S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 6913--A

                            I N  S E N A T E

                             March 28, 2014
                               ___________

Introduced  by  Sens. BONACIC, LARKIN -- read twice and ordered printed,
  and when printed to be committed to the Committee  on  Racing,  Gaming
  and  Wagering -- committee discharged, bill amended, ordered reprinted
  as amended and recommitted to said committee

AN ACT to amend the racing, pari-mutuel wagering and  breeding  law  and
  the penal law, in relation to allowing certain interactive poker games

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. The racing,  pari-mutuel  wagering  and  breeding  law,  is
amended by adding a new article 14 to read as follows:
                               ARTICLE 14
                           INTERACTIVE GAMING
SECTION 1400. LEGISLATIVE FINDINGS AND PURPOSE.
        1401. DEFINITIONS.
        1402. AUTHORIZATION.
        1403. REQUIRED SAFEGUARDS/MINIMUM STANDARDS.
        1404. SCOPE OF LICENSING REVIEW.
        1405. STATE TAX.
  S 1400. LEGISLATIVE FINDINGS AND PURPOSE. THE LEGISLATURE HEREBY FINDS
AND  DECLARES  THAT: 1. UNDER THE NEW YORK PENAL LAW A PERSON ENGAGES IN
GAMBLING WHEN HE OR SHE STAKES OR RISKS  SOMETHING  OF  VALUE  UPON  THE
OUTCOME  OF  A  CONTEST OF CHANCE OR A FUTURE CONTINGENT EVENT NOT UNDER
HIS OR HER CONTROL OR INFLUENCE, UPON AN AGREEMENT OR UNDERSTANDING THAT
HE OR SHE WILL RECEIVE SOMETHING OF VALUE IN  THE  EVENT  OF  A  CERTAIN
OUTCOME.
  2.  A CONTEST OF CHANCE IS DEFINED AS ANY CONTEST, GAME, GAMING SCHEME
OR GAMING DEVICE IN WHICH THE OUTCOME DEPENDS IN A MATERIAL DEGREE  UPON
AN  ELEMENT OF CHANCE, NOTWITHSTANDING THAT SKILL OF THE CONTESTANTS MAY
ALSO BE A FACTOR THEREIN. (SUBDIVISION 1 OF SECTION 225.00 OF THE  PENAL
LAW).  THUS,  GAMES OF CHANCE MAY INVOLVE SOME SKILL, BUT IN THOSE GAMES
THE LEVEL OF SKILL DOES NOT DETERMINE  THE  OUTCOME  REGARDLESS  OF  THE
DEGREE  OF  SKILL EMPLOYED. SEE PEOPLE V. TURNER, 165 MISC. 2D 222, 224,
629 N.Y.S.2D 661, 662 (CRIM. CT. 1995).  ON  THE  OTHER  HAND,  WHERE  A
CONTEST  PITS  THE  SKILL  LEVELS OF THE PLAYERS AGAINST EACH OTHER, NEW

