LBD04134-02-7
A. 5250 2
629 N.Y.S.2D 661, 662 (CRIM. CT. 1995). ON THE OTHER HAND, WHERE A
CONTEST PITS THE SKILL LEVELS OF THE PLAYERS AGAINST EACH OTHER, NEW
YORK COURTS HAVE FOUND A GAME TO BE ONE OF SKILL RATHER THAN CHANCE. SEE
PEOPLE V. HUNT, 162 MISC. 2D 70, 72, 616 N.Y.S.2D 168, 170 (CRIM. CT.
1994) ("PLAYED FAIRLY, SKILL RATHER THAN CHANCE IS THE MATERIAL COMPO-
NENT OF THREE-CARD MONTE.");
3. POKER IN MANY INSTANCES HAS BEEN DEFINED AS A GAME OF SKILL AND A
NEW YORK FEDERAL COURT IN U.S. V. DICRISTINA, 886 F. SUPP. 2D 164, 224,
ASSESSED THAT UNDER FEDERAL LAW POKER WAS PREDOMINANTLY A GAME OF SKILL;
4. NEW YORK COURTS HAVE INTERPRETED NEW YORK LAW TO APPLY A MORE
RIGOROUS TEST IN IDENTIFYING A "CONTEST OF CHANCE" THAN IS APPLIED BY
MOST STATES IN THIS NATION AND THE COURTS HAVE FOUND THAT WHERE A
CONTEST PITS THE SKILL LEVELS OF THE PLAYERS AGAINST EACH OTHER, THOSE
GAMES ARE GAMES OF SKILL AND NOT GAMES OF CHANCE. FURTHERMORE, THE
COURTS HAVE NOT LIMITED THE LEGISLATURE'S ABILITY TO DETERMINE THAT
CERTAIN FORMS OF POKER SHOULD FALL OUTSIDE THE GENERAL DEFINITION OF
GAMBLING SINCE THOSE GAMES ARE GAMES OF SKILL;
5. TEXAS HOLD'EM POKER INVOLVES TWO CARDS DEALT FACE DOWN TO EACH
PLAYER AND THEN FIVE COMMUNITY CARDS PLACED FACE-UP BY THE DEALER, A
SERIES OF THREE, THEN TWO ADDITIONAL SINGLE CARDS, WITH PLAYERS DETER-
MINING WHETHER TO CHECK, BET, RAISE OR FOLD AFTER EACH DEAL. OMAHA
HOLD'EM POKER IS A SIMILAR GAME, IN WHICH EACH PLAYER IS DEALT FOUR
CARDS AND MAKES HIS OR HER BEST HAND USING EXACTLY TWO OF THEM, PLUS
EXACTLY THREE OF THE FIVE COMMUNITY CARDS. THESE GAMES ARE CONSIDERED TO
BE COMPLEX FORMS OF POKER WHICH INVOLVE PLAYER STRATEGY AND DECISION-
MAKING AND WHICH PIT THE SKILL LEVELS OF THE PLAYERS AGAINST EACH OTHER.
AS GAMES OF SKILL, THESE FORMS OF POKER DO NOT FALL UNDER THE DEFINITION
OF GAMBLING AS PROHIBITED BY THE PENAL LAW; AND
6. THE LEGISLATURE FURTHER FINDS THAT AS THE INTERNET HAS BECOME AN
INTEGRAL PART OF SOCIETY, AND INTERNET POKER A MAJOR FORM OF ENTER-
TAINMENT FOR MANY CONSUMERS, ANY INTERACTIVE GAMING ENFORCEMENT AND
REGULATORY STRUCTURE MUST BEGIN FROM THE BEDROCK PREMISE THAT PARTIC-
IPATION IN A LAWFUL AND LICENSED GAMING INDUSTRY IS A PRIVILEGE AND NOT
A RIGHT, AND THAT REGULATORY OVERSIGHT IS INTENDED TO SAFEGUARD THE
INTEGRITY OF THE GAMES AND PARTICIPANTS AND TO ENSURE ACCOUNTABILITY AND
THE PUBLIC TRUST.
§ 1501. DEFINITIONS. AS USED IN THIS ARTICLE, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:
1. "AUTHORIZED GAME" MEANS OMAHA HOLD'EM AND TEXAS HOLD'EM POKER, AS
WELL AS ANY OTHER POKER GAME THAT THE COMMISSION DETERMINES IS THE MATE-
RIAL EQUIVALENT OF EITHER OF THOSE, WHETHER IN A CASH GAME OR TOURNA-
MENT.
