Daily Fantasy Sports (DFS) legislations have been sweeping the USA throughout the course of 2016. During the twelve months of last year, eight states managed to pass new laws legalising and regulating DFS. This time, early on in 2017, a gaming bill has surfaced in the state of Florida. The gambling bill will be looking at a massive expansion of gambling in the state. The language of the bill includes sections for the legalisation and regulation of DFS as well. The legislation also includes the state’s latest attempt at a gambling compact with the Seminole Tribe.
Florida Gaming Bill: SB 8- The Comprehensive Gaming Legislation
The Senate Gambling Bill, SB 8- The Comprehensive Gaming Legislation, was introduced by State Senator Bill Galvano on the 12th of January 2017. The bill looks in detail at four sectors of gambling in the state.
Point of Sale Terminals
Firstly, the bill takes a closer look at the sale of lottery tickets in Florida. In the bill, the term “point of sale terminal” is newly defined as “another type of vending machine for the sale of lottery tickets at retail locations.”
According to the bill, point of sale terminals will only dispense paper lottery tickets. Players will be allowed to choose their own numbers or use a machine to generate the numbers at random. However, these machines must not be designed to “reveal the winning numbers” or use mechanical reels. These machines will not be allowed to promote any commercial casino game or slot machine themes or titles either. Player will not be able to “redeem winning tickets” using the machines.
Under the act, lottery tickets may be purchased using debit cards, credit cards or similar charge cards but only by individuals who are at least 18 years old with valid documentation as proof of age. While the lottery machines that are currently in use only vend lottery tickets. The new points of sale terminals will also be used for the sale of other retail goods and services. They will have to, however, “limit the dollar amount of lottery tickets purchased” and “create a process to enable a customer to restrict or prevent his or her own access to lottery tickets or games.” Finally, they must also ensure that the program does not breach and Indian gaming compact provisions.
Seminole Tribe of Florida Gaming Compact
Secondly, the bill looks into the tribal compact between the state of Florida and the Seminole Tribe of Florida. The Seminole Tribe of Florida is a federally recognised tribe based in the state of Florida. It is one of three federally recognised Seminole entities. They received that status in 1957 and today have six Indian Reservations within the state boundaries. Their first gaming endeavour was launched in 1975. This has since helped generate significant revenues for education, welfare and economic development of the people.
If this act becomes law, the gaming compact between the Seminole Tribe of Florida and the State must also be amended to become effective as a tribal compact. It would “require that the current litigation between the State and the Tribe be dismissed with prejudice.” The bill also declared that state laws will have to incorporate amendments related to fantasy games, slot machines, blackjack, designated player games, point of sale terminals or any activities that are in violations of the 2010 gaming compact. On top of that, the bill looks to amend certain laws surrounding the tribal compact. Under the new law, the tribe will be allowed to offer dice games and wheel games all of their facilities.
Thirdly, the bill addressed certain issues surrounding fantasy contests in Florida. Legislators are looking to correct a federal statutory reference of “Fantasy Contests” and create the “Fantasy Contest Amusement Act.” They will also address consumer protection issues in the area. Under the act, fantasy contests will be defined as a game of skill and not one of chance. As a game of skill, all winning outcomes will have to reflect the player’s relative knowledge and skill.
The bill stated that a distinction is to be made between commercial and non- commercial fantasy contests. Non- commercial ventured will be excused from most of the associated fees and taxes. It is also clearly stated in the bill that the value of all prizes and awards for fantasy contests will have to be established and disclosed in advance of the game and cannot be determined by participation rates.
An Office of Amusements will be created under the Department of Business and Professional Regulation. All operators looking to offer fantasy contests in Florida will be required to obtain a license from them. Initial license application fees have been outlined in the bill at USD 500,000 apiece. Under the act, the operators will also be required to renew their permits every year for a fee of USD 100,000. Lower fees will be charged to smaller operators. Their fees will not exceed 10 per cent of the total entry fees they collect less the amounts paid to participants as prizes.
The Office’s duties will include administering and enforcing the act and any associated laws. They must ensure every license application is dealt within a maximum of 3 months. It will also be the Office’s responsibility to verify the moral standing of their applicants. Every contest operator will have to to provide evidence of a surety bond in the amount of USD 1 million to the state. This will be put aside to ensure customer payment protection. The operators will also have to carry out an independent audit of their firms by a third party every year. They will be required to maintain specified books and records and file quarterly reports with the Office of Amusements.
The Office will also be responsible for issuing penalties to companies who are in violation of related laws. If the bill passes into law, contest operators, their employees or agents of the companies will be subject to a maximum civil penalty of USD 5,000 for each of their violations. They would be allowed to charge a maximum of USD 100,000 in aggregated penalties to each company at a time.
Pari- Mutual Betting Issues
Finally, we note that a large section of the bill summery focuses on resolving and updating certain pari- mutual issues for track owners and permit holders.
Statement by Bill Sponsor
A statement was filed by the sponsor of the bill, Senator Galvano, on the 12th of January 2017 as well. He said in the statement that SB 8 takes a look at issues the Senate has been discussing for many years. He said, “This legislation in large part builds upon Senate work that has taken place over the last several years. My goal has been to address all aspects of gaming in a comprehensive manner that balances the interests of an industry that has contributed to Florida’s economy for nearly a hundred years, our ongoing revenue- sharing agreement with the Seminole Tribe of Florida, and the authority of local voters, while maximising revenues to the state.” Galvano further mentioned that the bill looks to revise and modernise several outdated laws.
He said, “The modifications within the bill represent a myriad of ideas advocated by various Senators and address industry concerns regarding antiquated and ambiguous provisions of current law. The bill balances the will of the voters who have authorised additional games and locations with a retraction of gaming permits across the state.” He noted that while this piece of legislation represented an important step for the state of Florida, it will require further consultation with the relevant parties before it is finalised.
Galvano concluded by saying, “Further negotiations to reach a new agreement with the Seminole Tribe of Florida are necessary. While this legislation represents an important step, there is still a great deal of work to be done. I look forward to discussing the bill further during the upcoming Senate committee meeting and continuing to work with Governor Scott, our colleagues in the Florida House, the Seminole Tribe, industry stakeholders and constituents across the state in the weeks to come.” While the provisions for fantasy sports have been mentioned several times in the bill itself, the senator did not specifically address the subject in his statement.
DFS in Florida
It is interesting to note that Senate Bill, SB 8, is the second piece of legislation, looking to regulate DFS, to surface this month in Florida. Another bill, House Bill, HB 149- An Act Relating to Fantasy Contests and Fantasy Contest Operators, was introduced on the 4th of January 2017. This other bill does not offer any licensing requirements or fees for the industry but outlines many of the same regulatory objectives as the Senate Bill.
The legislature in Florida has been keen to legalese and regulate DFS in the state. Their attempts have been strong throughout the last couple of years. Previously, starting in 2015, the state Senator Joe Negron and state Representative Matt Gaetz had spearheaded an effort but a bill was never enacted. It is not clear if a standalone bill for DFS will also emerge soon. DFS language appeared on its own and in the same legislative vehicle as the Seminole gaming compact, at different points in 2016. In 2017, Florida will likely be one of the states the DFS industry focuses on. The new bills signal the start of that effort.