AB 1437, as amended, Gray. Gambling: Internet Fantasy Sports Game Protection Act.
Existing law, the Gambling Control Act, provides for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission and the investigation and enforcement of those activities and establishments by the Department of Justice. Existing law prohibits a person, whether or not for gain, hire, or reward, from making a betting pool or placing a bet or wager on the result of any contest or event, including a sporting event, as specified.
This bill would enact the Internet Fantasy Sports Games Consumer Protection Act, which would require a person or entity to apply for, and receive, a license from the department prior to offering an Internet fantasy sports game for play in California. The bill would require the department to issue a license to a person or entity that applies for a license if the person or entity satisfies specified requirements, including, among others, that the applicant is of good character, honesty, and integrity. The bill would also require a person to register with a “licensed operator” prior to participating in an “Internet fantasy sports game” on an “authorized Internet Web site,” as those terms are defined.
The bill would require a licensed operator, among other things, to ensure that a registered player is eligible to play on an authorized Internet Web site, and to implement appropriate data security standards to prevent access by a person whose age and location have not been verified. The bill would authorize the department to assess a civil penalty against a licensed operator that violates these provisions according to a specified schedule depending on the number of violations. The bill would require the department to develop an online self-exclusion form on or before July 1, 2017, and to deliver that form to each licensed operator, and would require each licensed operator to make that form available to its registered players.
The bill would require a licensed operator to pay an annual regulatory fee, for deposit into the Fantasy Sports Fund, which the bill would establish in the State Treasury. The bill would continuously appropriate the Fantasy Sports Fund to the department for the reasonable costs of license oversight, consumer protection, state regulation, and other purposes related to the bill. The bill would require each licensed operator to pay a one-time license fee into the General Fund in an unspecified amount. The license fee would be credited against quarterly fees equivalent to an unspecified percentage of the licensed operator’s gross income that is attributable to the operation of an authorized Internet Web site in California.
The bill would make proprietary information provided by a licensed operator confidential in order to protect the licensed operator and to protect the security of an authorized Internet Web site. The bill would also prohibit a city, county, or city and county from regulating, taxing, or entering into a contract with respect to, any matter governed to the bill’s provisions, and would make conforming changes.
Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.
This bill would make legislative findings to that effect.
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2⁄3 of the membership of each house of the Legislature.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.
The people of the State of California do enact as follows:
Chapter 4.7 (commencing with Section 19750)
2is added to Division 8 of the Business and Professions Code, to
This chapter shall be known and may be cited as the
11Internet Fantasy Sports Games Consumer Protection Act.
The Legislature finds and declares all of the following:
13(a) The Internet is an integral tool in the everyday lives of
14Californians. Commerce, communication, and entertainment are
15just some of the areas in which this technological aid thrives.
16(b) Participating in Internet fantasy sports games, including
17those of the daily variety, is a very popular activity in California,
18and with the Internet as a technological aid, participation in these
19games can be conducted in a virtual environment and played from
P4 1the privacy of one’s own computer or mobile device. Despite a
2lack of regulation, participation in Internet fantasy sports games
3still remains popular with California residents.
4(c) Californians participate in Internet fantasy sports games on
5a daily basis on unregulated Internet Web sites. Neither federal
6nor California laws provide any consumer protections for California
7players. California players assume all risks, any negative social or
8financial impacts are borne by the citizens of California, and the
9revenues generated from these games are being realized by
10unlicensed operators and do not provide any benefits to the citizens
12(d) To better protect the people of California from potential
13risks from, and to maintain oversight of the systems used to carry
14out, Internet fantasy sports games, the Legislature finds it to be in
15the interest of the people to establish a regulatory framework by
16which entities, as authorized by the Department of Justice, may
17facilitate Internet fantasy sports games to players within California.
18(e) State authorization to operate Internet fantasy sports games
19consistent with federal law, and heightened regulation and
20enforcement regarding this activity, will provide California with
21the means to protect its citizens and consumers under certain
22conditions by providing a framework to ensure that, among other
23things, the state is not subject to an unnecessary and unprecedented
24expansion of gambling, minors are prevented from gambling,
25residents participating in these games are protected, and the state
26is not deprived of revenues to which it would otherwise be entitled
27from these activities.