2. "AUTHORIZED PARTICIPANTS" MEANS PERSONS WHO ARE EITHER PHYSICALLY
PRESENT IN THIS STATE WHEN PLACING A WAGER OR WHO OTHERWISE ARE PERMIT-
TED BY APPLICABLE LAW, AS DETERMINED BY THE COMMISSION, TO PLACE A
WAGER. THE INTERMEDIATE ROUTING OF ELECTRONIC DATA IN CONNECTION WITH
INTERACTIVE GAMING SHALL NOT DETERMINE THE LOCATION OR LOCATIONS IN
WHICH A WAGER IS INITIATED, RECEIVED OR OTHERWISE MADE.
3. "CORE FUNCTION" MEANS ANY OF THE FOLLOWING: (A) THE MANAGEMENT,
ADMINISTRATION OR CONTROL OF WAGERS ON INTERACTIVE GAMING; (B) THE
MANAGEMENT, ADMINISTRATION OR CONTROL OF THE GAMES WITH WHICH THOSE
WAGERS ARE ASSOCIATED; OR (C) THE DEVELOPMENT, MAINTENANCE, PROVISION OR
OPERATION OF AN INTERACTIVE GAMING PLATFORM.
4. "COMMISSION" MEANS THE NEW YORK STATE GAMING COMMISSION.
A. 5250 3
5. "DIVISION" MEANS THE DIVISION OF GAMING, ESTABLISHED UNDER PARA-
GRAPH (C) OF SUBDIVISION TWO OF SECTION ONE HUNDRED THREE OF THIS CHAP-
TER.
6. "INTERACTIVE GAMING" MEANS THE CONDUCT OF GAMES THROUGH THE USE OF
THE INTERNET OR OTHER COMMUNICATIONS TECHNOLOGY THAT ALLOWS A PERSON,
UTILIZING MONEY, CHECKS, ELECTRONIC CHECKS, ELECTRONIC TRANSFERS OF
MONEY, CREDIT CARDS, DEBIT CARDS OR ANY OTHER INSTRUMENTALITY, TO TRANS-
MIT TO A COMPUTER INFORMATION TO ASSIST IN THE PLACING OF A WAGER AND
CORRESPONDING INFORMATION RELATED TO THE DISPLAY OF THE GAME, GAME
OUTCOMES OR OTHER SIMILAR INFORMATION. THE TERM DOES NOT INCLUDE THE
CONDUCT OF (A) NON-GAMBLING GAMES THAT DO NOT OTHERWISE REQUIRE A
LICENSE UNDER STATE OR FEDERAL LAW; OR (B) GAMES THAT OCCUR ENTIRELY
AMONG PARTICIPANTS WHO ARE LOCATED ON A LICENSED CASINO PREMISES. FOR
PURPOSES OF THIS PROVISION, "COMMUNICATIONS TECHNOLOGY" MEANS ANY METHOD
USED AND THE COMPONENTS EMPLOYED BY AN ESTABLISHMENT TO FACILITATE THE
TRANSMISSION OF INFORMATION, INCLUDING, WITHOUT LIMITATION, TRANSMISSION
AND RECEPTION BY SYSTEMS BASED ON WIRE, CABLE, RADIO, MICROWAVE, LIGHT,
OPTICS OR COMPUTER DATA NETWORKS, INCLUDING, WITHOUT LIMITATION, THE
INTERNET AND INTRANETS.
7. "INTERACTIVE GAMING GROSS REVENUE" MEANS THE TOTAL OF ALL SUMS PAID
TO A LICENSEE FROM INTERACTIVE GAMING INVOLVING AUTHORIZED PARTICIPANTS,
LESS ONLY THE TOTAL OF ALL SUMS PAID OUT AS WINNINGS TO PATRONS AND
PROMOTIONAL GAMING CREDITS; PROVIDED, HOWEVER, THAT THE CASH EQUIVALENT
VALUE OF ANY MERCHANDISE OR OTHER NON-CASH THING OF VALUE INCLUDED IN A
CONTEST OR TOURNAMENT SHALL NOT BE INCLUDED IN THE TOTAL OF ALL SUMS
PAID OUT AS WINNINGS TO PLAYERS FOR PURPOSES OF DETERMINING INTERACTIVE
GAMING GROSS REVENUE.
(A) NEITHER AMOUNTS DEPOSITED WITH A LICENSEE FOR PURPOSES OF INTERAC-
TIVE GAMING NOR AMOUNTS TAKEN IN FRAUDULENT ACTS PERPETRATED AGAINST A
LICENSEE FOR WHICH THE LICENSEE IS NOT REIMBURSED SHALL BE CONSIDERED TO
HAVE BEEN "PAID" TO THE LICENSEE FOR PURPOSES OF CALCULATING INTERACTIVE
GAMING GROSS REVENUE.
