2025 -- H 6076

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LC002172

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2025

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A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- FANTASY SPORTS CONSUMER

PROTECTION ACT

     Introduced By: Representatives Slater, Potter, and Diaz

     Date Introduced: March 12, 2025

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Title 5 of the General Laws entitled "BUSINESSES AND PROFESSIONS"

is hereby amended by adding thereto the following chapter:

CHAPTER 97

FANTASY SPORTS CONSUMER PROTECTION ACT

     5-97-1. Short title.

     This chapter shall be known and may be cited as the “Fantasy Sports Consumer Protection

Act.”

     5-97-2. Definitions.

     For purposes of this chapter, the following words, terms and phrases shall have the

following meanings:

     (1) "Adjusted gross fantasy contest receipts" means the amount equal to the total of all

entry fees that a fantasy contest operator collects from all participants less only the total of all prizes

paid out as prizes to all participants multiplied by the location percentage for this state.

     (2) “Applicant” means a fantasy contest operator that submits an application for licensure

under this chapter.

     (3) “Athlete” means professional or amateur competitors in real-world sports events or an

organized video game competition that is regulated by a governing body and that is held between

players who play individually or as teams.

     (4) "Department" means the department of business regulation.

     (5) "Entry fee" means a cash or cash equivalent that is paid by a participant in advance to

participate in a fantasy contest offered by a fantasy contest operator.

     (6) "Fantasy contest" means an online fantasy or simulated game or contest of skill with an

entry fee in which:

     (i) Multiple participants compete against each other;

     (ii) The values of all prizes offered to a winning participant are established and made

known to the participant in advance of the contest;

     (iii) All winning outcomes reflect the relative knowledge and skill of the participant;

     (iv) The participant assembles a fictional entry or roster of actual athletes;

     (v) A participant competes for prizes awarded by a fantasy contest operator based on terms

and conditions published by the fantasy contest operator and made known to the participant in

advance of the contest;

     (vi) Winning outcomes are determined solely by clearly established scoring criteria based

on one or more statistical results of the performance of an individual athlete including, but not

limited to, a fantasy score;

     (vii) No winning outcome is based on the score, point spread, or any performance of any

single actual team or combination of teams or solely on any single performance of an individual

athlete or player in any single actual event; and

     (viii) "Fantasy contest" does not include any fantasy contest without an entry fee.

     (7) "Fantasy contest operator" means a person or entity that offers fantasy contests to

members of the public. "Fantasy contest operator" does not include an Internet service provider or

a provider of mobile data services merely as a result of that entity's transporting general traffic that

may include a fantasy contest.

     (8) "Location percentage" means the percentage rounded to the nearest one-tenth of one

percent (0.1%) of the total entry fees collected from players located in this state, divided by the

total entry fees collected from all players in the fantasy contest.

     (9) "Participant" means an individual who participates in a fantasy contest offered by a

fantasy contest operator. “Participant” does not include a fantasy contest operator by virtue of

doing any combination of the following:

     (i) Setting house rules for a contest;

     (ii) Assigning a salary or target score to any eligible athlete or player;

     (iii) Accepting an entry fee from a fantasy contest participant; or

     (iv) Awarding or disbursing prizes in conformance with this chapter.

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     (10) “Prohibited participant” means an individual who has self-excluded under § 5-97-10

or an athlete, coach, referee, trainer, or team staff when the fantasy contest entry includes athlete

selections from sports events overseen by the same sports governing body which oversees the

athlete, coach, referee, trainer or team staff in question.

     (11) “Sporting event” means a real-world athletic event or an organized video game

competition or other event approved by the department that is regulated by a governing body and

that is held between athletes who play individually or as teams.

     (12) “Sports governing body” means the organization that prescribes final rules and

enforces codes of conduct with respect to a sporting event and athletes therein.

     5-97-3. Department duties and powers.

     (a) The department shall regulate the conduct of fantasy contest operators under this

chapter.