It is the intent of the Legislature to create a licensing
29and regulatory framework and enforcement mechanisms for
30Internet fantasy sports games to do all of the following:
31(a) Ensure that Internet fantasy sports games of any duration
32are offered for play only in a manner that is consistent with federal
33and state law.
34(b) Ensure the state possesses sufficient resources to enforce
35prohibitions of illegal gambling activity, in part, by establishing
36a regulatory enforcement fund.
37(c) Ensure that the state is able to collect income tax revenues
38from registered players participating in authorized Internet fantasy
39sports games in the state.
P5 1(d) Create systems to protect each registered player’s private
2information and prevent fraud and identity theft.
3(e) Ensure that a registered player is able to have his or her
4financial transactions processed in a secure, timely, and transparent
6(f) Require that each licensed operator’s Internet Web site
7contains information relating to problem gambling, including a
8telephone number that an individual may call to seek information
9and assistance for a potential gambling addiction.
10(g) Ensure that each licensed operator maintains responsibility
11for the Internet fantasy sports games business and is not serving
12as a facade for an entity not eligible to be a licensed operator, and
13that each Internet fantasy sports games Web site identifies who is
14the actual licensed operator to ensure protection of players.
15(h) Deposit regulatory fees collected by the state from each
16licensed operator into the Fantasy Sports Fund, as established in
For purposes of this chapter, all of the following
23(a) “Authorized Internet Web site” means an Internet Web site
24operated by a licensed operator.
25(b) “Department” means the Department of Justice.
26(c) “Fund” means the Fantasy Sports Fund established by
28(d) “Internet fantasy sports game” means a game of any duration
29conducted on the Internet in which a registered player does all of
31(1) Competes against other registered players or a target score
32as the owner or manager of an imaginary or simulated team of
33athletes in an imaginary or simulated game.
34(2) Uses the statistics accumulated by the athletes in real-world
35sporting events to determine the scores of the imaginary or
37(3) Plays for a predetermined prize.
38(4) Pays a charge to the licensed operator providing the game
39in order to participate.
P6 1(e) “Licensed operator” means a person or entity licensed
2pursuant to this chapter to offer Internet fantasy sports games for
3play on an authorized Internet Web site.
4(f) “Registered player” means a person registered pursuant to
5this chapter to participate in an Internet fantasy sports game on an
6authorized Internet Web site.
(a) A person or entity shall apply for and receive a
11license from the department prior to offering an Internet fantasy
12sports game for play in California.
13(b) The department shall issue a license to a person or entity to
14operate an authorized Internet Web site if the applicant satisfies
15all of the following:
16(1) The applicant is of good character, honesty, and integrity.
17(2) The applicant’s prior activities, criminal record, if any,
18reputation, habits, and associations do not pose a threat to the
19public interest of the state, or to the effective regulation and control
20of Internet fantasy sports games, or create or enhance the dangers
21of unsuitable, unfair, or illegal practices, methods, and activities
22in the conduct of Internet fantasy sports games or in the carrying
23on of the business and financial arrangements incidental to those
25(3) The applicant is in all other respects qualified to be licensed
26as provided in this chapter, including, but not limited to, providing
27documentation establishing that the applicant is capable of paying
28the one-time license fee described in Section 19782 through its
29own net position or through credit directly available to the
31(c) The department may promulgate regulations to implement
(a) In order to ensure the protection of registered
34players, an authorized Internet Web site shall identify the person
35or entity that is the licensed operator.
36(b) A licensed operator shall ensure that an Internet fantasy
37sports game on its authorized Internet Web site complies with all
38of the following:
P7 1(1) An imaginary or simulated sports team in the game shall
2not be based on the current membership of an actual team that is
3a member of an amateur or professional sports organization.
4(2) A prize or award offered to the winning registered player
5or players shall be established and made known to the participating
6registered players in advance of the contest.
7(3) The value of a prize or award offered to the winning
8registered player or players shall not be determined by the number
9of participating registered players or the amount of any charges
10paid by those participating registered players to the licensed
12(4) The winning outcome of the game shall not be either of the
14(A) Based on the score, point spread, or performance of any
15single real-world team or any combination of real-world teams.