(B) "PROMOTIONAL GAMING CREDIT" INCLUDES BONUSES, PROMOTIONS AND ANY
AMOUNT RECEIVED BY A LICENSEE FROM A PATRON FOR WHICH THE LICENSEE CAN
DEMONSTRATE THAT IT OR ITS AFFILIATE HAS NOT RECEIVED CASH.
8. "INTERACTIVE GAMING PLATFORM" MEANS THE COMBINATION OF HARDWARE,
SOFTWARE AND DATA NETWORKS USED TO MANAGE, ADMINISTER OR CONTROL WAGERS
ON INTERACTIVE GAMING OR THE GAMES WITH WHICH THOSE WAGERS ARE ASSOCI-
ATED.
9. "INTERNET" MEANS A COMPUTER NETWORK OF INTEROPERABLE PACKET-
SWITCHED DATA NETWORKS.
10. "LICENSEE" MEANS A PERSON WHO IS LICENSED BY THE COMMISSION TO
OFFER INTERACTIVE GAMING, USING AN INTERACTIVE GAMING PLATFORM TO
AUTHORIZED PARTICIPANTS. A LICENSEE MAY UTILIZE MULTIPLE INTERACTIVE
GAMING PLATFORMS PROVIDED THAT EACH PLATFORM IS APPROVED BY THE COMMIS-
SION.
11. "OMAHA HOLD'EM POKER" MEANS THE POKER GAME MARKETED AS OMAHA
HOLD'EM POKER OR OMAHA POKER IN WHICH EACH PLAYER IS DEALT FOUR CARDS
AND MUST MAKE HIS OR HER BEST HAND USING EXACTLY TWO OF THEM, PLUS
EXACTLY THREE OF THE FIVE COMMUNITY CARDS.
12. "SIGNIFICANT VENDOR" MEANS ANY PERSON WHO OFFERS OR WHO PROPOSES
TO OFFER ANY OF THE FOLLOWING SERVICES WITH RESPECT TO INTERACTIVE
GAMING: (A) A CORE FUNCTION; (B) SALE, LICENSING OR OTHER RECEIPT OF
COMPENSATION FOR SELLING OR LICENSING A DATABASE OR CUSTOMER LIST OF
INDIVIDUALS RESIDING IN THE UNITED STATES SELECTED IN WHOLE OR IN PART
BECAUSE THEY PLACED WAGERS OR PARTICIPATED IN GAMBLING GAMES WITH OR
A. 5250 4
THROUGH AN INTERNET WEBSITE OR OPERATOR (OR ANY DERIVATIVE OF SUCH A
DATABASE OR CUSTOMER LIST); (C) PROVISION OF ANY TRADEMARK, TRADENAME,
SERVICE MARK OR SIMILAR INTELLECTUAL PROPERTY UNDER WHICH A LICENSEE OR
SIGNIFICANT VENDOR IDENTIFIES INTERACTIVE GAMES TO CUSTOMERS; OR (D)
PROVISION OF ANY PRODUCT, SERVICE OR ASSET TO A LICENSEE OR SIGNIFICANT
VENDOR IN RETURN FOR A PERCENTAGE OF INTERACTIVE GAMING REVENUE (NOT
INCLUDING FEES TO FINANCIAL INSTITUTIONS AND PAYMENT PROVIDERS FOR
FACILITATING A DEPOSIT OR WITHDRAWAL BY AN AUTHORIZED PARTICIPANT). THE
TERM "SIGNIFICANT VENDOR" SHALL NOT INCLUDE A PROVIDER OF GOODS OR
SERVICES TO A LICENSEE THAT ARE NOT SPECIFICALLY DESIGNED FOR USE AND
NOT PRINCIPALLY USED IN CONNECTION WITH INTERACTIVE GAMING.
13. "TEXAS HOLD'EM POKER" MEANS THE TYPE OF POKER MARKETED AS TEXAS
HOLD'EM POKER THAT INVOLVES TWO CARDS BEING DEALT FACE DOWN TO EACH
PLAYER AND THEN FIVE COMMUNITY CARDS BEING PLACED FACE-UP BY THE DEALER,
A SERIES OF THREE THEN TWO ADDITIONAL SINGLE CARDS, WITH PLAYERS HAVING
THE OPTION TO CHECK, BET, RAISE OR FOLD AFTER EACH DEAL.
§ 1502. AUTHORIZATION. 1. THE COMMISSION SHALL, WITHIN ONE HUNDRED
EIGHTY DAYS OF THE DATE THIS ARTICLE BECOMES LAW, PROMULGATE REGULATIONS
TO IMPLEMENT INTERACTIVE GAMING IN THIS STATE AND SHALL AUTHORIZE UP TO
ELEVEN LICENSES TO OPERATE INTERACTIVE GAMING INVOLVING AUTHORIZED
PARTICIPANTS, SUBJECT TO THE PROVISIONS OF THIS ARTICLE AND OTHER APPLI-
CABLE PROVISIONS OF LAW.
