§ 4860 Short title [Expires July 1, 2019, by its own terms]
This subchapter shall be known and may be cited as the "Delaware Interactive Fantasy Contests Act." The provisions of this subchapter shall expire on July 1, 2019, unless reauthorized. The Director of the Delaware Division of Gaming Enforcement shall report to the General Assembly on recommendations for revisions to this subchapter by January 1, 2019.
§ 4861 Legislative findings and purpose [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) The General Assembly hereby finds and declares that:
(1) Interactive fantasy sports are not games of chance because they consist of fantasy sports games or contests in which the fantasy sports teams are selected based upon the skill and knowledge of the participants and not based on the current membership of an actual team that is a member of an amateur or professional sports organization;
(2) Interactive fantasy sports contests are not wagers on future contingent events and are not under the contestants' control or influence because contestants have control over which players they choose and the outcome of each contest is not dependent upon the performance of any 1 player or any 1 actual team. The outcome of any fantasy sports contest does not correspond to the outcome of any 1 sporting event. Instead, the outcome depends on how the performances of participants' fantasy roster choices compare to the performance of others' roster choices.
(b) Based on the findings in subsection (a) of this section, the General Assembly declares that interactive fantasy sports do not constitute gambling in Delaware within the meaning of §§ 1401-1431 of Title 11.
(c) The General Assembly further finds that as the Internet has become an integral part of society, and interactive fantasy sports a major form of entertainment for many consumers, any interactive fantasy sports enforcement and regulatory structure must begin from the bedrock premise that participation is lawful and licensed interactive fantasy sports industry is a privilege and not a right, and that regulatory oversight is intended to safeguard the integrity of the games and participants to ensure accountability and the public trust. Interactive fantasy sports should continue to be enjoyed broadly and offered by licensed interactive fantasy sports operators in the state and not exclusively by any single brick and mortar casino.
§ 4862 Definitions [Expires July 1, 2019, pursuant to § 4860 of this title]
As used in this subchapter the following terms shall have the following meanings:
(1) "Authorized Delaware player" means an authorized player located in Delaware.
(2) "Authorized player" means an individual, who is not a prohibited player, that participates in an interactive fantasy sports contest offered by a registrant.
(3) "Collegiate sport or athletic event" means a sport or athletic event offered or sponsored by or played in connection with a public or private institution that offers education services beyond the secondary level.
(5) "Director" means the Director of the Delaware Division of Gaming Enforcement.
(6) "Division" means the Delaware Division of Gaming Enforcement.
(7) "Entry fee" means cash or cash equivalent that is paid by an authorized player or an authorized Delaware player to a registrant to participate in an interactive fantasy sports contest offered by such registrant.
(8) "Highly experienced player" means an authorized player who has done 1 of the following:
a. Entered more than 1,000 contests offered by a single operator or registrant.
b. Won more than 3 prizes valued at $1,000 each or more from a single operator or registrant.
(9) "High school sport or athletic event" means a sport or athletic event offered or sponsored by or played in connection with a public or private institution that offers education services at the secondary level.
(10) "Horse racing event" means any sport or athletic event conducted in Delaware that is subject to the provisions of Chapters 100 and 101 of Title 3, or any sport or athletic event conducted outside of Delaware, which if conducted in Delaware would be subject to the provisions of Chapters 100 and 101 of Title 3.
(11) "Interactive fantasy sports contest" or "contest" means an online simulated game of skill wherein 1 or more contestants compete against each other by using their knowledge and understanding of athletic events and athletes to select and manage rosters of players whose performance directly corresponds with the actual performance of competitors on sports teams and in sports contests. It does not include contests that are free to all participants or contests that encompass an entire season of the activity in which the underlying competition is being conducted, consists of at least 150 underlying competitions, and the prize or prizes awarded, if any, are determined by agreement of the participants only in order to distribute fully the participants' contributions to a fund established to award a prize or prizes for the contest.
(13) "Interactive fantasy sports operator" or "operator" means any person or entity that offers any interactive fantasy sports contest to any player through any interactive fantasy sports platform.
(14) "Interactive fantasy sports platform" or "platform" means any online method by which access to an interactive fantasy sports contest is provided.
(15) "Interactive fantasy sports registrant" or "registrant" means an operator that is registered by the Director. A registrant may utilize multiple interactive fantasy sports platforms and offer multiple contests.
(16) "Minor" means any person under the age of 18 years.