     (b) The department shall adopt any rules and regulations necessary for the successful

implementation, administration, and enforcement of this chapter. The department shall adopt rules

and regulations no later than one hundred eighty (180) days after the effective date of this chapter.

Rules and regulations proposed by the department may be adopted as emergency rules pursuant to

§ 42-35-2.10.

     (c) The department shall levy and collect all fees, surcharges, civil penalties, and taxes

imposed under § 5-97-9.

     (d) The department shall require fantasy contest operators to implement procedures to

prevent fraud, abuse, and money laundering.

     (e) The department shall verify that fantasy contest operators establish technical and

operational measures to prevent underage participation in a fantasy contest.

     (f) The department shall verify that fantasy contest operators deploy identity verification

procedures, which may require the use of a reputable independent third party that is in the business

of verifying an individual's personally identifiable information and can detect potential prohibited

participants.

     (g) The department shall verify that fantasy contest operators employ mechanisms on the

operator's platform that are designed to detect and prevent unauthorized accounts and to detect and

prevent fraud, money laundering, and collusion.

     (h) The department shall require the use of geolocation technology to verify that a

participant is not entering fantasy contests from a restricted jurisdiction.

     (i) The department shall adopt rules and regulations establishing compulsive and problem

gaming standards for fantasy contest operators that are consistent with this chapter.

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     (j) The department may exercise any other powers necessary to enforce the provisions of

this chapter.

     (k) The department and fantasy contest operator licensees shall cooperate with

investigations conducted by law enforcement agencies including, but not limited to, providing and

facilitating the provision of account-level entry and participation information.

     (l) A fantasy contest operator licensee shall make all reasonable efforts to promptly notify

the department of any information relating to:

     (1) A confirmed breach of the relevant sport's governing body's internal rules and codes of

conduct, if provided to the fantasy contest operator, pertaining to participation in real-money

fantasy contests;

     (2) Any conduct that corrupts any outcome related to a sports event or sports events for

purposes of financial gain, including match fixing; and

     (3) Confirmed illegal activities, including use of funds derived from illegal activity, entries

to conceal or launder funds derived from illegal activity, multi-accounting, and using false

identification.

     5-97-4. License.

     (a) Except as otherwise provided in this section, a person shall not offer fantasy contests in

this state unless the person is licensed by the department as a fantasy contest operator.

     (b) An applicant for a license issued under this chapter shall submit an application in the

form required by the department. The applicant shall submit fingerprints for a national criminal

history record check by a law enforcement agency. The fingerprints shall be furnished by the

applicant's owners, officers, and directors of a corporation, managers and members of a limited

liability company, and partners of a partnership. The fingerprints shall be accompanied by a signed

authorization for the release of information by the law enforcement agency. The department may

require additional background checks on licensees when they apply for license renewal, and an

applicant convicted of a disqualifying offense shall not be licensed. This subsection does not require

an applicant or individual who has submitted to a national criminal history record check in this state

or any other state within twelve (12) months before submitting the application to resubmit to

another criminal history record check if the applicant or individual submits the results of the

previous criminal history record check and affirms that there has been no material change in the

criminal history since the time of the criminal history record check.

     (c) The information required by the department shall include documentation of all of the

following:

     (1) The name of the applicant.

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     (2) The location of the applicant's principal place of business.

     (3) The applicant's contact information.

     (4) The applicant's social security number or, if applicable, the applicant's federal tax

identification number.

     (5) The name and address of each individual that holds a ten percent (10%) or more

ownership interest in the applicant or in shares of the applicant.

     (6) The applicant's criminal record, if any, or, if the applicant is a business entity, on

request, any criminal record of an individual who is a director, officer, or key employee of the

applicant or any individual who has a ten percent (10%) or more ownership interest in the applicant.

     (7) Any ownership interest that a director, officer, key employee, or individual owner of

ten percent (10%) or more of the applicant holds in a business that is or was a fantasy contest

operator or similar entity in any jurisdiction.