2. APPLICANTS ELIGIBLE TO APPLY FOR A LICENSE PURSUANT TO THIS ARTICLE
SHALL BE THOSE ENTITIES:
(A) LICENSED BY THE STATE PURSUANT TO SECTION SIXTEEN HUNDRED SEVEN-
TEEN-A OF THE TAX LAW TO OPERATE VIDEO LOTTERY GAMING AND HAS EXPERIENCE
IN THE OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH
COMPARABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF ADEQUATE
BUSINESS COMPETENCE AND EXPERIENCE IN THE OPERATION OF INTERACTIVE
GAMING; OR
(B) LICENSED BY THE STATE TO OPERATE A CLASS III GAMING FACILITY
PURSUANT TO ARTICLE THIRTEEN OF THIS CHAPTER AND HAS EXPERIENCE IN THE
OPERATION OF INTERACTIVE GAMING BY BEING LICENSED IN A STATE WITH COMPA-
RABLE LICENSING REQUIREMENTS OR GUARANTEES ACQUISITION OF ADEQUATE BUSI-
NESS COMPETENCE AND EXPERIENCE IN THE OPERATION OF INTERACTIVE GAMING.
3. THE COMMISSION SHALL, TO THE EXTENT PRACTICABLE, ISSUE LICENSES TO
MULTIPLE APPLICANTS NO SOONER THAN ONE HUNDRED EIGHTY DAYS AFTER THE
PROMULGATION OF REGULATIONS IN ORDER TO ENSURE A ROBUST AND COMPETITIVE
MARKET FOR CONSUMERS AND TO PREVENT EARLY LICENSEES FROM GAINING AN
UNFAIR COMPETITIVE ADVANTAGE.
4. NO PERSON MAY OPERATE, MANAGE OR MAKE AVAILABLE AN INTERACTIVE
GAMING PLATFORM OR ACT AS A SIGNIFICANT VENDOR WITH RESPECT TO INTERAC-
TIVE GAMING THAT IS OFFERED TO PERSONS LOCATED IN THIS STATE UNLESS
LICENSED BY THE COMMISSION PURSUANT TO THIS ARTICLE AND ONLY THOSE GAMES
AUTHORIZED BY THE COMMISSION SHALL BE PERMITTED.
5. LICENSE APPLICANTS MAY FORM A PARTNERSHIP, JOINT VENTURE OR OTHER
CONTRACTUAL ARRANGEMENT IN ORDER TO FACILITATE THE PURPOSES OF THIS
ARTICLE.
6. ANY PERSON FOUND SUITABLE BY THE COMMISSION MAY BE ISSUED A LICENSE
AS AN OPERATOR OR SIGNIFICANT VENDOR PURSUANT TO THIS ARTICLE. IN DETER-
MINING SUITABILITY, THE COMMISSION SHALL CONSIDER THOSE FACTORS IT DEEMS
RELEVANT IN ITS DISCRETION, INCLUDING BUT NOT LIMITED TO:
(A) WHETHER THE APPLICANT IS A PERSON OF GOOD CHARACTER, HONESTY AND
INTEGRITY;
(B) WHETHER THE APPLICANT IS PERSON WHOSE PRIOR ACTIVITIES, CRIMINAL
RECORD, IF ANY, REPUTATION, HABITS AND ASSOCIATIONS DO NOT:
A. 5250 5
(I) POSE A THREAT TO THE PUBLIC INTEREST OR TO THE EFFECTIVE REGU-
LATION AND CONTROL OF INTERACTIVE GAMING; OR
(II) CREATE OR ENHANCE THE DANGERS OF UNSUITABLE, UNFAIR OR ILLEGAL
PRACTICES, METHODS AND ACTIVITIES IN THE CONDUCT OF INTERACTIVE GAMING
OR IN THE CARRYING ON OF THE BUSINESS AND FINANCIAL ARRANGEMENTS INCI-
DENTAL TO SUCH GAMING;
(C) WHETHER THE APPLICANT IS CAPABLE OF AND LIKELY TO CONDUCT THE
ACTIVITIES FOR WHICH THE APPLICANT IS LICENSED IN ACCORDANCE WITH THE
PROVISIONS OF THIS ARTICLE, ANY REGULATIONS PRESCRIBED UNDER THIS ARTI-
CLE AND ALL OTHER APPLICABLE LAWS;
(D) WHETHER THE APPLICANT HAS OR GUARANTEES ACQUISITION OF ADEQUATE
BUSINESS COMPETENCE AND EXPERIENCE IN THE OPERATION OF LICENSED GAMING
OR OF INTERACTIVE GAMING IN THIS STATE OR IN A STATE WITH COMPARABLE
LICENSING REQUIREMENTS; AND
(E) WHETHER THE APPLICANT HAS OR WILL OBTAIN SUFFICIENT FINANCING FOR
THE NATURE OF THE PROPOSED OPERATION AND FROM A SUITABLE SOURCE.