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
              

                                                           LBD14301-02-4

S. 6913--A                          2

YORK COURTS HAVE FOUND A GAME TO BE ONE OF SKILL RATHER THAN CHANCE. SEE
PEOPLE V. HUNT, 162 MISC. 2D 70, 72, 616 N.Y.S.2D 168,  170  (CRIM.  CT.
1994)  ("PLAYED  FAIRLY, SKILL RATHER THAN CHANCE IS THE MATERIAL COMPO-
NENT OF THREE-CARD MONTE.");
  3.  POKER  IN MANY INSTANCES HAS BEEN DEFINED AS A GAME OF SKILL AND A
NEW YORK FEDERAL COURT IN U.S. V. DICRISTINA, 886 F. SUPP. 2D 164,  224,
ASSESSED THAT UNDER FEDERAL LAW POKER WAS PREDOMINANTLY A GAME OF SKILL;
  4.  NEW  YORK  COURTS  HAVE  INTERPRETED  NEW YORK LAW TO APPLY A MORE
RIGOROUS TEST IN IDENTIFYING A "CONTEST OF CHANCE" THAN  IS  APPLIED  BY
MOST  STATES  IN  THIS  NATION  AND  THE  COURTS HAVE FOUND THAT WHERE A
CONTEST PITS THE SKILL LEVELS OF THE PLAYERS AGAINST EACH  OTHER,  THOSE
GAMES  ARE  GAMES  OF  SKILL  AND  NOT GAMES OF CHANCE. FURTHERMORE, THE
COURTS HAVE NOT LIMITED THE  LEGISLATURE'S  ABILITY  TO  DETERMINE  THAT
CERTAIN  FORMS  OF  POKER  SHOULD FALL OUTSIDE THE GENERAL DEFINITION OF
GAMBLING SINCE THOSE GAMES ARE GAMES OF SKILL;
  5. TEXAS HOLD'EM POKER INVOLVES TWO CARDS  DEALT  FACE  DOWN  TO  EACH
PLAYER  AND  THEN  FIVE  COMMUNITY CARDS PLACED FACE-UP BY THE DEALER, A
SERIES OF THREE, THEN TWO ADDITIONAL SINGLE CARDS, WITH  PLAYERS  DETER-
MINING  WHETHER  TO  CHECK,  BET,  RAISE  OR FOLD AFTER EACH DEAL. OMAHA
HOLD'EM POKER IS A SIMILAR GAME, IN WHICH  EACH  PLAYER  IS  DEALT  FOUR
CARDS  AND  MAKES  HIS  OR HER BEST HAND USING EXACTLY TWO OF THEM, PLUS
EXACTLY THREE OF THE FIVE COMMUNITY CARDS. THESE GAMES ARE CONSIDERED TO
BE  COMPLEX  FORMS  OF  POKER  WHICH   INVOLVE   PLAYER   STRATEGY   AND
DECISION-MAKING  AND  WHICH  PIT THE SKILL LEVELS OF THE PLAYERS AGAINST
EACH OTHER. AS GAMES OF SKILL, THESE FORMS OF POKER DO  NOT  FALL  UNDER
THE DEFINITION OF GAMBLING AS PROHIBITED BY THE PENAL LAW;
  6.  THE  LEGISLATURE  FURTHER FINDS THAT AS THE INTERNET HAS BECOME AN
INTEGRAL PART OF SOCIETY, AND INTERNET POKER  A  MAJOR  FORM  OF  ENTER-
TAINMENT  FOR  MANY  CONSUMERS,  ANY  INTERACTIVE GAMING ENFORCEMENT AND
REGULATORY STRUCTURE MUST BEGIN FROM THE BEDROCK  PREMISE  THAT  PARTIC-
IPATION  IN A LAWFUL AND LICENSED GAMING INDUSTRY IS A PRIVILEGE AND NOT
A RIGHT, AND THAT REGULATORY OVERSIGHT  IS  INTENDED  TO  SAFEGUARD  THE
INTEGRITY OF THE GAMES AND PARTICIPANTS AND TO ENSURE ACCOUNTABILITY AND
THE PUBLIC TRUST; AND
  7.  WITH THE PASSAGE OF THE UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT
OF 2006, ISSUES CONCERNING THE SCOPE AND INTERPRETATION  OF  STATE  LAW,
INCLUDING THE IMPORTANCE OF THE LOCATION OF THE WAGER, WAGERING ACTIVITY
AND  WEBSITE,  WERE  CLARIFIED.  THOSE  PERSONS  THAT  PROVIDED GOODS OR
SERVICES RELATED TO INTERNET GAMBLING INVOLVING NEW YORK CITIZENS  PRIOR
TO  THE  ENACTMENT OF THAT STATUTE, INCLUDING, AT THE TIME, POKER, WHICH
WAS UNTIL THE ADOPTION OF THIS ACT UNLAWFUL,  BUT  EXITED  IN  AN  EXPE-
DITIOUS  FASHION AFTER ITS ENACTMENT SHOULD BE REGARDED DIFFERENTLY FROM
THOSE THAT CONTINUED TO FLOUT U.S. FEDERAL AND NEW YORK  LAW  THEREAFTER
FOR  PURPOSES OF SUITABILITY FOR LICENSING UNDER THIS ARTICLE.  GRANTING
THOSE PERSONS LICENSING PRIVILEGES OR ALLOWING THE USE OF THE ASSETS  OF
SUCH  PERSONS  IN  CONNECTION  WITH INTERACTIVE GAMING IN THIS STATE, IF
THOSE ASSETS WERE USED UNLAWFULLY, WOULD REWARD UNLAWFUL  GAMING  ACTIV-
ITY,  WOULD  PERMIT  MANIFESTLY  UNSUITABLE PERSONS TO PROFIT FROM THEIR
UNLAWFUL GAMING ACTIVITY AND WOULD CREATE UNFAIR COMPETITION WITH LICEN-
SEES THAT RESPECTED FEDERAL AND STATE LAW.
  S 1401. DEFINITIONS. AS USED IN  THIS  ARTICLE,  THE  FOLLOWING  TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
  1.  "AUTHORIZED  GAME" MEANS OMAHA HOLD'EM AND TEXAS HOLD'EM POKER, AS
WELL AS ANY OTHER POKER GAME THAT THE COMMISSION DETERMINES IS THE MATE-
RIAL EQUIVALENT OF EITHER OF THOSE, WHETHER IN A CASH  GAME  OR  TOURNA-
MENT.

