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

                                  9049

                          I N  A S S E M B L Y

                            January 19, 2016
                               ___________

Introduced  by M. of A. PRETLOW -- read once and referred to the Commit-
  tee on Racing and Wagering

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
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.

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

                                                           LBD02917-08-6

A. 9049                             2

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; AND
  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.
  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.
  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. "COMMISSION" MEANS THE NEW YORK STATE GAMING COMMISSION.
  5. "DIVISION" MEANS THE DIVISION OF GAMING,  ESTABLISHED  UNDER  PARA-
GRAPH  (C) OF SUBDIVISION TWO OF SECTION ONE HUNDRED THREE OF THIS CHAP-
TER.
  6. "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

A. 9049                             3

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.
  7. "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
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.
  8. "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.
  9.    "INTERNET"   MEANS   A   COMPUTER   NETWORK   OF   INTEROPERABLE
PACKET-SWITCHED DATA NETWORKS.
  10. "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.
  11. "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.
  12.  "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

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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.
  13. "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. APPLICANTS ELIGIBLE TO APPLY FOR A LICENSE PURSUANT TO THIS ARTICLE
SHALL BE THOSE ENTITIES:
  (A)  LICENSED  BY THE STATE PURSUANT TO SECTION SIXTEEN HUNDRED SEVEN-
TEEN-A OF THE TAX LAW TO OPERATE VIDEO LOTTERY GAMING AND HAS EXPERIENCE
IN THE OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH
COMPARABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF  ADEQUATE
BUSINESS  COMPETENCE  AND  EXPERIENCE  IN  THE  OPERATION OF INTERACTIVE
GAMING; OR
  (B) LICENSED BY THE STATE TO  OPERATE  A  CLASS  III  GAMING  FACILITY
PURSUANT  TO  ARTICLE THIRTEEN OF THIS CHAPTER AND HAS EXPERIENCE IN THE
OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH COMPA-
RABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF ADEQUATE BUSI-
NESS COMPETENCE AND EXPERIENCE IN THE OPERATION OF INTERACTIVE GAMING.
  3. 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.
  4. 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
LICENSED BY THE COMMISSION PURSUANT TO THIS ARTICLE AND ONLY THOSE GAMES
AUTHORIZED BY THE COMMISSION SHALL BE PERMITTED.
  5.  LICENSE  APPLICANTS MAY FORM A PARTNERSHIP, JOINT VENTURE OR OTHER
CONTRACTUAL ARRANGEMENT IN ORDER TO  FACILITATE  THE  PURPOSES  OF  THIS
ARTICLE.
  6. 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;

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  (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; AND
  (E) WHETHER THE APPLICANT HAS OR WILL OBTAIN SUFFICIENT FINANCING  FOR
THE NATURE OF THE PROPOSED OPERATION AND FROM A SUITABLE SOURCE.
  7. 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.
  8. THE COMMISSION SHALL REQUIRE ALL LICENSEES TO PAY A ONE-TIME FEE OF
TEN MILLION DOLLARS.  SUCH FEE PAID BY EACH LICENSEE SHALL BE APPLIED TO
SATISFY, IN WHOLE OR IN PART, AS APPLICABLE, THAT LICENSEE'S  TAX  OBLI-
GATION  PURSUANT  TO  SECTION  FOURTEEN  HUNDRED FIVE OF THIS ARTICLE IN
THIRTY-SIX EQUAL MONTHLY INSTALLMENTS, ALLOCATED TO EACH  OF  THE  FIRST
THIRTY-SIX  MONTHS  OF  TAX  OWED AFTER THE LICENSEE HAS BEGUN OPERATING
INTERACTIVE GAMING PURSUANT TO THIS ARTICLE. NO AMOUNTS NOT REQUIRED  TO
BE USED TO SATISFY SUCH TAX OBLIGATION DURING THAT PERIOD SHALL BE ALLO-
CATED TO PAYMENT OF SUCH TAX OBLIGATION AFTER THAT PERIOD.
  9.  LICENSES  ISSUED  BY THE COMMISSION SHALL REMAIN IN EFFECT FOR TEN
YEARS.
  10. 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.
  11. ANY REGULATIONS  ADOPTED  PURSUANT  TO  SUBDIVISION  TEN  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.
  12. 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.
  S 1403. REQUIRED SAFEGUARDS/MINIMUM STANDARDS.   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.

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  (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
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-

A. 9049                             7

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.
  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.
  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

A. 9049                             8

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. Severability clause. If any provision of this act or application
thereof shall for any reason be  adjudged  by  any  court  of  competent
jurisdiction  to  be invalid, such judgment shall not affect, impair, or
invalidate the remainder of the act, but shall be confined in its opera-
tion to the provision thereof directly involved in  the  controversy  in
which the judgment shall have been rendered.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law.