7. THE COMMISSION FURTHER SHALL DEVELOP STANDARDS BY WHICH TO EVALUATE
AND APPROVE INTERACTIVE GAMING PLATFORMS FOR USE WITH INTERACTIVE
GAMING. INTERACTIVE GAMING PLATFORMS MUST BE APPROVED BY THE COMMISSION
BEFORE BEING USED BY A LICENSEE OR SIGNIFICANT VENDOR TO CONDUCT INTER-
ACTIVE GAMING IN THIS STATE.
8. THE COMMISSION SHALL REQUIRE ALL LICENSEES TO PAY A ONE-TIME FEE OF
TEN MILLION DOLLARS. SUCH FEE PAID BY EACH LICENSEE SHALL BE APPLIED TO
SATISFY, IN WHOLE OR IN PART, AS APPLICABLE, THAT LICENSEE'S TAX OBLI-
GATION PURSUANT TO SECTION FIFTEEN HUNDRED FIVE OF THIS ARTICLE IN SIXTY
EQUAL MONTHLY INSTALLMENTS, ALLOCATED TO EACH OF THE FIRST SIXTY MONTHS
OF TAX OWED AFTER THE LICENSEE HAS BEGUN OPERATING INTERACTIVE GAMING
PURSUANT TO THIS ARTICLE. NO AMOUNTS NOT REQUIRED TO BE USED TO SATISFY
SUCH TAX OBLIGATION DURING THAT PERIOD SHALL BE ALLOCATED TO PAYMENT OF
SUCH TAX OBLIGATION AFTER THAT PERIOD.
9. LICENSES ISSUED BY THE COMMISSION SHALL REMAIN IN EFFECT FOR TEN
YEARS.
10. THE COMMISSION, BY REGULATION, MAY AUTHORIZE AND PROMULGATE ANY
RULES NECESSARY TO IMPLEMENT AGREEMENTS WITH OTHER STATES, OR AUTHORIZED
AGENCIES THEREOF (A) TO ENABLE PATRONS IN THOSE STATES TO PARTICIPATE IN
INTERACTIVE GAMING OFFERED BY LICENSEES UNDER THIS ARTICLE OR (B) TO
ENABLE PATRONS IN THIS STATE TO PARTICIPATE IN INTERACTIVE GAMING
OFFERED BY LICENSEES UNDER THE LAWS OF THOSE OTHER STATES, PROVIDED THAT
SUCH OTHER STATE OR AUTHORIZED AGENCY APPLIES SUITABILITY STANDARDS AND
REVIEW MATERIALLY CONSISTENT WITH THE PROVISIONS OF THIS ARTICLE.
11. ANY REGULATIONS ADOPTED PURSUANT TO SUBDIVISION TEN OF THIS
SECTION MUST SET FORTH PROVISIONS THAT ADDRESS:
(A) ANY ARRANGEMENTS TO SHARE REVENUE BETWEEN NEW YORK AND ANY OTHER
STATE OR AGENCY WITHIN ANOTHER STATE; AND
(B) ARRANGEMENTS TO ENSURE THE INTEGRITY OF INTERACTIVE GAMING OFFERED
PURSUANT TO ANY SUCH AGREEMENT AND THE PROTECTION OF PATRONS LOCATED IN
THIS STATE.
12. THE COMMISSION MAY DELEGATE ITS RESPONSIBILITIES TO ADMINISTER THE
PROVISIONS OF THIS ARTICLE TO THE DIVISION, AS IT SEES FIT, EXCEPT FOR
ITS RESPONSIBILITIES TO APPROVE LICENSES.
§ 1503. REQUIRED SAFEGUARDS/MINIMUM STANDARDS. THE COMMISSION SHALL
REQUIRE LICENSEES TO IMPLEMENT MEASURES TO MEET THE STANDARDS SET OUT IN
THIS SECTION, ALONG WITH SUCH OTHER STANDARDS THAT THE COMMISSION IN ITS
DISCRETION MAY CHOOSE TO REQUIRE.
