New Jersey § 5:20-2

§ 5:20-2.

a. As used in this section: “ entry fee ” means cash or a cash equivalent that is paid by a participant to a fantasy sports

operator to participate in a fantasy sports activity offered by that operator, but

shall not include a fee paid to an operator that does not offer a prize; “ fantasy sports activity ” or “ fantasy sports activities ” means any fantasy or simulated activity or contest with an entry fee in which a

participant owns or manages an imaginary team and competes against other participants

or a target score for a predetermined prize with the outcome reflecting the relative

skill of the participants and determined by statistics generated based on performance

by actual individuals participating in actual competitions or athletic events, provided

that the outcome shall not be based solely on the performance of an individual athlete,

or on the score, point spread, or any performance of any single real team or combination

of real teams; “fantasy sports activity” shall not include any activity in which

no entry fee is paid to the fantasy sports operator or in which a prize is not collected,

managed, or awarded by the operator; “ fantasy sports gross revenue ” means, for each fantasy sports activity, the amount equal to the total of all entry

fees that a fantasy sports 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; “ fantasy sports operator ” or “ operator ” means a business entity, including a casino licensee or the holder of a permit to

conduct a horse race meeting, that has been issued a permit by the Division of Consumer

Affairs in the Department of Law and Public Safety to offer persons the opportunity

to participate in a fantasy sports activity; “ location percentage ” means, for each authorized fantasy sports activity, the percentage rounded to the

nearest 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 sports activity; and “ prohibited participant ” means an individual who has access to non-public confidential information about

fantasy sports activities, any athlete whose performance may be used to determine

the outcome of a fantasy sports activity in the sport with which the athlete is associated,

any team employee, referee, or league official in a fantasy sports activity in the

sport with which that person is associated, and any sports agent associated with any

sport used for fantasy sports activities. b. The Division of Consumer Affairs in the Department of Law and Public Safety shall

be responsible for the regulation of fantasy sports activities in this State. A fantasy sports operator applicant seeking to conduct fantasy sports activities in

this State shall apply to the division for a permit to conduct such activities on

such forms and in such manner as the division shall require. The division shall promptly investigate each application, and shall oversee the

conduct of activities. The division shall charge a permit fee to each fantasy sports operator applicant

that applies for a permit in an amount sufficient to cover the division's cost in

issuing fantasy sports permits and overseeing the conduct of such activities, which

permit fee shall be in addition to the quarterly operations fee required pursuant

to subsection g. of this section. The division shall have the authority to inspect the facilities of fantasy sports

operators in order to ensure the integrity of fantasy sports activities. The division shall allow a fantasy sports operator applicant operating fantasy sports

activities on the date of enactment of this act, P.L.2017, c. 231 ( C.5:20-1 et seq. ), to continue to legally operate for up to 60 days after applications for permits

are made available to the public by the division. Operator applicants who have applied for a permit during that 60-day period may

continue to operate while the application is pending. A provider of fantasy sports activities that has not applied for a permit shall

cease operations in this State by the expiration of the 60-day period. A fantasy sports operator applicant that is not operating fantasy sports activities

in this State on the effective date of this act shall be prohibited from operating

fantasy sports activities pending approval of the applicant's application for a permit. Upon the granting of a permit, a fantasy sports operator may continue to operate fantasy

sports activities pending the renewal of the operator's permit, provided that the

operator has applied for the renewal in a timely manner. c. (1) With respect to a fantasy sports operator that is a casino, all equipment used

by the holder of the permit, including computers and servers, to conduct fantasy sports

activities shall be physically located within the boundaries of the municipality specified

in section 20 of P.L. 2013, c. 27 ( C.5:12-95.22 ) for the location of Internet gambling equipment. (2) With respect to a fantasy sports operator that is not a casino, at least one server

used to conduct fantasy sports activities shall be physically located within the boundaries

of the municipality specified in section 20 of P.L. 2013, c. 27 ( C.5:12-95.22 ) on or before January 1, 2018. d. The division shall regulate the conduct of fantasy sports activities by fantasy

sports operators that have been issued a permit by the division to conduct fantasy

sports activities. e. The division shall permit a fantasy sports operator to conduct fantasy sports activities

subject to the following conditions: the outcome of fantasy sports activities shall be determined by statistics generated

based on the performance of actual individuals participating in real competitions

or athletic events; all prizes offered to participants shall be established and disclosed in advance to

all participants; the outcome shall not be based solely on the performance of an individual athlete,

