tier 2 sports wagers.

(x) "Person" means an individual, partnership, corporation, association, limited liability company, federally recognized Indian tribe, or other legal entity.

(y) "Prize" includes both a monetary and a nonmonetary prize received directly or indirectly by an authorized participant from a sports betting operator as a result of internet sports betting. The value of a nonmonetary prize is the actual cost of the prize.

(z) "Sports betting" means to operate, conduct, or offer for play wagering conducted under this act on athletic events and other events approved by the board. Sports betting includes, but is not limited to, single-game bets, teaser bets, parlays, over-under, moneyline, pools, exchange betting, in-game betting, proposition bets, and straight bets. Sports betting does not include a fantasy contest.

(aa) "Sports betting operator" means a person that is issued a sports betting operator license.

(bb) "Sports betting operator license" means a license issued by the board to a person to operate, conduct, or offer internet sports betting.

(cc) "Sports betting supplier" means a person that the board has identified as requiring a license to provide goods, software, or services to a sports betting operator to operate, conduct, or offer internet sports betting. Sports betting supplier includes, but is not limited to, payment processors, geolocation service providers, internet sports betting platform providers, and data providers. Sports betting supplier does not include a person that provides to a sports betting operator only the goods, software, and services that it also provides to others for a purpose that does not involve sports betting.

(dd) "Sports betting supplier license" means a license issued by the board to a sports betting supplier.

(ee) "Sports betting wagering device" means a mechanical, electrical, or computerized terminal, device, apparatus, or piece of equipment used to place an internet sports betting wager. Sports betting wagering device does not include a personal computer, mobile phone, or device owned and used by an individual to place an internet sports betting wager.

(ff) "Sports governing body" means an organization that prescribes final rules and enforces codes of conduct for an athletic event and the participants in the athletic event.

(gg) "Tier 1 sports bet" means an internet sports betting wager that is not a tier 2 sports bet.

(hh) "Tier 2 sports bet" means an internet sports betting wager that is placed after an athletic event has started.

(ii) "Winnings" includes both of the following:

(i) The total monetary value of prizes received by authorized participants.

(ii) Other amounts credited to authorized participants' internet sports betting accounts and redeemed by the authorized participants, including the monetary value of loyalty points, freeplay, and other similar complimentaries, incentives, and redeemable sports betting credits and other things of value provided to authorized participants as an incentive to place or as a result of their having placed internet sports betting wagers.

Sec. 4. (1) Internet sports betting may be conducted only to the extent that it is conducted in accordance with this act.

(2) An internet sports betting wager received by a sports betting operator is considered to be gambling or gaming that is conducted in the sports betting operator's casino located in this state, regardless of the authorized participant's location at the time the participant initiates or otherwise places the internet sports betting wager.

(3) A law that is inconsistent with this act does not apply to internet sports betting as provided for by this act.

(4) This act does not apply to internet sports betting conducted exclusively on Indian lands by an Indian tribe under a facility license issued in accordance with a tribal gaming ordinance approved by the chair of the National Indian Gaming Commission. For purposes of this subsection, internet sports betting is conducted exclusively on Indian lands only if the individual who places the internet sports betting wager is physically present on Indian lands when the internet sports betting wager is initiated and the internet sports betting wager is received or otherwise made on equipment that is physically located on Indian lands, and the internet sports betting wager is initiated, received, or otherwise made in conformity with the safe harbor requirements described in 31 USC 5362(10)(C).

(5) A person shall not provide or make available sports betting wagering devices in a place of public accommodation in this state, including a club or other association, to enable individuals to place internet sports betting wagers. This subsection does not apply to a sports betting operator aggregating, providing, or making available sports betting wagering devices within its own casino.

(6) For purposes of this act, the intermediate routing of electronic data in connection with internet sports betting, including routing across state lines, does not determine the location or locations in which the internet sports betting wager is initiated, received, or otherwise made.