A. 5250 6
(A) APPROPRIATE SAFEGUARDS TO ENSURE, TO A REASONABLE DEGREE OF
CERTAINTY, THAT PARTICIPANTS IN INTERACTIVE GAMING ARE NOT YOUNGER THAN
TWENTY-ONE YEARS OF AGE.
(B) APPROPRIATE SAFEGUARDS TO ENSURE, TO A REASONABLE DEGREE OF
CERTAINTY, THAT PARTICIPANTS IN INTERACTIVE GAMING ARE PHYSICALLY
LOCATED WITHIN THE STATE OR SUCH OTHER JURISDICTION THAT THE COMMISSION
HAS DETERMINED TO BE PERMISSIBLE.
(C) APPROPRIATE SAFEGUARDS TO PROTECT, TO A REASONABLE DEGREE OF
CERTAINTY, THE PRIVACY AND ONLINE SECURITY OF PARTICIPANTS IN INTERAC-
TIVE GAMING.
(D) APPROPRIATE SAFEGUARDS TO ENSURE, TO A REASONABLE DEGREE OF
CERTAINTY, THAT THE INTERACTIVE GAMING IS FAIR AND HONEST AND THAT
APPROPRIATE MEASURES ARE IN PLACE TO DETER, DETECT AND, TO THE EXTENT
REASONABLY POSSIBLE, TO PREVENT CHEATING, INCLUDING COLLUSION, AND USE
OF CHEATING DEVICES, INCLUDING USE OF SOFTWARE PROGRAMS (SOMETIMES
REFERRED TO AS "BOTS") THAT MAKE BETS OR WAGERS ACCORDING TO ALGORITHMS.
(E) APPROPRIATE SAFEGUARDS TO MINIMIZE COMPULSIVE GAMING AND TO
PROVIDE NOTICE TO PARTICIPANTS OF RESOURCES TO HELP PROBLEM GAMBLERS.
(F) APPROPRIATE SAFEGUARDS TO ENSURE PARTICIPANTS' FUNDS ARE HELD IN
ACCOUNTS SEGREGATED FROM THE FUNDS OF LICENSEES AND OTHERWISE ARE
PROTECTED FROM CORPORATE INSOLVENCY, FINANCIAL RISK OR CRIMINAL OR CIVIL
ACTIONS AGAINST THE LICENSEE.
§ 1504. SCOPE OF LICENSING REVIEW. 1. IN CONNECTION WITH ANY LICENSE
ISSUED PURSUANT TO THIS ARTICLE, THE LICENSEE, SIGNIFICANT VENDOR OR
APPLICANT SHALL IDENTIFY AND THE COMMISSION SHALL REVIEW THE SUITABILITY
OF SUCH LICENSEE'S, SIGNIFICANT VENDOR'S OR APPLICANT'S OWNER, CHIEF
EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND ANY OTHER OFFICER OR
EMPLOYEE WHO THE COMMISSION DEEMS IS SIGNIFICANTLY INVOLVED IN THE
MANAGEMENT OR CONTROL OF THE LICENSEE, SIGNIFICANT VENDOR OR APPLICANT
OR OF THE INTERACTIVE GAMING PLATFORM. "OWNER" FOR PURPOSES OF THIS
PROVISION MEANS ANY PERSON WHO DIRECTLY OR INDIRECTLY HOLDS ANY BENEFI-
CIAL OR OWNERSHIP INTEREST IN THE APPLICANT OF FIVE PERCENT OR GREATER
OR ANY AMOUNT OF OWNERSHIP THAT THE COMMISSION DETERMINES TO BE SIGNIF-
ICANT OWNERSHIP OF THE LICENSEE, SIGNIFICANT VENDOR, OR APPLICANT.
2. INSTITUTIONAL INVESTORS ARE SUBJECT TO THE PROVISIONS SET OUT IN
THIS SECTION.