16(B) Based solely on the single performance of an individual
17athlete in a single real-world sporting event.
(a) A person shall register with a licensed operator
13prior to participating in an Internet fantasy sports game on an
14authorized Internet Web site.
15(b) A licensed operator shall ensure that a registered player is
16eligible to play on an authorized Internet Web site, and implement
17appropriate data security standards to prevent access by a person
18whose age and location have not been verified in accordance with
20(c) A licensed operator shall ensure that a registered player is
21physically located within the State of California at the time of
22participating in an Internet fantasy sports game on an authorized
23Internet Web site.
24(d) A licensed operator shall ensure that a registered player is
25at least 21 years of age.
26(e) (1) Each licensed operator shall, prior to registering and
27permitting a person to participate in an Internet fantasy sports game
28on an authorized Internet Web site, verify that the person is 21
29years of age or older by doing both of the following:
30(A) Attempting to match the name, address, and date of birth
31provided by the person to information contained in records in a
32database of individuals who have been verified to be 21 years of
33age or older by reference to an appropriate database of government
35(B) Verifying that the name and physical billing address on the
36check or credit card offered for payment by the person seeking to
37be a registered player matches the name and address listed in the
38database described in subparagraph (A).
39(2) If the licensed operator is unable to verify that the person is
4021 years of age or older pursuant to paragraph (1), the licensed
P9 1operator shall require the person to submit age-verification
2documents consisting of an attestation signed by the person that
3he or she is 21 years of age or older and a copy of a valid form of
4government identification, either electronically or by mail. For the
5purposes of this paragraph, a valid form of government
6identification includes a driver’s license, state identification card,
7passport, official naturalization or immigration document, including
8an alien registration receipt card or an immigrant visa, or United
9States military identification. The licensed operator shall verify
10that the physical billing address on the check or credit card
11provided by the person matches the address listed on his or her
13(3) A licensed operator is not in violation of this section if the
14operator complies with the requirements of paragraphs (1) and (2),
15and a person under 21 years of age participates in an Internet
16fantasy sports game on the operator’s authorized Internet Web
18(f) The department may assess a civil penalty against a licensed
19operator that violates this section according to the following
21(1) Not less than one thousand dollars
($1,000), and not more
22than two thousand dollars ($2,000), for the first violation.
23(2) Not less than two thousand five hundred dollars ($2,500),
24and not more than three thousand five hundred dollars ($3,500),
25for the second violation.
26(3) Not less than four thousand dollars ($4,000), and not more
27than five thousand dollars ($5,000), for the third violation.
28(4) Not less than five thousand five hundred dollars ($5,500),
29and not more than six thousand five hundred dollars ($6,500), for
30the fourth violation.
31(5) Ten thousand dollars ($10,000) for a fifth or subsequent
33(g) (1) The department shall, by regulation, provide a process
34for a licensed operator to exclude from play any person who has
35filled out an online self-exclusion form.
36(2) The department shall develop an online self-exclusion form
37on or before July 1, 2017.
38(3) The department shall deliver the form described in
39(2) to each licensed operator.
P10 1(4) A licensed operator shall prominently display a link to the
2department’s Responsible Gambling Internet Web page and the
3online self-exclusion form described in paragraph (2) when either
4of the following occurs:
5(A) A person registers as a registered player.
6(B) Each time a registered player accesses the authorized
7Internet Web site prior to playing.
8(5) A licensed operator shall retain each online self-exclusion
9form submitted to it by a registered player to identify persons who
10want to be excluded from play. A licensed operator shall exclude
11those persons from play.
12(6) A licensed operator that has made commercially reasonable
13efforts to comply with this subdivision is not in violation of this
14section if a person who has filled out an online self-exclusion form
15thereafter participates in an Internet fantasy sports game on the
16operator’s authorized Internet Web site.
(a) A licensed operator shall facilitate the collection
5by the Franchise Tax Board of personal income taxes from
6registered players and shall be responsible for providing current
7and accurate documentation on a timely basis to all state agencies.
8(b) The state and its agencies shall treat the proprietary
9information provided by a licensed operator as confidential in
10order to protect the licensed operator and to protect the security
11of an authorized Internet Web site.