     (8) An identification of any business in which an applicant or a director, officer, key

employee, or individual owner of ten percent (10%) or more of the applicant has an equity interest

of five percent (5%) or more. If a business has been identified under this subsection, documentation

shall be provided showing the state in which the business is incorporated or registered, if applicable.

     (9) Whether an applicant, director, officer, key employee, or individual owner of ten

percent (10%) or more of the applicant has ever applied for or been granted any license, registration,

or certificate issued by a licensing authority in this state or any other jurisdiction for a gaming

activity.

     (10) Whether an applicant or a director, officer, key employee, or individual owner of ten

percent (10%) or more of the applicant has filed or been served with a complaint or other notice

filed by a public body regarding the delinquency in payment of or dispute over filings concerning

the payment of any tax required under federal, state, or local law, including the amount of tax, the

type of tax, the taxing agency and the time periods involved.

     (11) Information sufficient to show, as determined by the department, that the applicant

can meet the requirements of procedures submitted by the applicant and any rules and regulations

pursuant to this chapter.

     (d) The department may adopt rules and regulations to establish additional qualifications

and requirements to preserve the integrity and security of fantasy contests in this state and to

promote and maintain a competitive fantasy sports market.

     (e) Upon receipt of a completed application and required fee, the department shall conduct

the necessary background investigation to determine if the applicant meets the qualifications for

licensure. Upon completion of the necessary background investigation, the department shall either

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issue a license or deny the application. If the application for licensure is denied, a statement setting

forth the grounds for denial shall be forwarded to the applicant together with all other documents

relied on by the department, to the extent allowed by law.

     5-97-5. Fantasy contests.

     (a) Any fantasy contest does not constitute gambling for any purpose.

     (b) Notwithstanding any provision of law to the contrary, the operation of fantasy contests

is only lawful when conducted in accordance with the provisions of this chapter.

     (c) A person participating in a fantasy contest shall be at least eighteen (18) years of age.

     (d) A licensee may only accept an entry from a person physically located in the state. A

fantasy contest operator shall use a geolocation system to ensure that a participant is physically

present in the state when submitting a fantasy contest entry unless otherwise authorized by the

department.

     (e) This chapter shall be construed liberally to promote the general welfare of the public

and integrity of the fantasy sports industry. However, the department shall not adopt rules or

regulations limiting or regulating the rules or administration of an individual fantasy contest, the

statistical makeup of a fantasy contest, or the digital platform of a fantasy contest operator. Further,

the department shall not limit or restrict the types of fantasy contests allowed, by labelling any such

contests as sports wagering.

     (f) No licensed fantasy contest operator shall be forced to surrender or terminate its license

prior to the date of expiration of the license solely by virtue of an amendment to the rules adopted

by this chapter.

     5-97-6. Issuance and denial of license.

     (a) The initial license fee for a fantasy contest operator that operated in this state, before

the effective date of this chapter, shall be fifteen percent (15%) of its adjusted gross fantasy contest

receipts from the preceding calendar year or ten thousand dollars ($10,000), whichever is less. The

initial license fee for a fantasy contest operator that did not operate in this state for at least twelve

(12) months before the effective date of this chapter shall be five thousand dollars ($5,000);

provided that, such a fantasy sports contest operator shall remit a supplemental license fee of fifteen

percent (15%) of its adjusted gross fantasy sports contest receipts for the twelve (12) month period

beginning on the date of licensure less the initial license fee, or five thousand dollars ($5,000),

whichever is less.

     (b) A fantasy contest operator that was offering contests to persons located in this state

before the effective date of this chapter may continue to offer contests to persons located in this

state until the fantasy contest operator's application for licensure has been approved or denied if the

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fantasy contest operator files an application for licensure with the department within ninety (90)

days after the adoption of the rules and regulations promulgated pursuant to and under the

provisions of this chapter.

     (c) Licenses issued by the department shall remain in effect for four (4) years. The

department shall establish a process for renewal with a renewal fee being one percent (1%) of the

adjusted gross fantasy contests receipts for the preceding four (4) years.