(17) "Prohibited players" means any of the following:
a. A member, officer, employee or agent of an operator or registrant.
b. A spouse, child, brother, sister or parent residing as a member of the same household in the principal place of abode of any member, officer, employee or agent of an operator or registrant.
c. An individual with access to nonpublic confidential information about contests.
d. Professional athlete or officiate whose performance may be used to determine the outcome of a contest, in the sport in which that professional athlete or officiate competes or officiates.
e. A minor.
(18) "Prohibited sports event" means any collegiate sport or athletic event, any high school sport or athletic event or any horse racing event.
(19) "Resident percentage" means, for each interactive fantasy sports contest, the percentage, rounded to the nearest tenth of a percent, of the entry fees collected from authorized Delaware players, divided by the entry fees collected from all authorized players in interactive fantasy sports contests.
(20) "Sports event" shall mean any amateur or professional sport or athletic event, except a prohibited sports event.
(21) "Ultimate equitable owner" shall mean a person who owns or controls any ownership interest of 10% or more in a person or entity either directly or indirectly, regardless of whether the person or entity owns or controls the ownership interest through 1 or more other persons or proxies, powers of attorney, or other variances.
§ 4863 Registration [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) Registration requirement. —
(1) No operator shall administer, manage, or otherwise make available an interactive fantasy sports platform to persons located in Delaware unless registered with the Director pursuant to § 4864 of this title. A registrant may use multiple interactive fantasy sports platforms and offer multiples types of contests. This subchapter, and any and all rules and regulations adopted under the authority of this subchapter, shall apply only to interactive fantasy sports contests for which an authorized player pays an entry fee.
(2) Any operator that offered contests to persons located in Delaware prior to August 25, 2017, may offer contests to persons located in Delaware from August 25, 2017, until 60 days after applications for registration are made available to the public by the Director. Operators who have applied for registration during that 60-day period may continue to operate until such operator's application for registration has been approved or denied in accordance with § 4864 of this title. Operators who have not applied for registration shall cease operations in this State by the expiration of the 60-day period.
(b) Registration issued by the Director shall remain in effect for 3 years. The Director shall establish a process for renewal.
(c) The Director shall publish a list of all operators registered in Delaware pursuant to this subchapter on a state website for public use.
(d) Interactive fantasy sports contests offered by a registrant in accordance with the provisions of this subchapter shall not constitute gambling as defined in §§ 1401-1431 of Title 11.
(e) The Director shall promulgate regulations to implement the provisions of this subchapter, including the development of the initial form of the application for registration. Such regulations shall provide for the registration and operation of contests in Delaware and shall include responsible protections with regard to compulsive play and safeguards for fair play.
(f) Registration as an Interactive Fantasy Sports Operator only grants the registrant the privilege to operate interactive fantasy sports contests in the State in accordance with the rules and limitations of this chapter.
§ 4864 Scope of registration review [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) The Director shall prescribe the initial form of the application for registration which shall include the following requirements:
(1) The full name and principal address of the operator.
(2) If a corporation, the name of the state in which incorporated and the full names and addresses of any partner, officer, director, shareholders holding 10% or more equity, and ultimate equitable owners.
(3) If a business entity other than a corporation, the full names and addresses of the principals, partners, members, and other types of equity holders holding 5% or more equity, and ultimate equitable owners.
(4) Whether such corporation or entity files information and reports with the United States Securities and Exchange Commission as required by § 13 of the Securities Exchange Act of 1934 (15 U.S.C. § 78m); or whether the securities of the corporation or entity are regularly traded on an established securities market in the United States.
(5) The type and estimated number of contests to be conducted annually.
(6) A statement of the assets and liabilities of the operator.
(7) Criminal record. —
a. Information regarding the criminal record, if any, of the following individuals, if those individuals are involved in the day-to-day management of interactive fantasy sports contests or operations, and as applicable to the entity's business structure:
1. Each partner of a partnership holding 10% or more of the partnership;
2. Each member of a limited liability company holding 10% or more of the LLC;
3. Each director and officer of a nonpublicly held corporation;
4. Each director and officer of a publicly held corporation;
5. Each stockholder holding 10% or more of a corporation; and
6. Ultimate equitable owners.
b. Individuals identified in paragraph (a)(7)a. of this section shall have a duty to disclose on the application for registration whether they have been convicted of a crime, other than traffic violations and convictions that have been expunged, and provide the nature of the crime, the date and place of the conviction, and the legal disposition of the case.
c. Fingerprinting procedure required. —
1. Individuals identified in paragraph (a)(7)a. of this section shall be required to submit fingerprints and other necessary information in order to obtain the following:
A. A report of the individual's entire criminal history record from the State Bureau of Identification or a statement from the State Bureau of Identification that the State Bureau of Identification Central Repository contains no such information relating to that individual; and
B. A report of the individual's entire federal criminal history record pursuant to the Federal Bureau of Investigation appropriation of Title II of Public Law 92-544. The State Bureau of Identification shall be the intermediary for the purposes of this section and the Division shall be the screening point for the receipt of said federal criminal history records.
