S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   4924
 
                        2019-2020 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 5, 2019
                                ___________
 
 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 15 to read as follows:
                                ARTICLE 15
                            INTERACTIVE GAMING
 SECTION 1500. LEGISLATIVE FINDINGS AND PURPOSE.
         1501. DEFINITIONS.
         1502. AUTHORIZATION.
         1503. REQUIRED SAFEGUARDS/MINIMUM STANDARDS.
         1504. SCOPE OF LICENSING REVIEW.
         1505. STATE TAX.
         1506. DISPOSITION OF TAXES.
   § 1500. 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,
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD05499-02-9

 A. 4924                             2
 
 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.
 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.
   §  1501.  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.

 A. 4924                             3
 
   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
 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

 A. 4924                             4
 
 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.
   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.
   §  1502.  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:

 A. 4924                             5
 
   (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; 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 FIFTEEN HUNDRED FIVE OF THIS ARTICLE IN SIXTY
 EQUAL  MONTHLY INSTALLMENTS, ALLOCATED TO EACH OF THE FIRST SIXTY 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 ALLOCATED 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.
   § 1503. 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. 4924                             6

   (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.
   § 1504. 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

 A. 4924                             7
 
 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. §
 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. § 80B-1 ET  SEQ.);  AND  SUCH
 OTHER  PERSONS  AS  THE  COMMISSION MAY DETERMINE FOR REASONS CONSISTENT
 WITH THE PUBLIC INTEREST.
   § 1505. 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.
   §  1506. DISPOSITION OF TAXES. THE COMMISSION SHALL PAY INTO THE STATE
 LOTTERY FUND ALL TAXES IMPOSED BY THIS ARTICLE; ANY INTEREST AND  PENAL-
 TIES  IMPOSED  BY  THE COMMISSION RELATING TO THOSE TAXES; ALL PENALTIES
 LEVIED AND COLLECTED BY THE COMMISSION; AND THE APPROPRIATE FUNDS,  CASH
 OR PRIZES FORFEITED FROM INTERACTIVE GAMING.
   §  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.
   §  3.  The penal law is amended by adding a new section 225.36 to read
 as follows:

 A. 4924                             8
 
 § 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  FIFTEEN
 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 FIFTEEN 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 PROSE-
 CUTION OR PROCEEDING ALLEGING FAILURE TO MAKE SUCH PAYMENT.
   §  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.
   § 5. This act shall take effect on the one hundred eightieth day after
 it shall have become a law.