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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 137
Introduced by Blood, 3.
Read first time January 11, 2019
Committee: General Affairs
1 A BILL FOR AN ACT relating to gambling; to amend sections 28-1101,
2 28-1105, and 28-1113, Reissue Revised Statutes of Nebraska; to adopt
3 the Fantasy Contests Act; to redefine terms; to provide a gambling
4 exception for conducting or participating in fantasy contests; to
5 change a provision relating to the possession of gambling records;
6 to harmonize provisions; and to repeal the original sections.
7 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 7 of this act shall be known and may be
2 cited as the Fantasy Contests Act.
3 Sec. 2. For purposes of the Fantasy Contests Act:
4 (1) Confidential information means information related to the play
5 of a fantasy contest obtained by a fantasy contest operator or by an
6 employee of such operator;
7 (2) Department means the Department of Revenue;
8 (3) Entry fee means cash or cash equivalent required to be paid by a
9 fantasy contest player to a fantasy contest operator in order to
10 participate in a fantasy contest;
11 (4) Fantasy contest means any online fantasy or simulated game or
12 contest with an entry fee required for participation and in which:
13 (a) The value of all prizes and awards offered to winning fantasy
14 contest players is established and made known to the fantasy contest
15 players in advance of the fantasy contest;
16 (b) All winning outcomes reflect the relative knowledge and skill of
17 the fantasy contest players and such outcomes are determined by
18 accumulated statistical results of the performance of individuals,
19 including athletes in the case of sports events; and
20 (c) No winning outcome is based on the score, point spread, or
21 performance of any single actual team or combination of teams or solely
22 on any single performance of an individual athlete or player in any
23 single actual event;
24 (5) Fantasy contest operator means a person that offers a digital
25 platform for the playing of a fantasy contest, administers one or more
26 fantasy contests, and awards any prize of value;
27 (6) Fantasy contest player means a person who pays an entry fee to
28 participate in a fantasy contest offered by a fantasy contest operator;
29 (7) Gross fantasy contest revenue means the amount equal to the
30 total of entry fees that a fantasy contest operator collects from fantasy
31 contest players less the total of sums paid out as prizes to fantasy
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1 contest players multiplied by the location percentage; and
2 (8) Location percentage means, for each fantasy contest, the
3 percentage rounded to the nearest tenth of a percent of the total of
4 entry fees collected from fantasy contest players located in Nebraska at
5 the time of entry into the fantasy contest divided by the total entry
6 fees collected from fantasy contest players in all locations in the
7 fantasy contest.
8 Sec. 3. (1) No fantasy contest operator shall offer any fantasy
9 contest in Nebraska without first registering with the department, except
10 that a fantasy contest operator may offer a fantasy contest in Nebraska
11 during the period that the application for registration is pending before
12 the department. An application for registration shall be on an electronic
13 or paper form prescribed by the department. To be eligible to obtain a
14 registration to offer a fantasy contest in Nebraska, a fantasy contest
15 operator shall (a) be authorized to transact business in Nebraska and (b)
16 pay a registration fee of ten thousand dollars to the department.
17 (2) On or before each annual anniversary date of the payment made
18 pursuant to subsection (1) of this section, a fantasy contest operator
19 shall pay an annual registration renewal fee of six percent of the
20 fantasy contest operator's gross fantasy contest revenue for the
21 preceding twelve months, not to exceed ten thousand dollars, to the
22 department. Initial and renewal registration fees shall be paid in a
23 manner prescribed by the department. No refunds shall be allowed of any
24 registration fees collected by the department. Any fantasy contest
25 operator that allows a registration to lapse without requesting an
26 extension of time to file an application for renewal shall be required to
27 resubmit an initial registration application. The department may grant an
28 extension upon receipt of a written request from a fantasy contest
29 operator.
30 (3) The department shall remit all registration and renewal fees
31 collected under this section to the State Treasurer for credit to the
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1 General Fund.