2. All information obtained pursuant to this subsection shall be forwarded to the Division, which shall access the information and make a determination to approve or deny an application for registration. A copy of all information forwarded to the Division shall be provided to the individual. The individual shall have an opportunity to respond in writing to the Division regarding any information obtained pursuant to paragraph (a)(7)a. of this section prior to a determination of suitability for registration. Information obtained under this subsection is confidential and may only be disclosed to the Director and designated personnel of the Division. The State Bureau of Identification may release any subsequent criminal history to the Division.
3. An individual whose criminal record is required pursuant to paragraph (a)(7)a. of this section who has submitted to a criminal background check in this or any other state within the previous 12 months shall not be required to submit to another criminal background check if the individual submits:
A. The results of such previous criminal background check, including any previous federal criminal background check; and
B. A reference from the individual's most recent employer, if any, covering the previous 12 months.
4. Individuals identified in paragraph (a)(7)a. of this section of those operators who received a conditional registration or registration to administer, manage or otherwise make available an interactive fantasy sports platform to offer interactive fantasy sports contests to persons located in Delaware on or before August 25, 2017, shall submit by January 1, 2019, at the registrant's expense, fingerprints and other necessary information in order to obtain a criminal background pursuant to this paragraph (a)(7).
(b) The Director may require the full names and addresses of the officers and directors of any creditor of the operator, and of those stockholders, members, partners, or other equity holders who hold more than 10% of the stock, interests, or equity of the creditor.
(c) The Director may impose a monetary penalty, not to exceed $1,000 per violation, deny any application for registration, or suspend, refuse to renew, or revoke any existing registration issued pursuant to this subchapter, upon the finding that the operator or registrant, or any individual identified in paragraph (a)(7)a. of this section has done any of the following:
(1) Knowingly made a false statement of material fact or has deliberately failed to disclose any information required by the Director.
(2) Had a registration or license to offer or conduct contests denied, suspended, or revoked in any other state or country for just cause.
(3) Legally defaulted in the payment of any obligation or debt due to the federal government, or any state or political subdivision.
(4) Within 10 years of the date of the application for registration, has been:
a. Found guilty of any illegal, corrupt, or fraudulent act, practice, or conduct in connection with any interactive fantasy sport contest in this or any other state; or
b. Convicted of a felony, or any criminal offense involving dishonesty or breach of trust;
(5) At any time, knowingly failed to comply with any requirement of this chapter, any regulations promulgated by the Director, or any other additional requirements of the Director.
(d) The Director may revoke a registration if the Director finds that facts not known at the time the Director considered the application that if know, would have justified the denial of the application.
(e) When the Director denies, revokes or fails to renew an application, the operator shall be afforded notice and the right to be heard and offer proof in opposition to such determination in accordance with the regulations of the Director.
(f) All information and data required by the Director to be furnished in the application or investigative process, or which otherwise may be obtained by the Division, pertaining to an applicant's criminal record, financial record, and background, including an application form and registration investigation report, shall be considered confidential, shall not be public records subject to Chapter 100 of this title, and shall not be revealed in whole or in part except in the ordinary administration of the chapter, or upon the lawful order of a court of competent jurisdiction, or with the approval of the Attorney General, to a duly authorized law-enforcement agency. The Director may enter agreements with other law-enforcement agencies or other interactive fantasy sports contest regulatory agencies for the sharing of confidential information. Any person who violates this subsection (f) shall be guilty of a class A misdemeanor.
(g) All information and data required by the Director to be furnished, or which otherwise may be obtained by the Division, relative to internal controls of an operator or registrant shall be considered confidential, shall not be public records subject to Chapter 100 of this title, and shall not be revealed in whole or in part except in the ordinary administration of the chapter, or upon the lawful order of a court of competent jurisdiction, or with the approval of the Attorney General, to a duly authorized law-enforcement agency. Any person who violates this subsection (g) shall be guilty of a class A misdemeanor.
§ 4865 Required safeguards; minimum standards [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) As a condition of registration, each operator and registrant shall implement commercially reasonable measures to:
(1) Limit each authorized player to 1 active and continuously used account, and prevent prohibited players from maintaining accounts or participating in any contest offered by such operator or registrant.