(A) AN INSTITUTIONAL INVESTOR HOLDING UNDER TWENTY-FIVE PERCENT OF THE
EQUITY SECURITIES OF A LICENSEE'S OR SIGNIFICANT VENDOR'S (OR APPLI-
CANT'S) HOLDING OR INTERMEDIARY COMPANIES, SHALL BE GRANTED A WAIVER OF
ANY INVESTIGATION OF SUITABILITY OR OTHER REQUIREMENT IF SUCH SECURITIES
ARE THOSE OF A CORPORATION, WHETHER PUBLICLY TRADED OR PRIVATELY HELD,
AND ITS HOLDINGS OF SUCH SECURITIES WERE PURCHASED FOR INVESTMENT
PURPOSES ONLY AND IT FILES A CERTIFIED STATEMENT TO THE EFFECT THAT IT
HAS NO INTENTION OF INFLUENCING OR AFFECTING THE AFFAIRS OF THE ISSUER,
THE LICENSEE (OR SIGNIFICANT VENDOR OR APPLICANT, AS APPLICABLE) OR ITS
HOLDING OR INTERMEDIARY COMPANIES; PROVIDED, HOWEVER, THAT IT SHALL BE
PERMITTED TO VOTE ON MATTERS PUT TO THE VOTE OF THE OUTSTANDING SECURITY
HOLDERS. THE COMMISSION MAY GRANT SUCH A WAIVER TO AN INSTITUTIONAL
INVESTOR HOLDING A HIGHER PERCENTAGE OF SUCH SECURITIES UPON A SHOWING
OF GOOD CAUSE AND IF THE CONDITIONS SPECIFIED ABOVE ARE MET. ANY INSTI-
TUTIONAL INVESTOR GRANTED A WAIVER UNDER THIS PARAGRAPH WHICH SUBSE-
QUENTLY DETERMINES TO INFLUENCE OR AFFECT THE AFFAIRS OF THE ISSUER
SHALL PROVIDE NOT LESS THAN THIRTY DAYS' NOTICE OF SUCH INTENT AND SHALL
FILE WITH THE COMMISSION A REQUEST FOR DETERMINATION OF SUITABILITY
BEFORE TAKING ANY ACTION THAT MAY INFLUENCE OR AFFECT THE AFFAIRS OF THE
ISSUER; PROVIDED, HOWEVER, THAT IT SHALL BE PERMITTED TO VOTE ON MATTERS
A. 5250 7
PUT TO THE VOTE OF THE OUTSTANDING SECURITY HOLDERS. IF AN INSTITUTIONAL
INVESTOR CHANGES ITS INVESTMENT INTENT, OR IF THE COMMISSION FINDS
REASONABLE CAUSE TO BELIEVE THAT THE INSTITUTIONAL INVESTOR MAY BE FOUND
UNSUITABLE, NO ACTION OTHER THAN DIVESTITURE SHALL BE TAKEN BY SUCH
INVESTOR WITH RESPECT TO ITS SECURITY HOLDINGS UNTIL THERE HAS BEEN
COMPLIANCE WITH ANY REQUIREMENTS ESTABLISHED BY THE COMMISSION, WHICH
MAY INCLUDE THE EXECUTION OF A TRUST AGREEMENT. THE LICENSEE (OR SIGNIF-
ICANT VENDOR OR APPLICANT, AS APPLICABLE) AND ITS RELEVANT HOLDING,
INTERMEDIARY OR SUBSIDIARY COMPANY SHALL NOTIFY THE COMMISSION IMME-
DIATELY OF ANY INFORMATION ABOUT, OR ACTIONS OF, AN INSTITUTIONAL INVES-
TOR HOLDING ITS EQUITY SECURITIES WHERE SUCH INFORMATION OR ACTION MAY
IMPACT UPON THE ELIGIBILITY OF SUCH INSTITUTIONAL INVESTOR FOR A WAIVER
PURSUANT TO THIS PARAGRAPH.
(B) IF AT ANY TIME THE COMMISSION FINDS THAT AN INSTITUTIONAL INVESTOR
HOLDING ANY SECURITY OF A HOLDING OR INTERMEDIARY COMPANY OF A LICENSEE
OR SIGNIFICANT VENDOR OR APPLICANT, OR, WHERE RELEVANT, OF ANOTHER
SUBSIDIARY COMPANY OF A HOLDING OR INTERMEDIARY COMPANY OF A LICENSEE OR
SIGNIFICANT VENDOR OR APPLICANT WHICH IS RELATED IN ANY WAY TO THE
FINANCING OF THE LICENSEE OR SIGNIFICANT VENDOR OR APPLICANT, FAILS TO
COMPLY WITH THE TERMS OF PARAGRAPH (A) OF THIS SECTION, OR IF AT ANY
TIME THE COMMISSION FINDS THAT, BY REASON OF THE EXTENT OR NATURE OF ITS
HOLDINGS, AN INSTITUTIONAL INVESTOR IS IN A POSITION TO EXERCISE SUCH A
SUBSTANTIAL IMPACT UPON THE CONTROLLING INTERESTS OF A LICENSEE OR
SIGNIFICANT VENDOR OR APPLICANT THAT INVESTIGATION AND DETERMINATION OF
SUITABILITY OF THE INSTITUTIONAL INVESTOR IS NECESSARY TO PROTECT THE
PUBLIC INTEREST, THE COMMISSION MAY TAKE ANY NECESSARY ACTION OTHERWISE
AUTHORIZED UNDER THIS ARTICLE TO PROTECT THE PUBLIC INTEREST.