(7) A sports betting operator may use no more than 1 internet sports betting platform to offer, conduct, or operate internet sports betting. The sports betting operator must clearly display its own brand or that of an affiliate on the internet sports betting platform that it utilizes. The sports betting operator may also elect, in its sole discretion, to have the brand of the internet sports betting platform that it utilizes be the name and logos of no more than 1 internet sports betting supplier if the internet sports betting platform also clearly displays the sports betting operator's own trademarks and logos or those of an affiliate.

Sec. 5. (1) The board has the powers and duties specified in this act and all other powers necessary to enable it to fully and effectively execute this act to administer, regulate, and enforce internet sports betting under this act.

(2) The board has jurisdiction over every person licensed by the board and may take enforcement action against a person that is not licensed by the board that offers internet sports betting in this state.

(3) The board may enter into agreements with other jurisdictions, including Indian tribes, to facilitate, administer, and regulate multijurisdictional sports betting by sports betting operators to the extent that entering into the agreement is consistent with state and federal laws and if the sports betting under the agreement is conducted only in the United States.

(4) The board may permit sports betting operators licensed by the board to accept internet sports betting wagers under this act on any amateur or professional athletic event.

Sec. 6. (1) The board may issue a sports betting operator license only to an applicant that is either of the following:

(a) A person that holds a casino license under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(b) An Indian tribe that lawfully conducts class III gaming in a casino located in this state under a facility license issued in accordance with a tribal gaming ordinance approved by the chair of the National Indian Gaming Commission.

(2) The board shall issue a sports betting operator license to an applicant described in subsection (1) after receiving the application described in subsection (4) or (5), as applicable, and the application fee, if the board determines that the internet sports betting proposed by the applicant complies with this act and the applicant is otherwise eligible and suitable. An applicant is eligible if it meets the requirements set forth in subsection (1)(a) or (b). It is the burden of the applicant to establish by clear and convincing evidence its suitability as to character, reputation, integrity, business probity, and financial ability. The application or enforcement of this subsection by the board must not be arbitrary, capricious, or contradictory to the express provisions of this act. In evaluating the eligibility and suitability of an applicant under the standards provided in this act, the board shall establish and apply the standards to each applicant in a consistent and uniform manner. In determining whether to grant a sports betting operator license to an applicant, the board may request from the applicant and consider as a factor in the determination any or all of the following information:

(a) Whether the applicant has adequate capitalization and the financial ability and the means to develop, construct, operate, and maintain the applicant's casino and proposed internet sports betting platforms in accordance with this act and the rules promulgated by the board.

(b) Whether the applicant has the financial ability to purchase and maintain adequate liability and casualty insurance and to provide an adequate surety bond.

(c) Whether the applicant has adequate capitalization and the financial ability to responsibly pay its secured and unsecured debts in accordance with its financing agreements and other contractual obligations.

(d) Whether the applicant has a history of material noncompliance with casino or casino-related licensing requirements or compacts with this state or any other jurisdiction, where the noncompliance resulted in enforcement action by the person with jurisdiction over the applicant.

(e) Whether the applicant has been indicted for, charged with, arrested for, or convicted of, pleaded guilty or nolo contendere to, forfeited bail concerning, or had expunged any criminal offense under the laws of any jurisdiction, either felony or misdemeanor, not including traffic violations, regardless of whether the offense has been expunged, pardoned, or reversed on appeal or otherwise. The board may consider mitigating factors, and, for an applicant described in subsection (1)(b), shall give deference to whether the applicant has otherwise met the requirements of the applicant's gaming compact for licensure, as applicable.

(f) Whether the applicant has filed, or had filed against it, a proceeding for bankruptcy or has ever been involved in any formal process to adjust, defer, suspend, or otherwise work out the payment of any debt.

(g) Whether the applicant has a history of material noncompliance with any regulatory requirements in this state or any other jurisdiction where the noncompliance resulted in an enforcement action by the regulatory agency with jurisdiction over the applicant.

(h) Whether at the time of application the applicant is a defendant in litigation involving the integrity of its business practices.

(3) A sports betting operator license issued under this act is valid for the 5-year period after the date of issuance and, if the board determines that the sports betting operator licensee continues to meet the eligibility and suitability standards under this act, is renewable for additional 5-year periods.