12(c) Proprietary information supplied by a licensed operator to
13a state agency is exempt from public disclosure, consistent with
14subdivision (b) of Section 6253 of the Government Code.
(a) The Fantasy Sports Fund is hereby created in the
19State Treasury, to be administered by the department.
20Notwithstanding Section 13340 of the Government Code, all
21moneys in the fund are continuously appropriated to the
22department, without regard to fiscal years, in the amounts necessary
23for the department to perform its duties under this chapter.
24(b) Each licensed operator shall pay an annual regulatory fee,
25to be deposited in the Fantasy Sports Fund, in an amount to be
26determined by the department, for the reasonable costs of license
27oversight, consumer protection, state regulation, problem gambling
28programs, and other regulatory purposes related to this chapter,
29including, but not limited to, enforcement efforts related to illegal
30 Internet gambling activities.
(a) Prior to operating its authorized Internet Web site,
32a licensed operator shall remit to the Treasurer a one-time license
33fee in the amount of ____ ($____), to be deposited into the General
34Fund and credited against charges imposed pursuant to subdivision
35(b). Upon depletion of the license fee balance, the department shall
36notify the licensed operator to commence quarterly payments to
37the state in accordance with subdivision (b).
38(b) In consideration of the substantial value of each license, a
39licensed operator shall remit to the Treasurer on a quarterly basis
40for deposit in the General Fund an amount equal to ____ percent
P12 1of its gross income that is attributable to the operation of an
2authorized Internet Web site in California.
3(1) Each quarterly payment shall be due on the 10th day of the
4month following the end of each quarter.
5(2) A licensed operator shall make all electronic and written
6financial records available to the Treasurer and the department on
7an electronic basis.
A city, county, or city and county shall not regulate,
12tax, or enter into a contract with respect to any matter governed
13by this chapter. This section does not prohibit or limit the
14investigation and prosecution of any violation of this chapter.
Section 337a of the Penal Code is amended to read:
(a) Except as provided in Section 336.9 and as authorized
17pursuant to Chapter 4.7 (commencing with Section 19750) of
18Division 8 of the Business and Professions Code, every person
19who engages in one of the following offenses shall be punished
20for a first offense by imprisonment in a county jail for a period of
21not more than one year or in the state prison, or by a fine not to
22exceed five thousand dollars ($5,000), or by both imprisonment
24(1) Pool selling or bookmaking, with or without writing, at any
25time or place.
26(2) Whether for gain, hire, reward, or gratuitously, or otherwise,
27keeps or occupies, for any period of time whatsoever, any room,
28shed, tenement, tent, booth, building, float, vessel, place, stand or
29enclosure, of any kind, or any part thereof, with a book or books,
30paper or papers, apparatus, device or paraphernalia, for the purpose
31of recording or registering any bet or bets, any purported bet or
32bets, wager or wagers, any purported wager or wagers, selling
33pools, or purported pools, upon the result, or purported result, of
34any trial, purported trial, contest, or purported contest, of skill,
35speed or power of endurance of person or animal, or between
36persons, animals, or mechanical apparatus, or upon the result, or
37purported result, of any lot, chance, casualty, unknown or
38 contingent event whatsoever.
39(3) Whether for gain, hire, reward, or gratuitously, or otherwise,
40receives, holds, or forwards, or purports or pretends to receive,
P13 1hold, or forward, in any manner whatsoever, any money, thing or
2consideration of value, or the equivalent or memorandum thereof,
3staked, pledged, bet or wagered, or to be staked, pledged, bet or
4wagered, or offered for the purpose of being staked, pledged, bet
5or wagered, upon the result, or purported result, of any trial, or
6purported trial, or contest, or purported contest, of skill, speed, or
7power of endurance of person or animal, or between persons,
8animals, or mechanical apparatus, or upon the result, or purported
9result, of any lot, chance, casualty, unknown or contingent event
11(4) Whether for gain, hire, reward, or gratuitously, or otherwise,
12at any time or place, records, or registers any bet or bets, wager
13or wagers, upon the result, or purported result, of any trial, or
14purported trial, or contest, or purported contest, of skill, speed, or
15power of endurance of person or animal, or between persons,
16animals, or mechanical apparatus, or upon the result, or purported
17result, of any lot, chance, casualty, unknown or contingent event
19(5) Being the owner, lessee or occupant of any room, shed,
20tenement, tent, booth, building, float, vessel, place, stand, enclosure
21or grounds, or any part thereof, whether for gain, hire, reward, or
22 gratuitously, or otherwise, permits that space to be used or occupied
23for any purpose, or in any manner prohibited by paragraph (1),
24(2), (3), or (4).