S. 6913--A                          3

  2.  "AUTHORIZED  PARTICIPANTS" MEANS PERSONS WHO ARE EITHER PHYSICALLY
PRESENT IN THIS STATE WHEN PLACING A WAGER OR WHO OTHERWISE ARE  PERMIT-
TED  BY  APPLICABLE  LAW,  AS  DETERMINED  BY THE COMMISSION, TO PLACE A
WAGER. THE INTERMEDIATE ROUTING OF ELECTRONIC DATA  IN  CONNECTION  WITH
INTERACTIVE  GAMING  SHALL  NOT  DETERMINE  THE LOCATION OR LOCATIONS IN
WHICH A WAGER IS INITIATED, RECEIVED OR OTHERWISE MADE.
  3. "CORE FUNCTION" MEANS ANY OF THE  FOLLOWING:  (A)  THE  MANAGEMENT,
ADMINISTRATION  OR  CONTROL  OF  WAGERS  ON  INTERACTIVE GAMING; (B) THE
MANAGEMENT, ADMINISTRATION OR CONTROL OF  THE  GAMES  WITH  WHICH  THOSE
WAGERS ARE ASSOCIATED; OR (C) THE DEVELOPMENT, MAINTENANCE, PROVISION OR
OPERATION OF AN INTERACTIVE GAMING PLATFORM.
  4.  "COVERED  ASSET" MEANS ANY OF THE FOLLOWING CATEGORIES OF ASSET IF
USED IN CONNECTION WITH THE KNOWING AND WILLFUL ACCEPTANCE OF ANY  WAGER
FROM  PERSONS  LOCATED  IN  THE UNITED STATES OF ANY FORM OF INTERACTIVE
GAMING (INCLUDING BUT NOT LIMITED TO POKER) AFTER DECEMBER THIRTY-FIRST,
TWO THOUSAND SIX, THAT HAS NOT BEEN AFFIRMATIVELY AUTHORIZED BY  LAW  OF
THE  UNITED  STATES  OR OF EACH STATE IN WHICH PERSONS MAKING SUCH WAGER
WERE LOCATED:  (A) ANY TRADEMARK, TRADE NAME, SERVICE  MARK  OR  SIMILAR
INTELLECTUAL PROPERTY THAT WAS USED TO IDENTIFY ANY ASPECT OF THE INTER-
NET  WEBSITE  OR  OF  THE  OPERATOR  OFFERING THE WAGERS OR GAMES TO ITS
PATRONS; (B) ANY DATABASE OR CUSTOMER LIST OF  INDIVIDUALS  RESIDING  IN
THE  UNITED STATES WHO PLACED SUCH WAGERS; (C) ANY DERIVATIVE OF A DATA-
BASE OR CUSTOMER LIST DESCRIBED IN PARAGRAPH (B) OF THIS SUBDIVISION; OR
(D) AN ASSET USED TO PROVIDE A CORE FUNCTION.
  5. "COMMISSION" MEANS THE NEW YORK STATE GAMING COMMISSION.
  6. "DIVISION" MEANS THE DIVISION OF GAMING,  ESTABLISHED  UNDER  PARA-
GRAPH  (C) OF SUBDIVISION TWO OF SECTION ONE HUNDRED THREE OF THIS CHAP-
TER.
  7. "INTERACTIVE GAMING" MEANS THE CONDUCT OF GAMES THROUGH THE USE  OF
THE  INTERNET  OR  OTHER COMMUNICATIONS TECHNOLOGY THAT ALLOWS A PERSON,
UTILIZING MONEY, CHECKS,  ELECTRONIC  CHECKS,  ELECTRONIC  TRANSFERS  OF
MONEY, CREDIT CARDS, DEBIT CARDS OR ANY OTHER INSTRUMENTALITY, TO TRANS-
MIT  TO  A  COMPUTER INFORMATION TO ASSIST IN THE PLACING OF A WAGER AND
CORRESPONDING INFORMATION RELATED TO  THE  DISPLAY  OF  THE  GAME,  GAME
OUTCOMES  OR  OTHER  SIMILAR  INFORMATION. THE TERM DOES NOT INCLUDE THE
CONDUCT OF (A) NON-GAMBLING  GAMES  THAT  DO  NOT  OTHERWISE  REQUIRE  A
LICENSE  UNDER  STATE  OR  FEDERAL LAW; OR (B) GAMES THAT OCCUR ENTIRELY
AMONG PARTICIPANTS WHO ARE LOCATED ON A LICENSED  CASINO  PREMISES.  FOR
PURPOSES OF THIS PROVISION, "COMMUNICATIONS TECHNOLOGY" MEANS ANY METHOD
USED  AND  THE COMPONENTS EMPLOYED BY AN ESTABLISHMENT TO FACILITATE THE
TRANSMISSION OF INFORMATION, INCLUDING, WITHOUT LIMITATION, TRANSMISSION
AND RECEPTION BY SYSTEMS BASED ON WIRE, CABLE, RADIO, MICROWAVE,  LIGHT,
OPTICS  OR  COMPUTER  DATA  NETWORKS, INCLUDING, WITHOUT LIMITATION, THE
INTERNET AND INTRANETS.
  8. "INTERACTIVE GAMING GROSS REVENUE" MEANS THE TOTAL OF ALL SUMS PAID
TO A LICENSEE FROM INTERACTIVE GAMING INVOLVING AUTHORIZED PARTICIPANTS,
LESS ONLY THE TOTAL OF ALL SUMS PAID OUT  AS  WINNINGS  TO  PATRONS  AND
PROMOTIONAL  GAMING CREDITS; PROVIDED, HOWEVER, THAT THE CASH EQUIVALENT
VALUE OF ANY MERCHANDISE OR OTHER NON-CASH THING OF VALUE INCLUDED IN  A
CONTEST  OR  TOURNAMENT  SHALL  NOT BE INCLUDED IN THE TOTAL OF ALL SUMS
PAID OUT AS WINNINGS TO PLAYERS FOR PURPOSES OF DETERMINING  INTERACTIVE
GAMING GROSS REVENUE.
  (A) NEITHER AMOUNTS DEPOSITED WITH A LICENSEE FOR PURPOSES OF INTERAC-
TIVE  GAMING  NOR AMOUNTS TAKEN IN FRAUDULENT ACTS PERPETRATED AGAINST A
LICENSEE FOR WHICH THE LICENSEE IS NOT REIMBURSED SHALL BE CONSIDERED TO