(4) A person described in subsection (1)(a) may apply to the board for a sports betting operator license to offer internet sports betting as provided in this act. The application must be made on forms provided by the board and include the information required by the board.

(5) A person described in subsection (1)(b) may apply to the board for a sports betting operator license to offer internet sports betting as provided in this act. The application must be made on forms provided by the board that require only the following information:

(a) The name and location of any of the applicant's casinos.

(b) The tribal law, charter, or any other organizational document of the applicant and other governing documents under which the applicant operates each of its casinos.

(c) Detailed information about the primary management officials of the applicant's casinos who will have management responsibility for the applicant's internet sports betting operations. As used in this subdivision, "primary management official" does not include an elected or appointed representative of the applicant unless the representative is also a full-time employee of the applicant's sports betting operations.

(d) The current facility license for the applicant's casinos.

(e) The applicant's current tribal gaming ordinance.

(f) The gaming history and experience of the applicant in the United States and other jurisdictions.

(g) Financial information, including copies of the last independent audit and management letter submitted by the applicant to the National Indian Gaming Commission under 25 USC 2710(b)(2)(C) and (D) and 25 CFR parts 271.12 and 271.13.

(h) The total number of gaming positions, including, but not limited to, electronic gaming devices and table games, at each of the applicant's casinos.

(6) An initial application for a sports betting operator license must be accompanied by an application fee of $50,000.00. The rules promulgated under section 10 may include provisions for the refund of an application fee, or the portion of an application fee that has not been expended by the board in processing the application, and the circumstances under which the fee will be refunded. The board may assess additional fees for the costs related to the licensure investigation.

(7) The board shall keep all information, records, interviews, reports, statements, memoranda, or other data supplied to or used by the board in the course of its review or investigation of an application for a sports betting operator license or renewal of a sports betting operator license confidential and shall use that material only to evaluate the applicant for a sports betting operator license or renewal. The materials described in this subsection are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.

(8) An application under this section must be submitted and considered in accordance with this act and any rules promulgated under this act.

(9) A sports betting operator shall pay a license fee of $100,000.00 to the board at the time the initial sports betting operator license is issued and $50,000.00 each year after the initial license is issued.

(10) The board shall deposit all application and license fees paid under this section into the fund.

(11) A sports betting operator shall not offer internet sports betting until the board has issued a license to at least 1 person under subsection (1)(a) and 1 person under subsection (1)(b) or 6 months after the effective date of this act, whichever occurs first.

(12) A person described in subsection (1)(b) that offers gaming in this state under a compact that requires agreement by the governor for the addition of any new class III gaming games may request the addition of sports betting as an allowable class III gaming game. If a tribe makes a request under this subsection within 60 days after the effective date of this act, the governor shall allow the addition of sports betting as a class III gaming game under the applicable compact. A tribe that receives the addition of sports betting under this subsection shall not offer internet sports betting until licensed under this act as a sports betting operator and the requirements of subsection (11) are satisfied.

(13) If the governor fails to allow the addition of sports betting as a class III gaming game under subsection (12), this state waives its sovereign immunity to permit the Indian tribe to initiate an action against the governor in his or her official capacity in either state or federal court to enforce this section.

(14) An institutional investor that holds for investment purposes only less than 25% of the equity of an applicant under this section is exempt from the licensure requirements of this act.

Sec. 7. (1) The board shall condition the issuance, maintenance, and renewal of a sports betting operator license to a person described in section 6(1)(b) on the person's compliance with all of the following conditions:

(a) The person complies with this act, rules promulgated by the board, and minimum internal controls pertaining to all of the following:

(i) The types of and rules for internet sports betting offered under this act.

(ii) Technical standards, procedures, and requirements for the acceptance, by the person, of internet sports betting wagers initiated or otherwise made by individuals located in this state who are not physically present on the person's Indian lands in this state at the time the internet sports betting wager is initiated or otherwise made.

(iii) Procedures and requirements for the acceptance of internet sports betting wagers initiated or otherwise made by individuals located in other jurisdictions, if the board authorizes multijurisdictional sports betting as provided in this act.