25(6) Lays, makes, offers or accepts any bet or bets, or wager or
26wagers, upon the result, or purported result, of any trial, or
27purported trial, or contest, or purported contest, of skill, speed or
28power of endurance of person or animal, or between persons,
29animals, or mechanical apparatus.
30(b) In any accusatory pleading charging a violation of this
31section, if the defendant has been once previously convicted of a
32violation of any subdivision of this section, the previous conviction
33shall be charged in the accusatory pleading, and, if the previous
34conviction is found to be true by the jury, upon a jury trial, or by
35the court, upon a court trial, or is admitted by the defendant, the
36defendant shall, if he or she is not imprisoned in the state prison,
37be imprisoned in the county jail for a period of not more than one
38year and pay a fine of not less than one thousand dollars ($1,000)
39and not to exceed ten thousand dollars ($10,000). Nothing in this
40paragraph shall prohibit a court from placing a person subject to
P14 1this subdivision on probation. However, that person shall be
2required to pay a fine of not less than one thousand dollars ($1,000)
3nor more than ten thousand dollars ($10,000) or be imprisoned in
4the county jail for a period of not more than one year, as a condition
5thereof. In no event does the court have the power to absolve a
6person convicted pursuant to this subdivision from either being
7imprisoned or from paying a fine of not less than one thousand
8dollars ($1,000) and not more than ten thousand dollars ($10,000).
9(c) In any accusatory pleading charging a violation of this
10section, if the defendant has been previously convicted two or
11more times of a violation of any subdivision of this section, each
12previous conviction shall be charged in the accusatory pleadings.
13If two or more of the previous convictions are found to be true by
14the jury, upon a jury trial, or by the court, upon a court trial, or are
15admitted by the defendant, the defendant shall, if he or she is not
16imprisoned in the state prison, be imprisoned in the county jail for
17a period of not more than one year or pay a fine of not less than
18one thousand dollars ($1,000) nor more than fifteen thousand
19dollars ($15,000), or be punished by both imprisonment and fine.
20Nothing in this paragraph shall prohibit a court from placing a
21person subject to this subdivision on probation. However, that
22person shall be required to pay a fine of not less than one thousand
23dollars ($1,000) nor more than fifteen thousand dollars ($15,000),
24or be imprisoned in the county jail for a period of not more than
25one year as a condition thereof. In no event does the court have
26the power to absolve a person convicted and subject to this
27subdivision from either being imprisoned or from paying a fine of
28not more than fifteen thousand dollars ($15,000).
29(d) Except where the existence of a previous conviction of any
30subdivision of this section was not admitted or not found to be true
31pursuant to this section, or the court finds that a prior conviction
32was invalid, the court shall not strike or dismiss any prior
33convictions alleged in the information or indictment.
34(e) This section
applies not only to persons who commit any of
35the acts designated in paragraphs (1) to (6), inclusive, of
36subdivision (a), as a business or occupation, but also applies to
37every person who in a single instance engages in any one of the
38acts specified in paragraphs (1) to (6), inclusive, of subdivision
The Legislature finds and declares that Section 1 of
2this act, which adds Section 19776 to the Business and Professions
3Code, imposes a limitation on the public’s right of access to the
4meetings of public bodies or the writings of public officials and
5agencies within the meaning of Section 3 of Article I of the
6California Constitution. Pursuant to that constitutional provision,
7the Legislature makes the following findings to demonstrate the
8interest protected by this limitation and the need for protecting
10The limitations on the people’s right of access set forth in this
begin delete chapterend delete are necessary to protect the privacy and integrity of
12information submitted by registered players as well as the
13proprietary information of the license applicants and licensed