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

                                  5302

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 13, 2015
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Racing, Gaming and  Wager-
  ing

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,

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02917-04-5
              

S. 5302                             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.
  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.

S. 5302                             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

S. 5302                             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.
  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
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; AND
  (E) WHETHER THE APPLICANT HAS OR WILL OBTAIN SUFFICIENT FINANCING  FOR
THE NATURE OF THE PROPOSED OPERATION AND FROM A SUITABLE SOURCE.

S. 5302                             5

  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 A 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.
  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.
  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.
  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

S. 5302                             6

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-
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

S. 5302                             7

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
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.

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

                                 5302--A

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 13, 2015
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Racing, Gaming and  Wager-
  ing  -- recommitted to the Committee on Racing, Gaming and Wagering in
  accordance with Senate Rule 6, sec. 8 --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee

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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02917-07-5
              

S. 5302--A                          2

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.
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.

S. 5302--A                          3

  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
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

S. 5302--A                          4

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.
  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;

S. 5302--A                          5

  (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; 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.   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.

S. 5302--A                          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.
  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

S. 5302--A                          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. 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.

S. 5302--A                          8

  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
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
________________________________________________________________________

                                 5302--B

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 13, 2015
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Racing, Gaming and  Wager-
  ing  -- recommitted to the Committee on Racing, Gaming and Wagering in
  accordance with Senate Rule 6, sec. 8 --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee --  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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02917-09-6
              

S. 5302--B                          2

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.
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

S. 5302--B                          3

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
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

S. 5302--B                          4

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.
  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:

S. 5302--B                          5

  (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; 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

S. 5302--B                          6

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
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

S. 5302--B                          7

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.
  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

S. 5302--B                          8

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
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
________________________________________________________________________

                                 5302--C

                       2015-2016 Regular Sessions

                            I N  S E N A T E

                              May 13, 2015
                               ___________

Introduced  by  Sen. BONACIC -- read twice and ordered printed, and when
  printed to be committed to the Committee on Racing, Gaming and  Wager-
  ing  -- recommitted to the Committee on Racing, Gaming and Wagering in
  accordance with Senate Rule 6, sec. 8 --  committee  discharged,  bill
  amended,  ordered reprinted as amended and recommitted to said commit-
  tee --  committee  discharged,  bill  amended,  ordered  reprinted  as
  amended  and  recommitted to said committee -- reported favorably from
  said committee and committed to the Committee on Finance --  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.

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD02917-11-6
              

S. 5302--C                          2

  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.
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.

S. 5302--C                          3

  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
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.

S. 5302--C                          4

  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
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-

S. 5302--C                          5

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; 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. 5302--C                          6

  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.
  (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

S. 5302--C                          7

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.
  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.

S. 5302--C                          8

  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
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.