S. 6913--A                          4

HAVE BEEN "PAID" TO THE LICENSEE FOR PURPOSES OF CALCULATING INTERACTIVE
GAMING GROSS REVENUE.
  (B)  "PROMOTIONAL  GAMING CREDIT" INCLUDES BONUSES, PROMOTIONS AND ANY
AMOUNT RECEIVED BY A LICENSEE FROM A PATRON FOR WHICH THE  LICENSEE  CAN
DEMONSTRATE THAT IT OR ITS AFFILIATE HAS NOT RECEIVED CASH.
  9.  "INTERACTIVE  GAMING  PLATFORM" MEANS THE COMBINATION OF HARDWARE,
SOFTWARE AND DATA NETWORKS USED TO MANAGE, ADMINISTER OR CONTROL  WAGERS
ON  INTERACTIVE  GAMING OR THE GAMES WITH WHICH THOSE WAGERS ARE ASSOCI-
ATED.
  10.   "INTERNET"   MEANS   A   COMPUTER   NETWORK   OF   INTEROPERABLE
PACKET-SWITCHED DATA NETWORKS.
  11.  "LICENSEE"  MEANS  A  PERSON WHO IS LICENSED BY THE COMMISSION TO
OFFER INTERACTIVE  GAMING,  USING  AN  INTERACTIVE  GAMING  PLATFORM  TO
AUTHORIZED  PARTICIPANTS.  A  LICENSEE  MAY UTILIZE MULTIPLE INTERACTIVE
GAMING PLATFORMS PROVIDED THAT EACH PLATFORM IS APPROVED BY THE  COMMIS-
SION.
  12.  "OMAHA  HOLD'EM  POKER"  MEANS  THE  POKER GAME MARKETED AS OMAHA
HOLD'EM POKER OR OMAHA POKER IN WHICH EACH PLAYER IS  DEALT  FOUR  CARDS
AND  MUST  MAKE  HIS  OR  HER  BEST HAND USING EXACTLY TWO OF THEM, PLUS
EXACTLY THREE OF THE FIVE COMMUNITY CARDS.
  13. "SIGNIFICANT VENDOR" MEANS ANY PERSON WHO OFFERS OR  WHO  PROPOSES
TO  OFFER  ANY  OF  THE  FOLLOWING  SERVICES WITH RESPECT TO INTERACTIVE
GAMING:  (A) A CORE FUNCTION; (B) SALE, LICENSING OR  OTHER  RECEIPT  OF
COMPENSATION  FOR  SELLING  OR  LICENSING A DATABASE OR CUSTOMER LIST OF
INDIVIDUALS RESIDING IN THE UNITED STATES SELECTED IN WHOLE OR  IN  PART
BECAUSE  THEY  PLACED  WAGERS  OR PARTICIPATED IN GAMBLING GAMES WITH OR
THROUGH AN INTERNET WEBSITE OR OPERATOR (OR ANY  DERIVATIVE  OF  SUCH  A
DATABASE  OR  CUSTOMER LIST); (C) PROVISION OF ANY TRADEMARK, TRADENAME,
SERVICE MARK OR SIMILAR INTELLECTUAL PROPERTY UNDER WHICH A LICENSEE  OR
SIGNIFICANT  VENDOR  IDENTIFIES  INTERACTIVE  GAMES TO CUSTOMERS; OR (D)
PROVISION OF ANY PRODUCT, SERVICE OR ASSET TO A LICENSEE OR  SIGNIFICANT
VENDOR  IN  RETURN  FOR  A PERCENTAGE OF INTERACTIVE GAMING REVENUE (NOT
INCLUDING FEES TO  FINANCIAL  INSTITUTIONS  AND  PAYMENT  PROVIDERS  FOR
FACILITATING  A DEPOSIT OR WITHDRAWAL BY AN AUTHORIZED PARTICIPANT). THE
TERM "SIGNIFICANT VENDOR" SHALL NOT  INCLUDE  A  PROVIDER  OF  GOODS  OR
SERVICES  TO  A  LICENSEE THAT ARE NOT SPECIFICALLY DESIGNED FOR USE AND
NOT PRINCIPALLY USED IN CONNECTION WITH INTERACTIVE GAMING.
  14. "TEXAS HOLD'EM POKER" MEANS THE TYPE OF POKER  MARKETED  AS  TEXAS
HOLD'EM  POKER  THAT  INVOLVES  TWO  CARDS BEING DEALT FACE DOWN TO EACH
PLAYER AND THEN FIVE COMMUNITY CARDS BEING PLACED FACE-UP BY THE DEALER,
A SERIES OF THREE THEN TWO ADDITIONAL SINGLE CARDS, WITH PLAYERS  HAVING
THE OPTION TO CHECK, BET, RAISE OR FOLD AFTER EACH DEAL.
  S  1402.  AUTHORIZATION.   1. THE COMMISSION SHALL, WITHIN ONE HUNDRED
EIGHTY DAYS OF THE DATE THIS ARTICLE BECOMES LAW, PROMULGATE REGULATIONS
TO IMPLEMENT INTERACTIVE GAMING IN THIS STATE AND SHALL AUTHORIZE UP  TO
TEN  LICENSES TO OPERATE INTERACTIVE GAMING INVOLVING AUTHORIZED PARTIC-
IPANTS, SUBJECT TO THE PROVISIONS OF THIS ARTICLE AND  OTHER  APPLICABLE
PROVISIONS OF LAW.
  2.  THE COMMISSION SHALL, TO THE EXTENT PRACTICABLE, ISSUE LICENSES TO
MULTIPLE APPLICANTS NO SOONER THAN ONE HUNDRED  EIGHTY  DAYS  AFTER  THE
PROMULGATION  OF REGULATIONS IN ORDER TO ENSURE A ROBUST AND COMPETITIVE
MARKET FOR CONSUMERS AND TO PREVENT  EARLY  LICENSEES  FROM  GAINING  AN
UNFAIR COMPETITIVE ADVANTAGE.
  3.  NO  PERSON  MAY  OPERATE,  MANAGE OR MAKE AVAILABLE AN INTERACTIVE
GAMING PLATFORM OR ACT AS A SIGNIFICANT VENDOR WITH RESPECT TO  INTERAC-
TIVE  GAMING  THAT  IS  OFFERED  TO PERSONS LOCATED IN THIS STATE UNLESS