(iv) The requirements set forth in sections 10a and 11.

(b) The person adopts and maintains technical standards for internet sports betting platforms, systems, and software that are consistent with the standards adopted by the board under section 10.

(c) The person maintains 1 or more mechanisms on the internet sports betting platform that are designed to reasonably verify that an authorized participant is 21 years of age or older and that internet sports betting is limited to transactions that are initiated and received or otherwise made by an authorized participant located in this state or, if the board authorizes multijurisdictional sports betting as provided in this act, another jurisdiction in the United States authorized by the multijurisdictional agreement.

(d) The person adopts and maintains responsible gaming measures consistent with those described in section 12.

(e) The person continues to maintain and operate in this state a casino offering class III gaming and the casino contains not less than 50% of the gaming positions that were in place on the effective date of this act.

(f) The person pays to this state within the time period described in section 14(3), 8.75% of the adjusted gross sports betting receipts received by that person from all internet sports betting conducted under this act. All payments made under this subdivision must be allocated according to section 15a.

(g) The person agrees to provide and timely provides, on written request of the board, books and records directly related to its internet sports betting for the purpose of permitting the board to verify the calculation of the payments under subdivision (f).

(h) The person provides a waiver of sovereign immunity to the board for the sole and limited purpose of consenting to both of the following:

(i) The jurisdiction of the board to the extent necessary and for the limited purpose of providing a mechanism for the board to do all of the following:

(A) Issue, renew, and revoke the person's sports betting operator license.

(B) Enforce the payment obligations set forth in this section and section 14.

(C) Regulate the person under and enforce sections 10(1)(a), (b), (d) to (g), 11, 12(4) and (5), and 13.

(D) Inspect the person's internet sports betting operation and records to verify that the person is conducting its internet sports betting in conformity with this act.

(E) Assess fines or monetary penalties for violations referred to in sub-subparagraph (C).

(F) Enforce the payment of sports betting operator license fees described in section 6(9).

(ii) The jurisdiction of the courts of this state, and expressly waiving the exhaustion of tribal remedies, with venue in Ingham County, and any courts to which appeals from that venue may be taken, to permit this state to enforce administrative orders of the board, the person's obligation to make payments required under subdivision (f) and to enforce collection of any judgment. Any judgment of monetary damages under this subparagraph is deemed limited recourse obligations of the person and does not impair any trust or restricted income or assets of the person.

(2) This state, acting through the governor, at the request of any Indian tribe, shall negotiate and may conclude and execute any amendments to an Indian tribe's compact necessary to effectuate internet sports betting by the Indian tribe under this act and to ensure internet sports betting conducted by the Indian tribe is in compliance with this act. If the governor fails to enter into negotiations with the Indian tribe, or fails to negotiate in good faith with respect to any request, this state waives its sovereign immunity to permit the Indian tribe to initiate an action against the governor in his or her official capacity in either state court or in federal court and obtain those remedies as authorized in 25 USC 2710(d)(7).

(3) The board must exercise its limited direct regulatory and enforcement authority in a manner that is not arbitrary, capricious, or contradictory to this act. Notwithstanding anything in this act to the contrary, this act only regulates internet sports betting as provided in this act and does not extend to the board, or any other agency of this state, any jurisdiction or regulatory authority over any other aspect of any gaming operations of an Indian tribe described in section 4(4) beyond those rights granted to this state under this act and the compact with the Indian tribe.

Sec. 8. (1) The board may issue a sports betting supplier license to a sports betting supplier. A person that is not licensed under this section shall not provide goods, software, or services as a sports betting supplier to a sports betting operator.

(2) On application by an interested person, the board may issue a provisional sports betting supplier license to an applicant for a sports betting supplier license. A provisional license issued under this subsection allows the applicant for the sports betting supplier license to conduct business with a sports betting operator before the sports betting supplier license is issued to the applicant. A provisional license issued under this subsection expires on the date provided by the board.

(3) A sports betting supplier license issued under subsection (1) is valid for the 5-year period after the date of issuance. A sports betting supplier license is renewable after the initial 5-year period for additional 5-year periods if the board determines that the sports betting supplier continues to meet the eligibility and suitability standards under this act.

