§ 4-49-205 — Requirements for fantasy sports operators

(a) In addition to the requirements of licensure set out in § 4-29-203, fantasy sports operators shall comply with the following requirements: (1) Fantasy sports operators shall not directly or indirectly operate or promote to Tennessee consumers any fantasy sports contest without a valid license obtained pursuant to this part; (2) Fantasy sports operators shall not operate or promote, in whole or in part, fantasy sports contests from this state to consumers outside of this state without a valid license obtained pursuant to this part; (3) Fantasy sports operators shall not offer auto draft to players or allow players to select from pre-selected teams of athletes in fantasy sports contests; (4) Fantasy sports operators shall not knowingly allow a minor to participate in any fantasy sports contest, which includes: (A) If a fantasy sports operator becomes or is made aware that a minor has participated in one (1) of its fantasy sports contests, the fantasy sports operator shall promptly, within no more than three (3) business days, refund any deposit received from the minor, whether or not the minor has engaged in or attempted to engage in a fantasy sports contest; provided, however, that any refund may be offset by prizes already awarded; (B) Fantasy sports operators shall clearly and conspicuously publish and facilitate parental control procedures to allow parents or guardians to exclude minors from access to any fantasy sports contest. These procedures shall include a toll free number to call for help in establishing such parental controls; and (C) Fantasy sports operators shall take all commercially reasonable steps to confirm that an individual opening an account is not a minor; (5) Fantasy sports operators shall not knowingly offer fantasy sports contests based on high school or college sporting events or sports whose participants are predominantly minors. For purposes of this subdivision (a)(5), "predominantly" means greater than fifty percent (50%); (6) Fantasy sports operators' advertisements for fantasy sports contests shall not target minors. For purposes of this subdivision (a)(6): (A) Advertisements that target minors are: (i) Publications or media aimed exclusively or primarily at minors; (ii) Advertisements or promotional activities at schools or school or amateur sporting events; (iii) Advertisements that depict cartoon characters, minors, students, or school or college settings; or (iv) Advertisements that state or imply endorsement by minors; and (B) "School or amateur sporting events" include school or amateur sporting events held at venues not primarily used for amateur or school events; provided, however, if permanent or semi-permanently placed advertisements in such venues cannot reasonably be removed or covered, a fantasy sports operator shall not be in violation of this subdivision (a)(6); (7) Fantasy sports operators' advertisements for fantasy sports contests shall clearly and conspicuously depict accurate representations concerning chances of winning and the number of persons winning; (8) Fantasy sports operators' representations or implications about average winnings from fantasy sports contests shall not be unfair or misleading. Such representations shall include, at a minimum, the average net winnings of all players participating in fantasy sports contests offered by the single fantasy sports operator and the percentage of winnings awarded by the single fantasy sports operator to highly experienced players participating in that operator's fantasy sports contests; (9) Fantasy sports operators shall comply with the Federal Trade Commission, Guides Concerning Use of Endorsements and Testimonials in Advertising, compiled in 16 CFR § 255 ; (10) (A) Fantasy sports operators' advertisements for fantasy sports contests shall, where feasible, clearly and conspicuously disclose information concerning assistance available to problem gamblers, including information directing problem gamblers to reputable resources containing further information. Such information shall be available free of charge during all times the fantasy sports operator is open for accepting entry fees and shall include a toll free number that persons may use to seek assistance; and (B) When information concerning resources for problem gamblers as required by subdivision (a)(10)(A) cannot be presented in the advertisement itself, the information shall be clearly and conspicuously disclosed on the web site to which the advertisement directs consumers, and be visible before the consumer is directed to establish an account, otherwise register with the fantasy sports operator, or log-in to an existing account; (11) Fantasy sports operators shall implement and enforce procedures for fantasy sports contests that: (A) Are clearly and conspicuously disclosed and featured in all fantasy sports contest platforms; and (B) Enable players to exclude themselves from contests and establish self-imposed deposit limits, limits on entry fees per fantasy sports contest, or limits on total potential losses permissible in a given period; (12) Fantasy sports operators shall not knowingly advertise any contest or prize directly to a player by any means if that player is self-excluded from that prize or contest or otherwise barred from playing in that contest; (13) Fantasy sports operators shall protect player funds on deposit. At a minimum, each fantasy sports operator shall: (A) Implement, clearly and conspicuously disclose to consumers, and follow: (i) Procedures that prevent unauthorized withdrawals from player accounts by fantasy sports operators or others; and (ii) Procedures for reporting and responding to complaints by a player regarding the handling of the player's accounts; (B) Implement, clearly and conspicuously disclose, and follow procedures that allow a player to permanently close the player's account at any time and for any reason, except if such closure is for the purposes of circumventing this part; (C) Promptly distribute any prize awarded to a player; (D) Return all funds from a closed account to the account holder within five (5) business days; and (E) Notify the account holder that the account has been closed when an account has been closed due to inactivity; (14) Fantasy sports operators shall prohibit all fantasy sports operator employees, fantasy sports operator contractors, and any spouse, children, or parents of any fantasy sports operator employee or contractor from participating in any fantasy sports contest involving a prize