S. 6913--A                          5

LICENSED BY THE COMMISSION PURSUANT TO THIS ARTICLE AND ONLY THOSE GAMES
AUTHORIZED BY THE COMMISSION SHALL BE PERMITTED.
  4. ANY PERSON FOUND SUITABLE BY THE COMMISSION MAY BE ISSUED A LICENSE
AS AN OPERATOR OR SIGNIFICANT VENDOR PURSUANT TO THIS ARTICLE. IN DETER-
MINING SUITABILITY, THE COMMISSION SHALL CONSIDER THOSE FACTORS IT DEEMS
RELEVANT IN ITS DISCRETION, INCLUDING BUT NOT LIMITED TO:
  (A)  WHETHER  THE APPLICANT IS A PERSON OF GOOD CHARACTER, HONESTY AND
INTEGRITY;
  (B) WHETHER THE APPLICANT IS PERSON WHOSE PRIOR  ACTIVITIES,  CRIMINAL
RECORD, IF ANY, REPUTATION, HABITS AND ASSOCIATIONS DO NOT:
  (I)  POSE  A  THREAT  TO THE PUBLIC INTEREST OR TO THE EFFECTIVE REGU-
LATION AND CONTROL OF INTERACTIVE GAMING; OR
  (II) CREATE OR ENHANCE THE DANGERS OF UNSUITABLE,  UNFAIR  OR  ILLEGAL
PRACTICES,  METHODS  AND ACTIVITIES IN THE CONDUCT OF INTERACTIVE GAMING
OR IN THE CARRYING ON OF THE BUSINESS AND FINANCIAL  ARRANGEMENTS  INCI-
DENTAL TO SUCH GAMING;
  (C)  WHETHER  THE  APPLICANT  IS  CAPABLE OF AND LIKELY TO CONDUCT THE
ACTIVITIES FOR WHICH THE APPLICANT IS LICENSED IN  ACCORDANCE  WITH  THE
PROVISIONS  OF THIS ARTICLE, ANY REGULATIONS PRESCRIBED UNDER THIS ARTI-
CLE AND ALL OTHER APPLICABLE LAWS;
  (D) WHETHER THE APPLICANT HAS OR GUARANTEES  ACQUISITION  OF  ADEQUATE
BUSINESS  COMPETENCE  AND EXPERIENCE IN THE OPERATION OF LICENSED GAMING
OR OF INTERACTIVE GAMING IN THIS STATE OR IN  A  STATE  WITH  COMPARABLE
LICENSING REQUIREMENTS;
  (E)  WHETHER THE APPLICANT HAS OR WILL OBTAIN SUFFICIENT FINANCING FOR
THE NATURE OF THE PROPOSED OPERATION AND FROM A SUITABLE SOURCE; AND
 (F) WHETHER THE APPLICANT HAS DISCLOSED TO  THE  COMMISSION  ALL  KNOWN
AFFILIATIONS  OR RELATIONSHIPS, WHETHER DIRECT OR INDIRECT, WITH PERSONS
AND ASSETS OF PERSONS DESCRIBED BY SUBDIVISION THREE OF SECTION FOURTEEN
HUNDRED FOUR OF THIS ARTICLE.
  5. THE COMMISSION FURTHER SHALL DEVELOP STANDARDS BY WHICH TO EVALUATE
AND APPROVE  INTERACTIVE  GAMING  PLATFORMS  FOR  USE  WITH  INTERACTIVE
GAMING.  INTERACTIVE GAMING PLATFORMS MUST BE APPROVED BY THE COMMISSION
BEFORE BEING USED BY A LICENSEE OR SIGNIFICANT VENDOR TO CONDUCT  INTER-
ACTIVE GAMING IN THIS STATE.
  6.  THE  COMMISSION SHALL REQUIRE ALL LICENSEES TO PAY ONE-TIME FEE OF
TEN MILLION DOLLARS.
  7. LICENSES ISSUED BY THE COMMISSION SHALL REMAIN IN  EFFECT  FOR  TEN
YEARS.
  8.  THE  COMMISSION,  BY  REGULATION, MAY AUTHORIZE AND PROMULGATE ANY
RULES NECESSARY TO IMPLEMENT AGREEMENTS WITH OTHER STATES, OR AUTHORIZED
AGENCIES THEREOF (A) TO ENABLE PATRONS IN THOSE STATES TO PARTICIPATE IN
INTERACTIVE GAMING OFFERED BY LICENSEES UNDER THIS  ARTICLE  OR  (B)  TO
ENABLE  PATRONS  IN  THIS  STATE  TO  PARTICIPATE  IN INTERACTIVE GAMING
OFFERED BY LICENSEES UNDER THE LAWS OF THOSE OTHER STATES, PROVIDED THAT
SUCH OTHER STATE OR AUTHORIZED AGENCY APPLIES SUITABILITY STANDARDS  AND
REVIEW  MATERIALLY  CONSISTENT  WITH  THE  PROVISIONS  OF  THIS ARTICLE,
INCLUDING BUT NOT LIMITED TO THE REQUIREMENTS  SET  OUT  IN  SUBDIVISION
THREE OF SECTION FOURTEEN HUNDRED FOUR OF THIS ARTICLE.
  9.  ANY  REGULATIONS  ADOPTED  PURSUANT  TO  SUBDIVISION EIGHT OF THIS
SECTION MUST SET FORTH PROVISIONS THAT ADDRESS:
  (A) ANY ARRANGEMENTS TO SHARE REVENUE BETWEEN NEW YORK AND  ANY  OTHER
STATE OR AGENCY WITHIN ANOTHER STATE; AND
  (B) ARRANGEMENTS TO ENSURE THE INTEGRITY OF INTERACTIVE GAMING OFFERED
PURSUANT  TO ANY SUCH AGREEMENT AND THE PROTECTION OF PATRONS LOCATED IN
THIS STATE.