(4) A person may apply to the board for a sports betting supplier license as provided in this act and the rules promulgated under this act.

(5) Except as otherwise provided in this section, an application under this section must be made on forms provided by the board and include the information required by the board. An Indian tribe that submits an application under this section shall provide only the information described in section 6(5).

(6) An application under this section must be accompanied by a nonrefundable application fee in an amount to be determined by the board, not to exceed $5,000.00.

(7) The board shall keep all information, records, interviews, reports, statements, memoranda, or other data supplied to or used by the board in the course of its review or investigation of an application for a sports betting supplier license or renewal of a sports betting supplier license confidential and shall use that material only to evaluate the applicant for a sports betting supplier license or renewal. The materials described in this subsection are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.

(8) A sports betting supplier shall pay a license fee of $5,000.00 to the board at the time an initial sports betting supplier license is issued to the sports betting supplier and $2,500.00 each year after the initial license is issued.

(9) The board shall deposit all application and license fees paid under this act into the fund.

(10) An institutional investor that holds for investment purposes only less than 25% of the equity of an applicant under this section is exempt from the licensure requirements of this act.

Sec. 9. (1) The board has jurisdiction over and shall supervise all internet sports betting operations governed by this act. The board may do anything necessary or desirable to effectuate this act, including, but not limited to, all of the following:

(a) Develop qualifications, standards, and procedures for approval and licensure by the board of sports betting operators and sports betting suppliers.

(b) Decide promptly and in reasonable order all license applications and approve, deny, suspend, revoke, restrict, or refuse to renew sports betting operator licenses and sports betting supplier licenses. A party aggrieved by an action of the board denying, suspending, revoking, restricting, or refusing to renew a license may request a contested case hearing before the board under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. A request for hearing under this subdivision must be made to the board in writing within 21 days after service of notice of the action by the board.

(c) Conduct all hearings pertaining to violations of this act or rules promulgated under this act.

(d) Provide for the establishment and collection of all applicable license fees, taxes, and payments imposed by this act and the rules promulgated under this act and the deposit of the applicable fees, taxes, and payments into the fund.

(e) Develop and enforce testing and auditing requirements for internet sports betting platforms, internet sports betting wagering, and internet sports betting accounts.

(f) Develop and enforce requirements for responsible gaming and player protection, including privacy and confidentiality standards and duties.

(g) Develop and enforce requirements for accepting internet sports betting wagers.

(h) Adopt by rule a code of conduct governing board employees that ensures, to the maximum extent possible, that persons subject to this act avoid situations, relationships, or associations that may represent or lead to an actual or perceived conflict of interest.

(i) Develop and administer civil fines for sports betting operators and sports betting suppliers that violate this act or the rules promulgated under this act.

(j) Audit and inspect, on reasonable notice, books, records, and facilities relevant to internet sports betting operations, sports betting wagers, and sports betting wagering accounts, including, but not limited to, the books and records regarding financing and accounting materials held by or in the custody of a sports betting operator or sports betting supplier.

(k) Acquire by lease or by purchase personal property, including, but not limited to, any of the following:

(i) Computer hardware.

(ii) Mechanical, electronic, and online equipment and terminals.

(iii) Intangible property, including, but not limited to, computer programs, software, and systems.

(2) The board may investigate and may issue cease and desist orders and obtain injunctive relief against a person that is not licensed by the board that offers internet sports betting in this state.

(3) The board shall keep all information, records, interviews, reports, statements, memoranda, and other data supplied to or used by the board in the course of any investigation of a person licensed under this act confidential and shall use that material only for investigative purposes. The materials described in this subsection are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.

Sec. 10. (1) Within 1 year after the effective date of this act, the board shall promulgate rules governing the licensing, administration, and conduct of internet sports betting under this act. The board shall promulgate the rules pursuant to the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328. The rules may include only things expressly authorized by this act, including all of the following:

(a) The acceptance of internet sports betting wagers.

(b) The development and posting of house rules regarding internet sports betting.

(c) The method of reporting to be used by licensees.

