Connecticut Seal

General Assembly

File No. 633

    February Session, 2018

Substitute Senate Bill No. 540

Senate, April 23, 2018

The Committee on Finance, Revenue and Bonding reported through SEN. FONFARA of the 1st Dist. and SEN. FRANTZ, L. of the 36th Dist., Chairpersons of the Committee on the part of the Senate, that the substitute bill ought to pass.

AN ACT AUTHORIZING SPORTS WAGERING AND ONLINE LOTTERY DRAW GAMES IN THE STATE.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective July 1, 2018) (a) As used in this section, unless the context otherwise requires:

(1) "Gaming entity" means a casino gaming facility in the state, the Connecticut Lottery Corporation established pursuant to section 12-802 of the general statutes, a race track in the state at which racing events are licensed to be conducted, a fronton in the state at which the game of jai alai is licensed to be played, an off-track betting facility in the state operated by the Department of Consumer Protection or by a licensee authorized to operate the off-track betting system or any other individual, entity or facility residing or located in the state and licensed by the department to offer wagering;

(2) "Interactive sports wagering platform" or "platform" means an individual or entity that offers sports wagering over the Internet, including through an Internet web site or a mobile device, on behalf of a gaming entity;

(3) "Official league data" means statistics, results, outcomes and other data relating to a sporting event, obtained from the relevant sports governing body or an entity expressly authorized by such sports governing body to provide such statistics, results, outcomes and other data to a sports wagering operator;

(4) "Sports governing body" means the organization that prescribes final rules and enforces codes of conduct with respect to a sporting event and participants in such sporting event;

(5) "Sports wagering" means accepting wagers on (A) a sporting event or a portion or portions of a sporting event, or (B) the individual performance statistics of an athlete or athletes in a sporting event or a combination of sporting events, by any system or method of wagering, including, but not limited to, in-person or over the Internet through an Internet web site or a mobile device. "Sports wagering" includes, but is not limited to, single-game bets, teaser bets, parlays, over-under bets, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets and straight bets;

(6) "Sports wagering operator" or "operator" means a gaming entity that offers sports wagering or an interactive sports wagering platform;

(7) "Sports wagering gross revenue" means (A) the amount equal to the total amount of all wagers placed on sporting events not excluded from sports wagering that a sports wagering operator collects from all bettors, less the total amount of all sums paid out as winnings to bettors, except that the cash equivalent value of any merchandise or thing of value awarded as a prize shall not be included in the sums paid out as winnings, or (B) in the case of exchange wagering, the amount equal to the total amount of commissions retained by an operator on winning sports wagers placed by bettors;

(8) "Tier one sports wager" means a sports wager that is determined solely by the final score or final outcome of a sporting event and is placed before the sporting event has begun;

(9) "Tier two sports wager" means a sports wager that is not a tier one sports wager;

(10) "Wager" or "bet" means the staking or risking by an individual of anything of value, upon the agreement or understanding that such individual or another individual will receive something of value in the event of a specific outcome. "Wager" or "bet" does not include (A) any activity governed by federal or state securities laws, (B) any indemnity or guaranty contract, (C) any insurance contract, or (D) participation in any game or contest in which (i) the participants do not stake or risk anything of value other than the personal efforts of such participants in playing the game or contest or obtaining access to the Internet, or (ii) the sponsor of the game or contest provides points or credits to the participants free of charge and such points or credits may only be used or redeemed for games or contests offered by the sponsor.

(b) (1) Sports wagering may not be offered in the state except by a gaming entity and may only be offered to the extent permitted under federal law.

(2) A gaming entity may offer sports wagering (A) to individuals who appear in person at a facility described in subdivision (1) of subsection (a) of this section, and (B) via an interactive sports wagering platform to individuals physically located in the state. A gaming entity may establish its own platform or may contract with a platform to administer sports wagering over the Internet on such gaming entity's behalf.

(c) (1) Each interactive sports wagering platform shall be licensed by the Department of Consumer Protection. Each applicant shall submit an application to the department, in a form and manner prescribed by the department, with an application fee of ten thousand dollars. Such license shall be renewable annually. The renewal fee shall be five thousand dollars. The commissioner may deny, nonrenew, suspend or revoke such license for cause after issuing a written decision to the applicant or licensee setting forth the basis for such denial, nonrenewal, suspension or revocation. Any applicant or licensee aggrieved by the action of the commissioner concerning a denial, nonrenewal, suspension or revocation of a license may appeal in accordance with the provisions of chapter 54 of the general statutes.