S. 6913--A                          6

  10. THE COMMISSION MAY DELEGATE ITS RESPONSIBILITIES TO ADMINISTER THE
PROVISIONS OF THIS ARTICLE TO THE DIVISION, AS IT SEES FIT,  EXCEPT  FOR
ITS  RESPONSIBILITIES TO APPROVE LICENSES AND TO CONDUCT THE PROCEEDINGS
REQUIRED UNDER SUBDIVISION FOUR OF SECTION FOURTEEN HUNDRED FOUR OF THIS
ARTICLE.
  S  1403.  REQUIRED  SAFEGUARDS/MINIMUM  STANDARDS.   1. THE COMMISSION
SHALL REQUIRE LICENSEES TO IMPLEMENT MEASURES TO MEET THE STANDARDS  SET
OUT IN THIS SECTION, ALONG WITH SUCH OTHER STANDARDS THAT THE COMMISSION
IN ITS DISCRETION MAY CHOOSE TO REQUIRE.
  (A)  APPROPRIATE  SAFEGUARDS  TO  ENSURE,  TO  A  REASONABLE DEGREE OF
CERTAINTY, THAT PARTICIPANTS IN INTERACTIVE GAMING ARE NOT YOUNGER  THAN
TWENTY-ONE YEARS OF AGE.
  (B)  APPROPRIATE  SAFEGUARDS  TO  ENSURE,  TO  A  REASONABLE DEGREE OF
CERTAINTY,  THAT  PARTICIPANTS  IN  INTERACTIVE  GAMING  ARE  PHYSICALLY
LOCATED  WITHIN THE STATE OR SUCH OTHER JURISDICTION THAT THE COMMISSION
HAS DETERMINED TO BE PERMISSIBLE.
  (C) APPROPRIATE SAFEGUARDS TO  PROTECT,  TO  A  REASONABLE  DEGREE  OF
CERTAINTY,  THE  PRIVACY AND ONLINE SECURITY OF PARTICIPANTS IN INTERAC-
TIVE GAMING.
  (D) APPROPRIATE SAFEGUARDS  TO  ENSURE,  TO  A  REASONABLE  DEGREE  OF
CERTAINTY,  THAT  THE  INTERACTIVE  GAMING  IS  FAIR AND HONEST AND THAT
APPROPRIATE MEASURES ARE IN PLACE TO DETER, DETECT AND,  TO  THE  EXTENT
REASONABLY  POSSIBLE,  TO PREVENT CHEATING, INCLUDING COLLUSION, AND USE
OF CHEATING DEVICES,  INCLUDING  USE  OF  SOFTWARE  PROGRAMS  (SOMETIMES
REFERRED TO AS "BOTS") THAT MAKE BETS OR WAGERS ACCORDING TO ALGORITHMS.
  (E)  APPROPRIATE  SAFEGUARDS  TO  MINIMIZE  COMPULSIVE  GAMING  AND TO
PROVIDE NOTICE TO PARTICIPANTS OF RESOURCES TO HELP PROBLEM GAMBLERS.
  (F) APPROPRIATE SAFEGUARDS TO ENSURE PARTICIPANTS' FUNDS ARE  HELD  IN
ACCOUNTS  SEGREGATED  FROM  THE  FUNDS  OF  LICENSEES  AND OTHERWISE ARE
PROTECTED FROM CORPORATE INSOLVENCY, FINANCIAL RISK OR CRIMINAL OR CIVIL
ACTIONS AGAINST THE LICENSEE.
  S 1404. SCOPE OF LICENSING REVIEW.  1. IN CONNECTION WITH ANY  LICENSE
ISSUED  PURSUANT  TO  THIS  ARTICLE, THE LICENSEE, SIGNIFICANT VENDOR OR
APPLICANT SHALL IDENTIFY AND THE COMMISSION SHALL REVIEW THE SUITABILITY
OF SUCH LICENSEE'S, SIGNIFICANT VENDOR'S  OR  APPLICANT'S  OWNER,  CHIEF
EXECUTIVE  OFFICER,  CHIEF  FINANCIAL  OFFICER  AND ANY OTHER OFFICER OR
EMPLOYEE WHO THE COMMISSION  DEEMS  IS  SIGNIFICANTLY  INVOLVED  IN  THE
MANAGEMENT  OR  CONTROL OF THE LICENSEE, SIGNIFICANT VENDOR OR APPLICANT
OR OF THE INTERACTIVE GAMING PLATFORM.   "OWNER" FOR  PURPOSES  OF  THIS
PROVISION  MEANS ANY PERSON WHO DIRECTLY OR INDIRECTLY HOLDS ANY BENEFI-
CIAL OR OWNERSHIP INTEREST IN THE APPLICANT OF FIVE PERCENT  OR  GREATER
OR  ANY AMOUNT OF OWNERSHIP THAT THE COMMISSION DETERMINES TO BE SIGNIF-
ICANT OWNERSHIP OF THE LICENSEE, SIGNIFICANT VENDOR, OR APPLICANT.
  2. INSTITUTIONAL INVESTORS ARE SUBJECT TO THE PROVISIONS  SET  OUT  IN
THIS SECTION.
  (A) AN INSTITUTIONAL INVESTOR HOLDING UNDER TWENTY-FIVE PERCENT OF THE
EQUITY  SECURITIES  OF  A  LICENSEE'S OR SIGNIFICANT VENDOR'S (OR APPLI-
CANT'S) HOLDING OR INTERMEDIARY COMPANIES, SHALL BE GRANTED A WAIVER  OF
ANY INVESTIGATION OF SUITABILITY OR OTHER REQUIREMENT IF SUCH SECURITIES
ARE  THOSE  OF A CORPORATION, WHETHER PUBLICLY TRADED OR PRIVATELY HELD,
AND ITS HOLDINGS  OF  SUCH  SECURITIES  WERE  PURCHASED  FOR  INVESTMENT
PURPOSES  ONLY  AND IT FILES A CERTIFIED STATEMENT TO THE EFFECT THAT IT
HAS NO INTENTION OF INFLUENCING OR AFFECTING THE AFFAIRS OF THE  ISSUER,
THE  LICENSEE (OR SIGNIFICANT VENDOR OR APPLICANT, AS APPLICABLE) OR ITS
HOLDING OR INTERMEDIARY COMPANIES; PROVIDED, HOWEVER, THAT IT  SHALL  BE
PERMITTED TO VOTE ON MATTERS PUT TO THE VOTE OF THE OUTSTANDING SECURITY