(d) The types of records that must be kept.

(e) The ways in which an authorized participant may fund his or her internet sports betting account, that must include, at a minimum, the use of cash, cash equivalents, automated clearing house, debit cards, credit cards, and any other form of payment authorized by the board. As used in this subdivision, "automated clearing house" means a national or governmental organization that has authority to process electronic payments, including, but not limited to, the National Automated Clearing House Association and the Federal Reserve System.

(f) Protections for authorized participants placing internet sports betting wagers.

(g) The qualifications, standards, and procedures for approval and licensure by the board for sports betting operators and sports betting suppliers consistent with this act.

(h) Requirements to ensure responsible gaming.

(i) Technical and financial standards for internet sports betting platforms.

(j) Procedures for a contested case hearing.

(2) The board may audit and inspect books and records relating to internet sports betting operations, internet sports betting wagers, internet sports betting accounts, or internet sports betting platforms, including, but not limited to, the books and records regarding financing and accounting materials held by, or in the custody of, a licensee.

(3) Subject to the procedures under subsection (4), the board may use information received from a sports governing body to determine whether to allow either of the following:

(a) Internet sports betting wagering on a particular event.

(b) Authorized participants to make internet sports betting wagers of a particular type.

(4) If a sports governing body requests internet sports betting wagering information or requests the board to prohibit internet sports betting wagering on a particular event or making internet sports betting wagers of a particular type, the board shall notify, in writing, all sports betting operators, which must be allowed to respond to the sports governing body's request, in writing, in the time prescribed by the board. After reviewing the request, any response, and any other information available to the board, the board may grant the request or part of the request if it determines that it is necessary to protect the integrity of the event or public confidence in the integrity of the event on which the internet sports betting wagers are being placed.

Sec. 10a. (1) A sports betting operator may use any data source for determining the results of all tier 1 sports bets.

(2) A sports governing body headquartered in the United States may notify the board that it desires sports betting operators to use official league data to settle tier 2 sports bets. A notification under this subsection must be made in the form and manner as the board may require. The board shall notify each sports betting operator of the sports governing body's notification within 5 days after the board's receipt of the notification. If a sports governing body does not notify the board of its desire to supply official league data, an operator may use any data source for determining the results of any tier 2 sports bets on athletic events of that sports governing body.

(3) Within 60 days after the board notifying each sports betting operator of a sports governing body notification to the board under subsection (2), sports betting operators shall use only official league data to determine the results of tier 2 sports bets on athletic events sanctioned by that sports governing body unless any of the following apply:

(a) The sports governing body or designee cannot provide a feed of official league data to determine the results of a particular type of tier 2 sports bet, in which case sports betting operators may use any data source for determining the results of the applicable tier 2 sports bet until the data feed becomes available on commercially reasonable terms.

(b) A sports betting operator can demonstrate to the board that the sports governing body or its designee will not provide a feed of official league data to the sports betting operator on commercially reasonable terms. The following is a nonexclusive list of other factors the board may consider in evaluating whether official league data is being offered on commercially reasonable terms:

(i) The availability of a sports governing body's tier 2 official league data to a sports betting operator from more than 1 authorized source.

(ii) Market information regarding the purchase by operators of data from any authorized source including sports governing bodies or their designees for the purpose of settling sports wagers, for use in this state or other jurisdictions.

(iii) The nature and quantity of data, including the quality and complexity of the process used for collecting the data.

(iv) The extent to which sports governing bodies or their designees have made data used to settle tier 2 bets or wagers available to operators.

(c) The sports governing body or other designee does not obtain a sports betting supplier license to the extent required by law.

(4) While the board is determining whether official league data is commercially reasonable under subsection (3), a sports betting operator may use any data source for determining the results of any tier 2 sports bets. The board shall make a determination under subsection (3) within 120 days after the sports betting operator notifies the board that it desires to demonstrate that the sports governing body or its designee will not provide a feed of official league data to the operator on commercially reasonable terms.