over five dollars ($5.00) offered by any fantasy sports operator, except such individuals may play in a private contest on a fantasy sports contest platform in which the affiliation is clearly and conspicuously disclosed to each player, and the restrictions set out in this subdivision (a)(14) are made known to the affected persons. This subdivision (a)(14) does not prohibit fantasy sports operator employees from utilizing test accounts solely in order to measure and assess the functionality of their products; provided, that these accounts must be closely monitored for any unauthorized use; (15) Fantasy sports operators shall prohibit the disclosure of proprietary and nonpublic information by all fantasy sports operator employees and fantasy sports operator contractors that may affect the result of a fantasy sports contest to any person permitted to engage in fantasy sports contests; (16) Fantasy sports operators shall not knowingly allow the following persons to participate in fantasy sports contests based on the sports in which the person participates or is otherwise associated: (A) Professional and amateur athletes whose individual statistics or performance may be used to determine any part of the outcome of any fantasy sports contest; and (B) Any sports agent, team employee, referee, or league official associated with any athletic competition that is the subject of fantasy sports contests; (17) (A) Fantasy sports operators shall not knowingly allow a player to enter a game or contest after that player has been provided with proprietary or nonpublic information that may affect the result of a fantasy sports contest by an athlete, sports agent, team employee, referee, or league official; (B) A fantasy sports operator shall regularly monitor its fantasy sports contests for evidence of activity that indicates that a player has access to proprietary or nonpublic information; and (C) On learning of a violation of this subdivision (a)(17), the fantasy sports operator shall permanently bar the player from participating in any fantasy sports contest operated by the fantasy sports operator and close the player's account; (18) Fantasy sports operators shall offer introductory procedures for fantasy sports contests for beginning players, which shall be clearly and conspicuously displayed on the main pages of the web site explaining contest play, how to identify highly experienced players, and recommending beginning- player-only contests and low-cost private contests; (19) Fantasy sports operators shall clearly and conspicuously identify highly experienced players in fantasy sports contests by a symbol attached to a player's username, or by other easily visible means, on all fantasy sports operator contest mediums and platforms; (20) Fantasy sports operators shall offer some fantasy sports contests open only to beginning players and that exclude highly experienced players. Operators of contests described in this subdivision (a)(20) shall: (A) Implement and follow procedures to prevent highly experienced players from participating in such fantasy sports contests directly or through a proxy; and (B) Suspend accounts of highly experienced players who participate in contests for beginning players only; (21) Fantasy sports operators shall prohibit the use of scripts in fantasy sports contests that give players an unfair advantage over other players; (22) Fantasy sports operators shall monitor all fantasy sports contests to detect the use of unauthorized scripts and ban players found to have used such scripts from further fantasy sports contests; (23) Fantasy sports operators shall make all authorized scripts readily available to all fantasy sports players; provided, that a fantasy sports operator shall clearly and conspicuously publish its rules on what types of scripts may be authorized in the fantasy sports contest; (24) Fantasy sports operators shall clearly and conspicuously disclose their rules regarding when a fantasy sports contest locks, thus allowing no further entries, changes to lineups, or substitution of players; (25) Fantasy sports operators shall restrict the number of entries per fantasy sports contest per player, including, but not limited to, the following restrictions, which shall be clearly and conspicuously disclosed and enforced: (A) Fantasy sports operators shall not allow players to submit more than one (1) entry in any fantasy sports contest involving twelve (12) entries or fewer; (B) Fantasy sports operators shall not allow players to submit more than two (2) entries in any fantasy sports contest involving more than thirteen (13) entries but fewer than thirty-six (36) entries; (C) Fantasy sports operators shall not allow players to submit more than three (3) entries in any fantasy sports contest involving thirty-six (36) or more entries but fewer than one hundred and one (101) entries; (D) Except as otherwise provided in subdivision (a)(25)(E), fantasy sports operators shall not allow fantasy sports players to submit more than three percent (3%) of all entries in any fantasy sports contest involving more than one hundred (100) entries; and (E) Fantasy sports operators shall be permitted to allow unlimited entries in no more than three percent (3%) of all fantasy sports contests, and the entry fee for such contests shall be a minimum of one hundred fifty dollars ($150); and (26) Fantasy sports operators shall protect player funds on deposit by, at a minimum: (A) Segregating player funds from operating funds; and (B) Maintaining a reserve for the benefit and protection of authorized players' funds in fantasy sports accounts. (b) For purposes of this section "clearly and conspicuously": (1) Means to disclose in such a way that the disclosure is made through the same means through which the communication is presented; (2) Requires that if the communication is visual, the disclosure is placed in close proximity to relevant claims, expressed in clear and plain language and syntax, and the size, contrast, location, and other characteristics stand out from other visual elements so that the disclosure is prominently displayed and unavoidable; (3) Requires that a disclosure is repeated if necessary, visible for a sufficient duration, and does not necessitate scrolling; (4) Requires that if the communication is audio, the disclosure is presented at adequate volume and cadence; and (5) Requires that the disclosure is made before the consumer makes a decision to accept an offer.

Legislative History

Renumbered from 47-18-1605 by 2023 Tenn. Acts, ch. 143, s 5, eff. 7/1/2023.