S. 6913--A                          7

HOLDERS.  THE  COMMISSION  MAY  GRANT  SUCH A WAIVER TO AN INSTITUTIONAL
INVESTOR HOLDING A HIGHER PERCENTAGE OF SUCH SECURITIES UPON  A  SHOWING
OF  GOOD CAUSE AND IF THE CONDITIONS SPECIFIED ABOVE ARE MET. ANY INSTI-
TUTIONAL  INVESTOR  GRANTED  A  WAIVER UNDER THIS PARAGRAPH WHICH SUBSE-
QUENTLY DETERMINES TO INFLUENCE OR AFFECT  THE  AFFAIRS  OF  THE  ISSUER
SHALL PROVIDE NOT LESS THAN THIRTY DAYS' NOTICE OF SUCH INTENT AND SHALL
FILE  WITH  THE  COMMISSION  A  REQUEST FOR DETERMINATION OF SUITABILITY
BEFORE TAKING ANY ACTION THAT MAY INFLUENCE OR AFFECT THE AFFAIRS OF THE
ISSUER; PROVIDED, HOWEVER, THAT IT SHALL BE PERMITTED TO VOTE ON MATTERS
PUT TO THE VOTE OF THE OUTSTANDING SECURITY HOLDERS. IF AN INSTITUTIONAL
INVESTOR CHANGES ITS INVESTMENT  INTENT,  OR  IF  THE  COMMISSION  FINDS
REASONABLE CAUSE TO BELIEVE THAT THE INSTITUTIONAL INVESTOR MAY BE FOUND
UNSUITABLE,  NO  ACTION  OTHER  THAN  DIVESTITURE SHALL BE TAKEN BY SUCH
INVESTOR WITH RESPECT TO ITS SECURITY  HOLDINGS  UNTIL  THERE  HAS  BEEN
COMPLIANCE  WITH  ANY  REQUIREMENTS ESTABLISHED BY THE COMMISSION, WHICH
MAY INCLUDE THE EXECUTION OF A TRUST AGREEMENT. THE LICENSEE (OR SIGNIF-
ICANT VENDOR OR APPLICANT, AS  APPLICABLE)  AND  ITS  RELEVANT  HOLDING,
INTERMEDIARY  OR  SUBSIDIARY  COMPANY  SHALL NOTIFY THE COMMISSION IMME-
DIATELY OF ANY INFORMATION ABOUT, OR ACTIONS OF, AN INSTITUTIONAL INVES-
TOR HOLDING ITS EQUITY SECURITIES WHERE SUCH INFORMATION OR  ACTION  MAY
IMPACT  UPON THE ELIGIBILITY OF SUCH INSTITUTIONAL INVESTOR FOR A WAIVER
PURSUANT TO THIS PARAGRAPH.
  (B) IF AT ANY TIME THE COMMISSION FINDS THAT AN INSTITUTIONAL INVESTOR
HOLDING ANY SECURITY OF A HOLDING OR INTERMEDIARY COMPANY OF A  LICENSEE
OR  SIGNIFICANT  VENDOR  OR  APPLICANT,  OR,  WHERE RELEVANT, OF ANOTHER
SUBSIDIARY COMPANY OF A HOLDING OR INTERMEDIARY COMPANY OF A LICENSEE OR
SIGNIFICANT VENDOR OR APPLICANT WHICH IS  RELATED  IN  ANY  WAY  TO  THE
FINANCING  OF  THE LICENSEE OR SIGNIFICANT VENDOR OR APPLICANT, FAILS TO
COMPLY WITH THE TERMS OF PARAGRAPH (A) OF THIS SECTION,  OR  IF  AT  ANY
TIME THE COMMISSION FINDS THAT, BY REASON OF THE EXTENT OR NATURE OF ITS
HOLDINGS,  AN INSTITUTIONAL INVESTOR IS IN A POSITION TO EXERCISE SUCH A
SUBSTANTIAL IMPACT UPON THE  CONTROLLING  INTERESTS  OF  A  LICENSEE  OR
SIGNIFICANT  VENDOR OR APPLICANT THAT INVESTIGATION AND DETERMINATION OF
SUITABILITY OF THE INSTITUTIONAL INVESTOR IS NECESSARY  TO  PROTECT  THE
PUBLIC  INTEREST, THE COMMISSION MAY TAKE ANY NECESSARY ACTION OTHERWISE
AUTHORIZED UNDER THIS ARTICLE TO PROTECT THE PUBLIC INTEREST.
  (C) FOR PURPOSES OF THIS SECTION, AN  "INSTITUTIONAL  INVESTOR"  SHALL
MEAN  ANY RETIREMENT FUND ADMINISTERED BY A PUBLIC AGENCY FOR THE EXCLU-
SIVE BENEFIT OF FEDERAL, STATE, OR LOCAL  PUBLIC  EMPLOYEES;  INVESTMENT
COMPANY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. S
80A-1  ET  SEQ.);  COLLECTIVE  INVESTMENT TRUST ORGANIZED BY BANKS UNDER
PART NINE OF THE RULES OF THE COMPTROLLER OF THE  CURRENCY;  CLOSED  END
INVESTMENT  TRUST; CHARTERED OR LICENSED LIFE INSURANCE COMPANY OR PROP-
ERTY AND CASUALTY INSURANCE COMPANY;  BANKING  AND  OTHER  CHARTERED  OR
LICENSED  LENDING  INSTITUTION;  INVESTMENT ADVISOR REGISTERED UNDER THE
INVESTMENT ADVISORS ACT OF 1940 (15 U.S.C. S 80B-1 ET  SEQ.);  AND  SUCH
OTHER  PERSONS  AS  THE  COMMISSION MAY DETERMINE FOR REASONS CONSISTENT
WITH THE PUBLIC INTEREST.
  3. THE COMMISSION SHALL NOT ISSUE A LICENSE TO OR OTHERWISE FIND SUIT-
ABLE ANY PROSPECTIVE LICENSEE OR SIGNIFICANT VENDOR WHO:
  (A) HAS AT ANY TIME, EITHER DIRECTLY, OR THROUGH ANOTHER  PERSON  WHOM
IT OWNED, IN WHOLE OR IN SIGNIFICANT PART, OR CONTROLLED:
  (I)  KNOWINGLY  AND  WILLFULLY  ACCEPTED  OR  MADE AVAILABLE WAGERS ON
INTERACTIVE GAMING (INCLUDING POKER) FROM PERSONS LOCATED IN THE  UNITED
STATES AFTER DECEMBER THIRTY-FIRST, TWO THOUSAND SIX, UNLESS SUCH WAGERS