Sec. 11. (1) A sports betting operator shall provide, or shall require the sports betting supplier providing an internet sports betting platform to provide, 1 or more mechanisms on the internet sports betting platform that are designed to reasonably verify that an authorized participant is 21 years of age or older and that internet sports betting is limited to transactions that are initiated and received or otherwise made by an authorized participant located in this state or, if the board authorizes multijurisdictional internet sports betting as provided in this act, another jurisdiction in the United States authorized by the multijurisdictional agreement.

(2) An individual who wishes to place an internet sports betting wager under this act must satisfy the verification requirements under subsection (1) before the individual may establish an internet sports betting account or make an internet sports betting wager on an internet sports bet offered by a sports betting operator.

(3) A sports betting operator shall include, or shall require the sports betting supplier providing an internet sports betting platform to include, mechanisms on its internet sports betting platform that are designed to detect and prevent the unauthorized use of internet sports betting accounts and to detect and prevent fraud, money laundering, and collusion.

(4) A sports betting operator, or a sports betting supplier providing its internet sports betting platform, shall not knowingly authorize any of the following individuals to establish an internet sports betting account or knowingly allow them to place an internet sports betting wager, except if required and authorized by the board for testing purposes or to otherwise fulfill the purposes of this act:

(a) An individual who is less than 21 years old.

(b) An individual whose name appears in the board's responsible gaming database.

(5) A sports betting operator shall display, or shall require the sports betting supplier providing its sports betting platform to display, in a clear, conspicuous, and accessible manner, evidence of the sports betting operator's license issued under this act.

Sec. 12. (1) The board may develop responsible gaming measures, including a statewide responsible gaming database identifying individuals who are prohibited from establishing an internet sports betting account or participating in internet sports betting offered by a sports betting operator. The executive director of the board may place an individual's name in the responsible gaming database if any of the following apply:

(a) The individual has been convicted in any jurisdiction of a felony, a crime of moral turpitude, or a crime involving gaming.

(b) The individual has violated this act or another gaming-related law.

(c) The individual has performed an act or has a notorious or unsavory reputation such that the individual's participation in sports betting under this act would adversely affect public confidence and trust in sports betting.

(d) The individual's name is on a valid and current exclusion list maintained by this state or another jurisdiction in the United States.

(e) Any other reason the board considers appropriate to protect the integrity of sports betting under this act.

(2) The board may promulgate rules for the establishment and maintenance of the responsible gaming database.

(3) A sports betting operator, in a format specified by the board, may provide the board with names of individuals to be included in the responsible gaming database.

(4) A sports betting operator shall require a sports betting supplier providing an internet sports betting platform to display, on the internet sports betting platform used by the sports betting operator, in a clear, conspicuous, and accessible manner the number of the toll-free compulsive gambling hotline maintained by this state and offer responsible gambling services and technical controls to authorized participants, consisting of both temporary and permanent self-exclusion for all internet sports betting offered and the ability for authorized participants to establish their own periodic deposit and internet sports betting wagering limits and maximum playing times.

(5) An authorized participant may voluntarily prohibit himself or herself from establishing an internet sports betting account with a sports betting operator. The board may incorporate the voluntary self-exclusion list into the responsible gaming database and maintain both the self-exclusion list and the responsible gaming database in a confidential manner.

(6) The self-exclusion list and responsible gaming database established under this section are exempt from disclosure under section 13 of the freedom of information act, 1976 PA 442, MCL 15.243.

Sec. 13. (1) A person shall not do any of the following:

(a) Offer internet sports betting in this state if the person is not a sports betting operator unless this act does not apply to internet sports betting under section 4(4).

(b) Knowingly make a false statement on an application for a license to be issued under this act.

(c) Knowingly provide false information to the board or an authorized representative of the board.

(2) A person that violates subsection (1)(a) is guilty of a felony punishable by imprisonment for not more than 10 years or a fine of not more than $100,000.00, or both.

(3) The board shall not issue a license under this act to a person that violates subsection (1).

(4) The attorney general or a county prosecuting attorney may bring an action to prosecute a violation of subsection (1)(a) in the county in which the violation occurred or in Ingham County.