(2) Prohibit minors from participating in any contest, which includes:
a. If a registrant becomes or is made aware that a minor has participated in 1 of its contests, such registrant shall promptly, within no more than 2 business days, refund any deposit received from the minor, whether or not the minor has engaged in or attempted to engage in a contest; provided, however, that any refund may be offset by any prizes already awarded;
b. Each registrant shall publish and facilitate parental control procedures to allow parents or guardians to exclude minors from access to any contest or platform; and
c. Each registrant shall take appropriate steps to confirm that an individual opening an account is not a minor.
(3) When referencing the chances or likelihood of winning in advertisements or upon contest entry, make clear and conspicuous statements that are not inaccurate or misleading concerning the chances of winning and the number of winners.
(4) Enable authorized players to exclude themselves from contests and take reasonable steps to prevent such players from entering a contest from which they have excluded themselves.
(5) Permit any authorized player to permanently close an account registered to such player, on any or all platforms supported by such operator or registrant, at any time and for any reason.
(6) Offer introductory procedures for authorized players that explain contest play and how to identify a highly experienced player.
(7) Identify all highly experienced players in any contest by a symbol attached to such players' usernames, or by other easily visible means, on all platforms supported by such operator or registrant.
(8) Disclose the number of entries that a single authorized player may submit to each contest.
(9) Disclose the maximum number of total entries allowed for each contest.
(10) Implement measures to protect the privacy and online security of authorized players and their accounts.
(11) Offer all authorized players information regarding his or her account history and account details;
(12) Ensure authorized players' funds are protected upon deposit and segregated from the operating funds of such operator or registrant and otherwise protected from corporate insolvency, financial risk, or criminal or civil actions against such operator or registrant.
(13) List on each website, in a prominent place, information concerning assistance for compulsive play, including a toll-free number directing callers to reputable resources containing further information, which shall be free of charge.
(14) Ensure the value of any prizes and awards offered to authorized players shall be established and made known to such players in advance of the contest.
(15) Ensure all winning outcomes reflect the relative knowledge and skill of the authorized players and shall be determined predominantly by accumulated statistical results of the performances of individuals in sports events.
(16) Ensure no winning outcome shall be based on the score, point spread, or performance of a single actual sports team, or any combination of such teams.
(17) Ensure no winning outcome shall be based solely on any single performance of an individual athlete in a single sport or athletic event.
(18) Ensure no game or contest shall be based on a prohibited sports event.
(19) Prevent the sharing of confidential information that could affect interactive fantasy sports contest play with third parties until such information is made publicly available.
(b) Each registrant shall restrict the number of entries submitted to 1 entry by a single authorized player for a contest involving 12 entries or fewer. Each registrant shall restrict the number of entries submitted by a single authorized player to 2 entries for a contest involving 13-36 entries. Each registrant shall restrict the number of entries submitted by a single authorized player to 3 entries for a contest involving 37-100 entries. In any contest involving more than 100 entries, registrants shall restrict the number of entries submitted by a single authorized player to 3% of all entries or 150 entries, whichever is smaller.
(c) For all advertised contests, the registrant shall prominently include information about the maximum number of entries that may be submitted by a single authorized player for that contest.
(d) Registrants may establish contests, representing less than 2% of the total number of contests it offers, in which there is no restriction on the number of entries by a single authorized player, provided that:
(1) The registrant clearly discloses that there are no limits on the number of entries by a single authorized player; and
(2) That the cost of participating in a contest with no restriction on the number of entries by a single authorized player is $50 or more per entry.
(e) Operators shall not directly or indirectly operate, promote or advertise any platform or contest to persons located in Delaware state unless pursuant to this subchapter or the operators conducted business in Delaware prior to July 26, 2017.
(f) Registrants shall not offer any contest based on any prohibited sports event.
(g) Registrants shall not permit any minor or prohibited participant to enter any contest.
(h) Advertisements for contests and prizes offered by a registrant shall not target prohibited participants, minors, or self-excluded persons. Representations or implications about average winnings from contests shall not be unfair or misleading. Such representations shall include, at a minimum:
(1) The median and mean net winnings of all authorized players participating in contests offered by such registrant; and
(2) The percentage of winnings awarded by the registrant to highly experienced players participating in contests offered by such registrant within the preceding calendar year.
(i) Registrants shall prohibit the use of third-party scripts or scripting programs for any contest and ensure that measures are in place to deter, detect and, to the extent reasonably possible, prevent cheating, including collusion, and use of cheating devices, including use of third party software programs that submit entry fees or adjust the athletes selected by an authorized player.