(C) FOR PURPOSES OF THIS SECTION, AN "INSTITUTIONAL INVESTOR" SHALL
MEAN ANY RETIREMENT FUND ADMINISTERED BY A PUBLIC AGENCY FOR THE EXCLU-
SIVE BENEFIT OF FEDERAL, STATE, OR LOCAL PUBLIC EMPLOYEES; INVESTMENT
COMPANY REGISTERED UNDER THE INVESTMENT COMPANY ACT OF 1940 (15 U.S.C. §
80A-1 ET SEQ.); COLLECTIVE INVESTMENT TRUST ORGANIZED BY BANKS UNDER
PART NINE OF THE RULES OF THE COMPTROLLER OF THE CURRENCY; CLOSED END
INVESTMENT TRUST; CHARTERED OR LICENSED LIFE INSURANCE COMPANY OR PROP-
ERTY AND CASUALTY INSURANCE COMPANY; BANKING AND OTHER CHARTERED OR
LICENSED LENDING INSTITUTION; INVESTMENT ADVISOR REGISTERED UNDER THE
INVESTMENT ADVISORS ACT OF 1940 (15 U.S.C. § 80B-1 ET SEQ.); AND SUCH
OTHER PERSONS AS THE COMMISSION MAY DETERMINE FOR REASONS CONSISTENT
WITH THE PUBLIC INTEREST.
§ 1505. STATE TAX. LICENSEES ENGAGED IN THE BUSINESS OF CONDUCTING
INTERACTIVE GAMING PURSUANT TO THIS ARTICLE SHALL PAY A PRIVILEGE TAX
BASED ON THE LICENSEE'S INTERACTIVE GAMING GROSS REVENUE AT A FIFTEEN
PERCENT RATE.
§ 1506. DISPOSITION OF TAXES. THE COMMISSION SHALL PAY INTO THE STATE
LOTTERY FUND ALL TAXES IMPOSED BY THIS ARTICLE; ANY INTEREST AND PENAL-
TIES IMPOSED BY THE COMMISSION RELATING TO THOSE TAXES; ALL PENALTIES
LEVIED AND COLLECTED BY THE COMMISSION; AND THE APPROPRIATE FUNDS, CASH
OR PRIZES FORFEITED FROM INTERACTIVE GAMING.
§ 2. Subdivision 1 of section 225.00 of the penal law is amended to
read as follows:
1. "Contest of chance" means any contest, game, gaming scheme or
gaming device in which the outcome depends [in a material degree]
PREDOMINANTLY upon an element of chance, notwithstanding that skill of
the contestants may also be a factor therein.
§ 3. The penal law is amended by adding a new section 225.36 to read
as follows:
A. 5250 8
§ 225.36 INTERACTIVE GAMING OFFENSES AND EXCEPTIONS.
1. THE KNOWING AND WILLFUL OFFERING OF UNLICENSED INTERACTIVE GAMING
TO PERSONS IN THIS STATE, OR THE KNOWING AND WILLFUL PROVISION OF
SERVICES WITH RESPECT THERETO, SHALL CONSTITUTE A GAMBLING OFFENSE UNDER
THIS ARTICLE.
2. LICENSED INTERACTIVE GAMING ACTIVITIES UNDER SECTION FIFTEEN
HUNDRED TWO OF THE RACING, PARI-MUTUEL WAGERING AND BREEDING LAW SHALL
NOT BE A GAMBLING OFFENSE UNDER THIS ARTICLE.
3. A PERSON OFFERING UNLICENSED INTERACTIVE GAMING TO PERSONS IN THIS
STATE SHALL BE LIABLE FOR ALL TAXES SET FORTH IN SECTION FIFTEEN HUNDRED
FIVE OF THE RACING, PARI-MUTUEL WAGERING AND BREEDING LAW IN THE SAME
MANNER AND AMOUNTS AS IF SUCH PERSON WERE A LICENSEE. TIMELY PAYMENT OF
SUCH TAXES SHALL NOT CONSTITUTE A DEFENSE TO ANY PROSECUTION OR OTHER
PROCEEDING IN CONNECTION WITH THE INTERACTIVE GAMING EXCEPT FOR A PROSE-
CUTION OR PROCEEDING ALLEGING FAILURE TO MAKE SUCH PAYMENT.
§ 4. Severability clause. If any provision of this act or application
thereof shall for any reason be adjudged by any court of competent
jurisdiction to be invalid, such judgment shall not affect, impair, or
invalidate the remainder of the act, but shall be confined in its opera-
tion to the provision thereof directly involved in the controversy in
which the judgment shall have been rendered.
§ 5. This act shall take effect on the one hundred eightieth day after
it shall have become a law.