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

                                 9049--A

                          I N  A S S E M B L Y

                            January 19, 2016
                               ___________

Introduced  by M. of A. PRETLOW -- read once and referred to the Commit-
  tee on Racing 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
YORK COURTS HAVE FOUND A GAME TO BE ONE OF SKILL RATHER THAN CHANCE. SEE

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

                                                           LBD02917-10-6

A. 9049--A                          2

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; AND
  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.
  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.
  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. "COMMISSION" MEANS THE NEW YORK STATE GAMING COMMISSION.
  5. "DIVISION" MEANS THE DIVISION OF GAMING,  ESTABLISHED  UNDER  PARA-
GRAPH  (C) OF SUBDIVISION TWO OF SECTION ONE HUNDRED THREE OF THIS CHAP-
TER.
  6. "INTERACTIVE GAMING" MEANS THE CONDUCT OF GAMES THROUGH THE USE  OF
THE  INTERNET  OR  OTHER COMMUNICATIONS TECHNOLOGY THAT ALLOWS A PERSON,

A. 9049--A                          3

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.
  7. "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
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.
  8.  "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.
  9.   "INTERNET"   MEANS   A   COMPUTER   NETWORK   OF    INTEROPERABLE
PACKET-SWITCHED DATA NETWORKS.
  10.  "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.
  11.  "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.
  12. "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

A. 9049--A                          4

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.
  13.  "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
ELEVEN LICENSES  TO  OPERATE  INTERACTIVE  GAMING  INVOLVING  AUTHORIZED
PARTICIPANTS, SUBJECT TO THE PROVISIONS OF THIS ARTICLE AND OTHER APPLI-
CABLE PROVISIONS OF LAW.
  2. APPLICANTS ELIGIBLE TO APPLY FOR A LICENSE PURSUANT TO THIS ARTICLE
SHALL BE THOSE ENTITIES:
  (A)  LICENSED  BY THE STATE PURSUANT TO SECTION SIXTEEN HUNDRED SEVEN-
TEEN-A OF THE TAX LAW TO OPERATE VIDEO LOTTERY GAMING AND HAS EXPERIENCE
IN THE OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH
COMPARABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF  ADEQUATE
BUSINESS  COMPETENCE  AND  EXPERIENCE  IN  THE  OPERATION OF INTERACTIVE
GAMING; OR
  (B) LICENSED BY THE STATE TO  OPERATE  A  CLASS  III  GAMING  FACILITY
PURSUANT  TO  ARTICLE THIRTEEN OF THIS CHAPTER AND HAS EXPERIENCE IN THE
OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH COMPA-
RABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF ADEQUATE BUSI-
NESS COMPETENCE AND EXPERIENCE IN THE OPERATION OF INTERACTIVE GAMING.
  3. 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.
  4. 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
LICENSED BY THE COMMISSION PURSUANT TO THIS ARTICLE AND ONLY THOSE GAMES
AUTHORIZED BY THE COMMISSION SHALL BE PERMITTED.
  5.  LICENSE  APPLICANTS MAY FORM A PARTNERSHIP, JOINT VENTURE OR OTHER
CONTRACTUAL ARRANGEMENT IN ORDER TO  FACILITATE  THE  PURPOSES  OF  THIS
ARTICLE.
  6. 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

A. 9049--A                          5

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; AND
  (E)  WHETHER THE APPLICANT HAS OR WILL OBTAIN SUFFICIENT FINANCING FOR
THE NATURE OF THE PROPOSED OPERATION AND FROM A SUITABLE SOURCE.
  7. 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.
  8. THE COMMISSION SHALL REQUIRE ALL LICENSEES TO PAY A ONE-TIME FEE OF
TEN MILLION DOLLARS.  SUCH FEE PAID BY EACH LICENSEE SHALL BE APPLIED TO
SATISFY,  IN  WHOLE OR IN PART, AS APPLICABLE, THAT LICENSEE'S TAX OBLI-
GATION PURSUANT TO SECTION FOURTEEN HUNDRED  FIVE  OF  THIS  ARTICLE  IN
THIRTY-SIX  EQUAL  MONTHLY  INSTALLMENTS, ALLOCATED TO EACH OF THE FIRST
THIRTY-SIX MONTHS OF TAX OWED AFTER THE  LICENSEE  HAS  BEGUN  OPERATING
INTERACTIVE  GAMING PURSUANT TO THIS ARTICLE. NO AMOUNTS NOT REQUIRED TO
BE USED TO SATISFY SUCH TAX OBLIGATION DURING THAT PERIOD SHALL BE ALLO-
CATED TO PAYMENT OF SUCH TAX OBLIGATION AFTER THAT PERIOD.
  9. LICENSES ISSUED BY THE COMMISSION SHALL REMAIN IN  EFFECT  FOR  TEN
YEARS.
  10.  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.
  11.  ANY  REGULATIONS  ADOPTED  PURSUANT  TO  SUBDIVISION  TEN 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.
  12. 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.
  S  1403.  REQUIRED SAFEGUARDS/MINIMUM STANDARDS.  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

A. 9049--A                          6

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
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

A. 9049--A                          7

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.
  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.
  3. A PERSON OFFERING UNLICENSED INTERACTIVE GAMING TO PERSONS IN  THIS
STATE  SHALL  BE  LIABLE  FOR  ALL  TAXES  SET FORTH IN SECTION FOURTEEN

A. 9049--A                          8

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. Severability clause. If any provision of this act or application
thereof shall for any reason be  adjudged  by  any  court  of  competent
jurisdiction  to  be invalid, such judgment shall not affect, impair, or
invalidate the remainder of the act, but shall be confined in its opera-
tion to the provision thereof directly involved in  the  controversy  in
which the judgment shall have been rendered.
  S 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law.