     (d) A fantasy contest operator that allows its license to lapse, without requesting an

extension of time to file, shall resubmit an initial application. An extension may be granted by the

department upon receipt of a written request.

     (e) A fantasy contest operator applying for a license or renewal of a license may operate

during the application period unless the department has reasonable cause to believe that the fantasy

contest operator is or may be in violation of the provisions of this chapter and the department

requires the fantasy contest operator to suspend the operation of any fantasy contest until the license

or renewal of a license is issued.

     5-97-7. Independent audits.

     (a) As part of its submission for licensure or renewal, an applicant shall:

     (1) Contract with a certified public accountant to conduct an independent audit, consistent

with generally accepted accounting principles;

     (2) Annually contract with a certified public accountant, or another professional service

provider, recognized by the department to verify compliance with the provisions of this chapter;

and

     (3) Submit to the department a copy of the audit report and a copy of the compliance report

of the certified public accountant or professional service provider.

     (b) An initial applicant is not required to submit an audit report until the twenty-four (24)

months following the issuance of a license to the licensee.

     5-97-8. Reporting prohibited conduct -- Investigations of prohibited conduct.

     (a) The department shall investigate all reasonable allegations of prohibited conduct and

refer any allegations it deems credible to the appropriate law enforcement entity.

     (b) The identity of any reporting person shall remain confidential unless that person

authorizes disclosure of the person's identity or until the allegation of prohibited conduct is referred

to law enforcement.

     (c) If the department receives a complaint of prohibited conduct by an athlete, the

department shall notify the appropriate sports governing body of the athlete to review the complaint

as provided by rule and regulation of the department.

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     (d) The department shall adopt rules and regulation's governing investigations of prohibited

conduct and referrals to law enforcement entities.

     5-97-9. Imposition of tax.

     For the fiscal year beginning on July 1, 2025, for the privilege of holding a license to

operate fantasy contests, the state shall impose and collect a tax at a rate of ten percent (10%) of

the fantasy contest operator's adjusted gross fantasy contests receipts. The accrual method of

accounting shall be used for purposes of calculating the amount of the tax owed by the licensee.

The fantasy contest operator shall submit to the department, on or before the last day of each

calendar month, a return indicating the amount of tax due for the previous calendar month as well

as any other information the department shall require and shall remit to the department payment of

the tax due with the return.

     5-97-10. Compulsive gaming -- Voluntary self-exclusion.

     (a) Each licensee shall include a statement regarding obtaining assistance with real-money

gaming problems on the licensee's portal, website, computer or mobile application and on all

marketing materials and advertisements of the licensee.

     (b) A resident, or nonresident if allowed to participate in fantasy contests, may voluntarily

prohibit themselves from establishing a fantasy contest account with a fantasy contest operator.

The department shall incorporate the voluntary self-exclusion program for fantasy contests into any

existing self-exclusion program that it operates on the effective date of this chapter.

     (c) If a self-excluded person participates in a fantasy contest, the fantasy contest operator

shall report to the department, at a minimum, the name of the self-excluded person, the date of

participation, the amount or value of any money, prizes, or awards forfeited, if any, and any other

action taken.

     (d) A fantasy contest operator may not pay any prize or award to a person who is on the

department's self-exclusion list. Any prize or award won by a person on the self-exclusion list is

forfeited and shall be donated by the fantasy contest operator to the problem gaming charities or

programs as identified and directed by the department on a quarterly basis by the twenty-fifth day

of the following month.

     (e) A fantasy contest operator shall develop and maintain a program to mitigate compulsive

play and curtail compulsive play, which may be in conjunction with the department.

     SECTION 2. This act shall take effect upon passage.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO BUSINESSES AND PROFESSIONS -- FANTASY SPORTS CONSUMER

PROTECTION ACT

***

     This act would empower the department of business regulation (DBR) to license and

regulate fantasy contest operators conducting fantasy sports contests limited to participants located

within the state. This act would also levy a ten percent (10%) tax on their adjusted gross receipts.

     This act would take effect upon passage.

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