(2) Any proprietary, financial or personal information or trade secrets included in a platform license application or in any documents, reports and data submitted by an interactive sports wagering platform to the department shall not be disclosed pursuant to subsection (a) of section 1-210 of the general statutes unless disclosure is required by a court order.

(3) An interactive sports wagering platform may enter into agreements to offer sports wagering on behalf of one or more gaming entities, provided such agreements shall not be a prerequisite for the obtaining of a platform license.

(d) Each sports wagering operator shall:

(1) Require (A) each applicant for employment to submit to comprehensive background checks, including state and national criminal history records checks, and (B) each current employee to submit to such background checks annually. No operator may employ an individual who has been convicted of any crime involving corruption, manipulation of a sporting event or association with organized crime;

(2) Verify that an individual placing a wager pursuant to this section is at least twenty-one years of age. Any individual may restrict himself or herself from placing wagers with an operator, including imposing wager limits, and any operator that has been notified by such individual of such restriction or limit shall take reasonable steps to prevent such individual from exceeding such restriction or limit;

(3) (A) Use whatever data source such operator deems appropriate to determine the result of any tier one wager, and (B) use only official sports governing body data to determine the result of any tier two wager, if the relevant sports governing body possesses a feed of official league data and makes such feed available for purchase by the operator on commercially reasonable terms;

(4) Maintain records of all bets and wagers placed, including personally identifiable information of the bettor, the amount and type of the bet, the time the bet was placed, the location of the bet, including any assigned Internet protocol address, the outcome of the bet, records of abnormal betting activity and, in the case of in-person wagers, video camera recordings, for at least three years after the sporting event occurs. Each operator shall make such records and recordings available for inspection upon request of the Commissioner of Consumer Protection or as required by a court order;

(5) Maintain the security of wagering data, customer data and other confidential information to prevent unauthorized access and dissemination. Nothing in this subdivision shall preclude the use of any Internet-based hosting of such data or information or the disclosure of such data or information pursuant to a court order; and

(6) Maintain the confidentiality of information provided by a sports governing body to such operator, unless disclosure is required pursuant to a court order.

(e) Any advertisement for sports wagering shall:

(1) Ensure that such advertisement does not target minors or other individuals or demographics who are ineligible to place wagers, problem gamblers or other vulnerable individuals. The Commissioner of Consumer Protection may adopt regulations in accordance with the provisions of chapter 54 of the general statutes to specify the form, quantity or frequency, timing and location of such advertisement;

(2) Disclose in such advertisement the identity of the sports wagering operator;

(3) Include information about or Internet web site links to resources related to gambling addiction; and

(4) Not be false, misleading or deceptive to a reasonable consumer.

(f) (1) No individual who is a sports wagering operator or is an officer, director, owner or employee of a sports wagering operator, and no family member of such individual who resides in the same household as such individual, shall place any wager with such operator.

(2) No athlete, coach, referee, team owner or employee of a sports governing body or such governing body's member teams, and no personnel of any bargaining unit of such governing body's athletes or referees, shall place any wager on any sporting event overseen by such governing body. In determining which individuals are prohibited from placing a wager under this subdivision, a sports wagering operator shall use publicly available information and any lists provided by the relevant sports governing body to the Department of Consumer Protection.

(3) No individual with access to nonpublic, confidential information held by a sports wagering operator concerning a sporting event shall place any wager on such sporting event with any operator.

(4) No individual shall place any wager pursuant to this section as an agent or a proxy for another individual.

(5) Each sports wagering operator shall take reasonable steps to prevent the conduct described under subdivisions (1) to (4), inclusive, of this subsection and shall immediately notify the Commissioner of Consumer Protection if such operator believes such conduct has occurred.

(g) (1) A tax is imposed on sports wagering gross revenue at the rate of fifteen per cent. Each sports wagering operator shall file a return with the Commissioner of Revenue Services, in such form and manner as the commissioner prescribes, not later than thirty days after the end of each calendar quarter and shall remit the tax due under this subdivision with such return.

(2) A sports betting right and integrity fee is imposed at the rate of one-quarter of one per cent of all wagers placed on sporting events with a sports wagering operator. Each sports wagering operator shall file a return with the Commissioner of Revenue Services, in such form and manner as the commissioner prescribes, not later than thirty days after the end of each calendar quarter and shall remit the tax due under this subdivision with such return. Each operator shall identify in each such return the percentage of wagers during the reporting period that is attributable to each sports governing body's sporting events. The amounts remitted pursuant to this subdivision shall be deposited in the sports betting right and integrity fee account established pursuant to section 2 of this act.