S. 6913--A                          8

WERE  AFFIRMATIVELY  AUTHORIZED  BY  LAW OF THE UNITED STATES OR OF EACH
STATE IN WHICH PERSONS MAKING SUCH WAGERS WERE LOCATED; OR
  (II) KNOWINGLY FACILITATED OR OTHERWISE PROVIDED SERVICES WITH RESPECT
TO INTERACTIVE GAMING (INCLUDING POKER) INVOLVING PERSONS LOCATED IN THE
UNITED  STATES  FOR A PERSON DESCRIBED IN SUBPARAGRAPH (I) OF THIS PARA-
GRAPH AND ACTED WITH KNOWLEDGE OF THE FACT THAT SUCH WAGERS OR  INTERAC-
TIVE GAMING INVOLVED PERSONS LOCATED IN THE UNITED STATES.
  (B)  HAS PURCHASED OR ACQUIRED, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN
SIGNIFICANT PART, A PERSON DESCRIBED IN PARAGRAPH (A) OF  THIS  SUBDIVI-
SION  OR  WILL  USE  THAT  PERSON  OR A COVERED ASSET IN CONNECTION WITH
INTERACTIVE GAMING LICENSED PURSUANT TO THIS ARTICLE.
  4. A PROSPECTIVE LICENSEE OR SIGNIFICANT VENDOR MAY APPEAL A  DETERMI-
NATION  BY  THE  COMMISSION  THAT  IT IS WITHIN THE SCOPE OF SUBDIVISION
THREE OF THIS SECTION ONLY IN ACCORDANCE WITH THE  PROCEDURES  SPECIFIED
IN THIS SUBDIVISION.
  (A)  THE  COMMISSION  SHALL AFFORD THE PROSPECTIVE LICENSEE OR SIGNIF-
ICANT VENDOR A HEARING AT WHICH SUCH  PERSON  MAY  PROVIDE  EVIDENCE  TO
SUPPORT  THE  BASIS ON WHICH IT SEEKS RELIEF. THE COMMISSION SHALL WAIVE
THE PROHIBITION IF THE PROSPECTIVE LICENSEE OR SIGNIFICANT VENDOR DEMON-
STRATES BY CLEAR AND CONVINCING EVIDENCE THAT ITS CONDUCT IN  CONNECTION
WITH  INTERACTIVE  GAMING  AND  WAGERS  INVOLVING PERSONS LOCATED IN THE
UNITED STATES WAS NOT UNLAWFUL AND,  IF  APPLICABLE,  THAT  THE  COVERED
ASSETS  TO  BE  USED OR THAT ARE BEING USED BY SUCH PERSON IN CONNECTION
WITH INTERACTIVE GAMING LICENSED PURSUANT TO THIS ARTICLE WERE NOT  USED
IN A MANNER THAT WAS UNLAWFUL. THE DETERMINATION OF THE COMMISSION SHALL
BE  MADE  WITHOUT REGARD TO WHETHER THE PERSON HAS BEEN PROSECUTED UNDER
THE CRIMINAL LAWS OF ANY STATE, THE UNITED STATES OR OTHER  JURISDICTION
AND  THE PROCEEDING TERMINATED IN A MANNER OTHER THAN WITH A CONVICTION.
IF THE PROHIBITION IS WAIVED, THE PROSPECTIVE  LICENSEE  OR  SIGNIFICANT
VENDOR STILL MUST SATISFY ALL OTHERWISE APPLICABLE LICENSE AND SUITABIL-
ITY REQUIREMENTS.
  (B)  THE  COMMISSION  SHALL  PRESIDE OVER THE HEARING AND SHALL ACT AS
FINDER OF FACT ENTITLED TO EVALUATE THE CREDIBILITY OF THE WITNESSES AND
PERSUASIVENESS OF THE EVIDENCE,  PURSUANT  TO  WHATEVER  PROCEDURES  THE
COMMISSION DETERMINES TO BE APPROPRIATE.
  S  1405.  STATE  TAX.  LICENSEES ENGAGED IN THE BUSINESS OF CONDUCTING
INTERACTIVE GAMING PURSUANT TO THIS ARTICLE SHALL PAY  A  PRIVILEGE  TAX
BASED  ON  THE  LICENSEE'S INTERACTIVE GAMING GROSS REVENUE AT A FIFTEEN
PERCENT RATE.
  S 2. Subdivision 1 of section 225.00 of the penal law  is  amended  to
read as follows:
  1.  "Contest  of  chance"  means  any  contest, game, gaming scheme or
gaming device in which  the  outcome  depends  [in  a  material  degree]
PREDOMINANTLY  upon  an element of chance, notwithstanding that skill of
the contestants may also be a factor therein.
  S 3. The penal law is amended by adding a new section 225.36  to  read
as follows:
S 225.36 INTERACTIVE GAMING OFFENSES AND EXCEPTIONS.
  1.  THE  KNOWING AND WILLFUL OFFERING OF UNLICENSED INTERACTIVE GAMING
TO PERSONS IN THIS STATE,  OR  THE  KNOWING  AND  WILLFUL  PROVISION  OF
SERVICES WITH RESPECT THERETO, SHALL CONSTITUTE A GAMBLING OFFENSE UNDER
THIS ARTICLE.
  2.  LICENSED  INTERACTIVE  GAMING  ACTIVITIES  UNDER  SECTION FOURTEEN
HUNDRED TWO OF THE RACING, PARI-MUTUEL WAGERING AND BREEDING  LAW  SHALL
NOT BE A GAMBLING OFFENSE UNDER THIS ARTICLE.

S. 6913--A                          9

  3.  A PERSON OFFERING UNLICENSED INTERACTIVE GAMING TO PERSONS IN THIS
STATE SHALL BE LIABLE FOR  ALL  TAXES  SET  FORTH  IN  SECTION  FOURTEEN
HUNDRED FIVE OF THE RACING, PARI-MUTUEL WAGERING AND BREEDING LAW IN THE
SAME  MANNER  AND  AMOUNTS  AS  IF  SUCH  PERSON WERE A LICENSEE. TIMELY
PAYMENT  OF SUCH TAXES SHALL NOT CONSTITUTE A DEFENSE TO ANY PROSECUTION
OR OTHER PROCEEDING IN CONNECTION WITH THE INTERACTIVE GAMING EXCEPT FOR
A PROSECUTION OR PROCEEDING ALLEGING FAILURE TO MAKE SUCH PAYMENT.
  S 4. This act shall take effect on the one hundred eightieth day after
it shall have become a law.