(j) Operators and registrants shall develop and prominently display procedures for the filing of a complaint by the authorized player against such registrant. An initial response shall be given by such registrant to such player filing the complaint within 48 hours. A complete response shall be given by such registrant to such player filing the complaint within 10 business days. An authorized player may file a complaint alleging a violation of the provisions of this subchapter with the Director.
(k) Registrants shall maintain records of all accounts belonging to authorized players and retain such records for 5 years.
§ 4866 Powers and duties of the Director [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) The Director shall promulgate regulations to implement the provisions of and effectuate the policy and objectives of this subchapter as the Director may deem necessary or advisable, including the development of the initial form of the application for registration. Such regulations shall provide for the registration and operation of contests in Delaware and shall include, without limitation, responsible protections with regard to compulsive play and safeguards for fair play. Such regulations may regulate the conduct and operation of contests and platforms, protect contestants and promote the fairness, honesty and integrity of contests. Provided, however, the Director shall not promulgate resolutions or limitations addressing any of the following:
(1) Rules or the administration of an individual game or contest.
(2) The statistical makeup of a game or contest.
(3) The digital platform of a platform operator.
(b) The Director shall have the following powers and duties for purposes of administrating, regulating, and enforcing the provisions of this subchapter:
(1) All powers and duties assigned by this subchapter, as well as all powers necessary and properly to fully and effectively execute this subchapter.
(2) To approve and deny applications for registration to conduct contests in Delaware state, and to suspend, refuse to renew, or revoke any registration issued to a registrant under this subchapter.
(3) To review each platform and contest offered by an operator or registrant.
(4) To accept and investigate complaints of any kind from an authorized player and attempt to mediate such complaints where appropriate.
(5) To investigate alleged violations of this subchapter.
(6) To initiate proper enforcement proceedings where such action is deemed by the Director to be necessary or appropriate.
(7) All powers and duties assigned by this subchapter.
§ 4867 Annual report [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) Each registrant shall annually submit a report to the Director no later than June 30 of each year, which shall include all of the following information as it shall apply to accounts held by authorized players located in Delaware:
(1) The number of accounts held by authorized players on all platforms offered by the registrant, and the number of accounts held by highly experienced players on all platforms offered by the registrant.
(2) The total number of new accounts established in the preceding year, as well as the total number of accounts permanently closed in the preceding year.
(3) The total number of entry fees received from authorized players.
(4) The total number of prizes awarded to authorized players.
(5) The total amount of interactive fantasy sports revenue received by the registrant.
(6) The total amount of authorized players that requested to exclude themselves from contests.
(7) Any additional information that the Director deems necessary to carry out the provisions of this subchapter.
(b) Upon the submission of such annual report, to such extent that the Director deems it to be in the public interest, the Director shall be authorized to conduct a financial audit of any registrant, at any time, to ensure compliance with this subchapter.
(c) The Director shall annually publish a report based on the aggregate information provided by all registrants pursuant to subsection (a) of this section, which shall be published on a state website no later than 180 days after the deadline for the submission of individual reports as specified in subsection (a) of this section.
§ 4868 Fees.
Transferred to § 2301(d)(3) of Title 30 by 81 Del. Laws, c. 371, § 1, effective August 10, 2018.
§ 4869 Disposition of fees.
Transferred to § 2301(d)(3) of Title 30 by 81 Del. Laws, c. 371, § 1, effective August 10, 2018.
§ 4870 Determination of fee liability.
§ 4871 Contests authorized [Expires July 1, 2019, pursuant to § 4860 of this title]
Interactive fantasy sports contests registered and conducted pursuant to the provisions of this subchapter are hereby authorized.
§ 4872 Contests prohibited [Expires July 1, 2019, pursuant to § 4860 of this title]
The conduct of unregistered interactive fantasy sports contests is prohibited.
§ 4873 Unregistered practice [Expires July 1, 2019, pursuant to § 4860 of this title]
(a) Where the Director has determined, upon notice and hearing pursuant to Chapter 101 of this title, that an operator has administered, managed or otherwise made available an interactive fantasy sports platform to persons located in Delaware regulated by this subchapter without having lawfully registered or that an operator or registrant previously registered under this subchapter is engaged in a practice regulated by this subchapter notwithstanding that the operator's registration has been suspended or revoked, the Director may issue a cease and desist order. In addition to the power to issue a cease and desist order, the Director may seek a injunctive relief prohibiting such unlawful practice and seek the imposition of other civil penalties defined by this subchapter.
(b) Upon notice and hearing pursuant to Chapter 101 of this title, the Director may fine any operator or registrant who violates such cease and desist order not less than $1,000 or more than $5,000 for each offense. Each day a violation continues may be deemed a separate offense in the Director's discretion.