2 (4) Any fantasy contest operator offering a fantasy contest to
3 residents of Nebraska prior to the effective date of this act may
4 continue to offer such fantasy contest until sixty days after an
5 application for registration is made available to the public by the
6 department. Except as provided in section 4 of this act, a fantasy
7 contest operator who has applied for registration during such sixty-day
8 period may continue to operate while the registration is pending. A
9 fantasy contest operator who has not registered shall cease operations
10 within Nebraska by the expiration of the sixty-day period.
11 Sec. 4. (1) The department shall consider each application filed
12 for registration and shall issue a valid registration to any applicant
13 who meets the criteria set forth in the Fantasy Contests Act. The
14 department shall deny registration to any applicant who does not meet
15 such criteria.
16 (2) Any fantasy contest operator applying for initial registration
17 or renewal of a registration may operate during the period pending
18 application approval unless the department has reasonable cause to
19 believe that such operator is or may be in violation of the Fantasy
20 Contests Act and the department requires such operator to suspend
21 operation of any fantasy contest until an application for initial
22 registration or renewal is approved.
23 (3) The department shall issue or deny a registration application
24 within sixty days after receipt of the application. If the registration
25 is not issued, the department shall provide the fantasy contest operator
26 with the specific justification for not issuing such registration.
27 (4) Any pending application made under the Fantasy Contests Act
28 shall not be considered a public record for purposes of sections 84-712
29 to 84-712.09 until made public by the department pursuant to section 3 of
30 this act.
31 Sec. 5. (1) The department shall adopt and promulgate rules and
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1 regulations to implement and administer the Fantasy Contests Act,
2 including, but not limited to, rules and regulations:
3 (a) To provide for the prevention of practices detrimental to the
4 public interest and to safeguard the integrity of fantasy contests; and
5 (b) To establish the necessary scope of review of registration
6 applications filed by fantasy contest operators.
7 (2) The department shall not adopt and promulgate rules and
8 regulations limiting or regulating:
9 (a) Game rules governing the play of individual fantasy contests;
10 (b) The statistical components of a fantasy contest; or
11 (c) The digital platform of a fantasy contest operator.
12 Sec. 6. (1) As a condition of registration, a fantasy contest
13 operator shall submit evidence satisfactory to the department that the
14 operator has established and implemented or has the ability to implement
15 commercially reasonable procedures for fantasy contests that:
16 (a) Prevent a fantasy contest operator, any employee of the fantasy
17 contest operator, and any relative living in the same household as such
18 fantasy contest operator or employee from participating as a fantasy
19 contest player in any fantasy contest offered by a fantasy contest
20 operator;
21 (b) Prevent the sharing of confidential information with third
22 parties that could affect fantasy contest play until the information is
23 made publicly available;
24 (c) Prohibit the following persons from participating in a fantasy
25 contest based on the sport or competition in which the person
26 participates or with which the person is otherwise associated:
27 (i) An athlete, referee, umpire, coach, or other individual who
28 participates or officiates in a game or competition that is the subject
29 of a fantasy contest; or
30 (ii) Any sports agent, team employee, or league official associated
31 with a sport or athletic event that is the subject of a fantasy contest;
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1 (d) Verify that a fantasy contest player in a fantasy contest is
2 nineteen years of age or older;
3 (e) Provide a fantasy contest player with access to information on
4 responsible play and access to information on seeking assistance for
5 compulsive gambling behavior;
6 (f) Provide a fantasy contest player with information regarding the
7 fantasy contest player's play history and account details;
8 (g) Ensure that a person who is a player in a real-world game or
9 sporting event is restricted from participating in a fantasy contest that
10 is determined, in whole or in part, on the accumulated statistical
11 results of that player, the player's real-world team, or the sport or
12 competition in which he or she is a player;
13 (h) Allow a person to restrict himself or herself from entering a
14 fantasy contest upon request and provide reasonable steps to prevent the
15 person from entering any fantasy contest offered by the fantasy contest
16 operator;
17 (i) Disclose the number of entries that a fantasy contest player may
18 submit to each fantasy contest and provide reasonable steps to prevent a
19 fantasy contest player from submitting more than the allowable number;
20 (j) Segregate fantasy contest player funds from operational funds or
21 maintain a reserve that exceeds the amount of player funds on deposit,
22 which reserve may not be used for operational activities. The reserve
23 funds may be in the form of cash, cash equivalents, payment processor
24 reserves, payment processor receivables, an irrevocable letter of credit,
25 a bond, or any combination thereof, in the amount that must exceed the
26 total balances of the accounts of all fantasy contest players; and
27 (k) Prohibit the use of unauthorized third-party scripts on the
28 platform.
