Six years after the passage of New York’s fantasy sports law—and a recent decision by New York’s highest court upholding that law—the New York State Gaming Commission has finally released proposed regulations governing the licensing and operation of online fantasy sports contests in the state.
While fantasy contest operators who were already offering contests in New York in 2015 have been allowed to continue operating under a temporary permit, newer operators will soon finally have the opportunity to apply for registration (once the regulations become effective). Before the regulations are finalized, there is a 60-day public comment period (ending September 16, 2022) during which the Commission will accept and consider feedback.
The proposed regulations are in many respects similar to the rules governing fantasy sports in other states—including required taxes, operator licensing, minimum age limits, protection of user funds, marketing and responsible gaming rules, special requirements for beginner and highly experienced players, and a variety of other mandatory internal controls and procedures. Many of these regulations are implementing requirements contained in New York’s 2016 fantasy sports statute.
In other respects, however, New York’s proposed regulations contain unique or more expansive provisions than other states—for instance:
- The registration process requires a suitability review (including personal disclosure applications and fingerprinting) for the applicant’s officers, directors, and anyone else with a 10% or greater direct or indirect interest in the operator
- Prop betting-style fantasy contests are explicitly prohibited
- The Commission has discretion to require contest systems to undergo testing and certification by an independent testing laboratory
- Mandatory designation of a chief information security officer, and submission of biannual reports concerning the operator’s cybersecurity program, including disclosure of any material cybersecurity events
- Strict liability and escalating fines for allowing any prohibited participant to enter a contest
- Requirement to publish and maintain a webpage with statistics on players’ rates of success
If you are a fantasy contest operator seeking to apply for registration in New York and looking for assistance, please feel free to contact Nick Jackson, Managing Director of ZG Gaming Solutions, at email@example.com. Or if you have legal questions about the substantive requirements of New York’s fantasy sports law or proposed regulations, please contact a member of ZwillGen’s Gaming, Gambling & Fantasy Sports team.