or on the score, point spread, or any performance of a single real team or combination

of real teams; a fantasy sports operator may permit participants to use a mobile account or a participant

deposit account; a casino licensee or licensed racetrack may use its facilities to accept entry fees

and to pay prizes; a casino licensee may partner with, or enter into a contract with, one or more fantasy

sports operators to offer fantasy sports activities, notwithstanding the provisions

of section 104 of P.L.1977, c. 110 ( C.5:12-104 ); and a participant in a fantasy sports activity shall be at least 18 years of age. f. A fantasy sports operator shall: use commercially reasonable practices to prohibit the sharing of statistical information

with third parties that could affect a fantasy sports activity until that information

is publicly available; adopt procedures to ensure that any prohibited participant does not participate in

fantasy sports activities; adopt procedures to ensure that a fantasy sports participant is at least 18 years

of age; offer individuals the ability to restrict themselves from participating in fantasy

sports activities and take reasonable steps to prevent any such individual from participating

in fantasy sports activities; prohibit fantasy sports activities based upon high school athletics; contract with a certified public accountant to perform a financial audit of the operator

to ensure compliance with the provisions of this section and submit the accountant's

report to the division on an annual basis; disclose the number of entries a participant may submit to each fantasy sports activity

and take reasonable steps to prevent a participant from exceeding that number; and segregate participants' funds from operational funds or maintain a reserve in cash, cash equivalents, payment processor reserves and receivables , an irrevocable letter of credit, a bond, or a combination thereof in the amount of

the deposits in participants' accounts for the benefit and protection of participants'

funds held in fantasy sports activity accounts. g. A fantasy sports operator shall pay, on a quarterly basis, to the division for

deposit into the general fund of the State, an operations fee in an amount equal to

10.5 percent of fantasy sports gross revenue for each quarter. The administration of the operations fee, including but not limited to the form,

method, and manner of the assessment, collection, and enforcement thereof, shall be

as determined by the division pursuant to regulations that, notwithstanding any provisions

of the “Administrative Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ), may be adopted by the division immediately upon filing with the Office of Administrative

Law the regulations as the division deems necessary to implement this subsection,

which regulations shall be effective for a period not to exceed 360 days following

the date of enactment of P.L.2017, c. 231 and may thereafter be amended, adopted, or readopted by the division in accordance

with the “Administrative Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ). With respect to a fantasy sports operator that is a casino, an entry fee, management

fee, or other revenue generated from a fantasy sports activity shall not be considered

“gross revenue” as defined in section 24 of P.L.1977, c. 110 ( C.5:12-24 ) or “Internet gaming gross revenue” as defined in section 6 of P.L.2013, c. 27 ( C.5:12-28.2 ), and no investment alternative tax provided for by any other provision of law shall

apply to fantasy sports operators. h. (1) Any person who provides fantasy sports activities without approval of the division

shall be subject to a fine of not more than $25,000 and, in the case of a person other

than a natural person, to a fine of not more than $100,000. (2) Any person who knowingly tampers with software, computers, or other equipment

used to conduct fantasy sports activities to alter the payout of an activity or disables

the activity from operating according to the rules of the activity as promulgated

by the division shall be subject to a fine of not more than $50,000 and, in the case

of a person other than a natural person, to a fine of not more than $200,000. (3) Any person who knowingly offers or allows to be offered any fantasy sports activity

that has been tampered with in a way that affects the payout of an activity or disables

the activity from operating according to the rules of the activity as promulgated

by the division shall be subject to a fine of not more than $50,000 and, in the case

of a person other than a natural person, to a fine of not more than $200,000. (4) Any person who violates any provision of this section shall be subject to a fine

of not more than $25,000 and, in the case of a person other than a natural person,

to a fine of not more than $100,000, and to injunctive relief to prevent future violations

of this section. (5) Notwithstanding the penalties provided for in this subsection, the division shall,

in accordance with the “Administrative Procedure Act,” P.L.1968, c. 410 ( C.52:14B-1 et seq. ), adopt and promulgate such rules and regulations as may be necessary to address

additional violations of this section. The division shall also have the authority to disqualify an operator either by allowing

the operator to voluntarily withdraw from the operation of fantasy sports activities,

or by suspending the operations of the operator, or by revoking the permit to conduct

such operations. (6) The fines provided by this subsection shall be in addition to any fine or penalty

that may be imposed pursuant to any criminal law of this State. i. Fantasy sports activities shall be conducted in New Jersey only in accordance with

the provisions of this section.