Sec. 14. (1) Except for a sports betting operator that is an Indian tribe, a sports betting operator is subject to a tax of 8.75% on its adjusted gross sports betting receipts received by the sports betting operator.

(2) A sports betting operator that is an Indian tribe is subject to the payment requirements under section 7(1)(f).

(3) A sports betting operator shall pay the tax or payment, as applicable, under subsection (1) or (2) on a monthly basis. The payment for each monthly accounting period is due on the tenth day of the following month.

(4) No other tax, payment, or fee may be imposed on a sports betting operator by this state or a political subdivision of this state for sports betting conducted under this act. This subsection does not impair the contractual rights under an existing development agreement between a city and a sports betting operator that holds a casino license under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226.

(5) In addition to payment of the tax and other fees as provided in this act, and to any payment required pursuant to an existing development agreement described in subsection (4), if a city has imposed a municipal services fee equal to 1.25% on a casino licensee, the city may charge a 1.25% fee on the adjusted gross sports betting receipts of a sports betting operator that holds a casino license under the Michigan Gaming Control and Revenue Act, 1996 IL 1, MCL 432.201 to 432.226, whose casino is in that city.

Sec. 15. The tax imposed under section 14(1) must be allocated as follows:

(a) Thirty percent to the city in which the sports betting operator's casino is located, for use in connection with the following:

(i) The hiring, training, and deployment of street patrol officers in that city.

(ii) Neighborhood development programs designed to create jobs in that city with a focus on blighted neighborhoods.

(iii) Public safety programs such as emergency medical services, fire department programs, and street lighting in that city.

(iv) Anti-gang and youth development programs in that city.

(v) Other programs that are designed to contribute to the improvement of the quality of life in that city.

(vi) Relief to the taxpayers of that city from 1 or more taxes or fees imposed by that city.

(vii) The costs of capital improvements in that city.

(viii) Road repairs and improvements in that city.

(b) Sixty-five percent to this state to be deposited into the fund.

(c) Five percent to the Michigan agriculture equine industry development fund created under section 20 of the horse racing law of 1995, 1995 PA 279, MCL 431.320. However, if the 5% allocated under this subdivision to the Michigan agriculture equine industry development fund created under section 20 of the horse racing law of 1995, 1995 PA 279, MCL 431.320, exceeds $3,000,000.00 in a fiscal year, the amount in excess of $3,000,000.00 must be allocated and deposited in the fund created under section 16.

Sec. 15a. Any payments under section 7(1)(f) must be allocated as follows:

(a) Thirty percent to the governing body of the jurisdiction in which the sports betting operator licensee's casino is located, for its use in connection with the provision of governmental services.

(b) Fifty-two and one-half percent to this state to be deposited in the fund.

(c) Seventeen and one-half percent to the Michigan strategic fund created under section 5 of the Michigan strategic fund act, 1984 PA 270, MCL 125.2005.

Sec. 16. (1) The internet sports betting fund is created in the state treasury.

(2) The state treasurer may receive money or other assets required to be paid into the fund under this act or from any other source for deposit into the fund. The state treasurer shall direct the investment of the fund. The state treasurer shall credit to the fund interest and earnings from fund investments.

(3) The board is the administrator of the fund for auditing purposes.

(4) The board shall expend money from the fund, on appropriation, for all of the following:

(a) Each year, $1,000,000.00 to the compulsive gaming prevention fund created in section 3 of the compulsive gaming prevention act, 1997 PA 70, MCL 432.253.

(b) The board's costs of regulating and enforcing internet sports betting under this act.

(c) All money remaining in the fund after the expenditures under subdivisions (a) and (b) to be deposited into the state school aid fund established under section 11 of article IX of the state constitution of 1963.

Sec. 17. To the extent that sports betting equipment used to offer internet sports betting under this act is a gambling device as that term is defined in 15 USC 1171, a shipment of sports betting equipment, the registering, recording, and labeling of which has been completed by the manufacturer or the manufacturer's dealer in accordance with 15 USC 1171 to 1178, is a legal shipment of a gambling device into this state.

Sec. 18. This act does not authorize the construction or operation of a casino that was not constructed or operating before the effective date of this act.