29 (2) A fantasy contest operator shall not offer a fantasy contest
30 based on the performance of a participant in a collegiate, high school,
31 or youth athletic event.
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1 (3) A fantasy contest operator shall:
2 (a) Contract annually with a certified public accountant to conduct
3 an independent financial audit consistent with the standards accepted by
4 the American Institute of Certified Public Accountants; and
5 (b) Submit a copy of the audit report prepared pursuant to
6 subdivision (3)(a) of this section to the department.
7 Sec. 7. Any person who knowingly violates any provision of the
8 Fantasy Contests Act shall be liable for a civil penalty of not more than
9 one thousand dollars for each violation, not to exceed five thousand
10 dollars for violations arising out of the same transaction or occurrence,
11 which shall accrue to the state, and which may be recovered in a civil
12 action brought by the department. All money collected by the department
13 pursuant to this section shall be remitted to the State Treasurer for
14 distribution in accordance with Article VII, section 5, of the
15 Constitution of Nebraska.
16 Sec. 8. Section 28-1101, Reissue Revised Statutes of Nebraska, is
17 amended to read:
18 28-1101 As used in this article, unless the context otherwise
19 requires:
20 (1) A person advances gambling activity if, acting other than as a
21 player, he or she engages in conduct that materially aids any form of
22 gambling activity. Conduct of this nature includes, but shall not be
23 limited to, conduct directed toward (a) the creation or establishment of
24 the particular game, contest, scheme, device, or activity involved, (b)
25 the acquisition or maintenance of premises, paraphernalia, equipment, or
26 apparatus therefor, or (c) engaging in the procurement, sale, or offering
27 for sale within this state of any chance, share, or interest in a lottery
28 of another state or government whether or not such chance, share, or
29 interest is an actual lottery ticket, receipt, contingent promise to pay,
30 order to purchase, or other record of such interest except as provided in
31 the Fantasy Contests Act, the Nebraska County and City Lottery Act, the
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1 Nebraska Lottery and Raffle Act, the Nebraska Pickle Card Lottery Act,
2 the Nebraska Small Lottery and Raffle Act, the State Lottery Act, or
3 section 9-701;
4 (2) Bookmaking means shall mean advancing gambling activity by
5 unlawfully accepting bets from members of the public as a business upon
6 the outcome of future contingent events;
7 (3) A person profits from gambling activity if, other than as a
8 player, he or she accepts or receives money or other property pursuant to
9 an agreement or understanding with any person whereby he or she
10 participates or is to participate in the proceeds of gambling activity;
11 (4) A person engages in gambling if he or she bets something of
12 value upon the outcome of a future event, which outcome is determined by
13 an element of chance, or upon the outcome of a game, contest, or
14 election, or conducts or participates in any bingo, lottery by the sale
15 of pickle cards, lottery, raffle, gift enterprise, fantasy contest, or
16 other scheme not authorized or conducted in accordance with the Fantasy
17 Contests Act, the Nebraska Bingo Act, the Nebraska County and City
18 Lottery Act, the Nebraska Lottery and Raffle Act, the Nebraska Pickle
19 Card Lottery Act, the Nebraska Small Lottery and Raffle Act, the State
20 Lottery Act, or section 9-701, but a person does not engage in gambling
21 by:
22 (a) Entering into a lawful business transaction;
23 (b) Playing an amusement device or a coin-operated mechanical game
24 which confers as a prize an immediate, unrecorded right of replay not
25 exchangeable for something of value;
26 (c) Conducting or participating in a prize contest; or
27 (d) Conducting or participating in any bingo, lottery by the sale of
28 pickle cards, lottery, raffle, or gift enterprise conducted in accordance
29 with the Fantasy Contests Act, the Nebraska Bingo Act, the Nebraska
30 County and City Lottery Act, the Nebraska Lottery and Raffle Act, the