(3) (A) Beginning in the second calendar year immediately succeeding the year in which sports wagering is permitted in the state under federal law, a sports governing body may submit, not later than April thirtieth annually, a request to the Commissioner of Revenue Services for a distribution of the fees remitted by operators pursuant to subdivision (2) of this subsection in the previous calendar year, and shall notify the Commissioner of Consumer Protection of the submission of such request. The Commissioner of Revenue Services shall disburse funds to the sports governing body on a pro rata basis of the total amounts reported wagered in the previous calendar year on sporting events. The commissioner shall distribute any unclaimed sports betting right and integrity fees on a pro rata basis to the sports governing body or bodies that submitted eligible and timely distribution requests.

(B) The Commissioners of Consumer Protection and Revenue Services shall cooperate with a sports governing body and operators to ensure the timely, efficient and accurate sharing of information with and distribution of the sports betting right and integrity fees to the sports governing body.

(C) The Commissioner of Revenue Services shall publish annually a report that states the amount of the fees received from each sports wagering operator pursuant to subdivision (2) of this subsection in the previous calendar year and the amount disbursed to each sports governing body pursuant to subparagraph (A) of this subdivision.

(h) Any sports governing body may notify the Commissioner of Consumer Protection that:

(1) Real-time information sharing for wagers placed on its sporting event is necessary and desirable. Upon such notification, any sports wagering operators may share in real time, at the account level and in pseudonymous form, the records, other than the video camera recordings, maintained pursuant to subdivision (4) of subsection (d) of this section with the sports governing body or its designee with respect to wagers on its sporting events; and

(2) Such governing body desires to restrict, limit or exclude wagering on a sporting event or events by providing notice in such form and manner as the commissioner prescribes. If the commissioner denies such request, the sports governing body may appeal in accordance with the provisions of chapter 54 of the general statutes and no sports wagering operator shall accept wagers on such sporting event or events during the pendency of such appeal. The commissioner may adopt regulations in accordance with the provisions of chapter 54 of the general statutes to specify any sporting event or events that a sports governing body desires to restrict, limit or exclude from wagering on a permanent basis in the state.

(i) (1) Each sports wagering operator and the Commissioner of Consumer Protection shall cooperate with an investigation conducted by any sports governing body or law enforcement agency, including, but not limited to, by providing or facilitating the provision of account-level betting information and any audio or video camera recordings relating to individuals placing wagers.

(2) Each sports wagering operator shall immediately report to the Commissioner of Consumer Protection any information relating to (A) criminal or disciplinary proceedings commenced against such operator in connection with its operations, (B) abnormal betting activity or patterns that may indicate a concern with the integrity of a sporting event or events, (C) any potential breach of the relevant sports governing body's internal rules or codes of conduct pertaining to sports wagering, (D) any other conduct that corrupts the betting outcome of a sporting event or events for purpose of financial gain, including match-fixing, and (E) suspicious or illegal wagering activities, including the use of funds derived from illegal activity to place a wager, the placing of a wager to conceal funds derived from illegal activity, the use of an agent or a proxy to place a wager or the use of false identification to place a wager.

(3) Each sports wagering operator shall also immediately report to the relevant sports governing body any information relating to conduct described under subparagraphs (B) to (D), inclusive, of subdivision (2) of this subsection.

(j) Any individual or entity that knowingly violates any provision of this section shall be subject to a civil penalty of not more than five thousand dollars for each violation, not to exceed fifty thousand dollars for multiple violations arising out of the same transaction or occurrence.

(k) Any individual or entity that (1) places or causes to be placed a wager on the basis of material nonpublic information relating to such wager, or (2) knowingly engages in, facilitates or conceals conduct that is intended to influence a betting outcome of a sporting event for purposes of financial gain, in connection with wagering on such sporting event, shall be fined not more than five million dollars or imprisoned not more than ten years, or both. A wager is placed on the basis of material nonpublic information if the individual or entity placing the wager or causing the wager to be placed was aware of such information when such individual or entity placed such wager or caused such wager to be placed. Any individual or entity that is found to have violated subdivision (2) of this subsection shall be liable to the relevant sports governing body and may be sued by such governing body at law or in equity in any court of competent jurisdiction.

(l) The Commissioner of Consumer Protection may adopt regulations, in accordance with the provisions of chapter 54 of the general statutes, to implement the provisions of this section.

Sec. 2. (NEW) (Effective July 1, 2018) On and after the date sports wagering is permitted in the state under federal law, there is established an account to be known as the "sports betting right and integrity fee account" which shall be a separate, nonlapsing account within the General Fund. The account shall contain any moneys required by law to be deposited in the account. Moneys in the account shall be expended by the Commissioner of Revenue Services for the purposes of disbursing funds to sports governing bodies in accordance with the provisions of subparagraph (A) of subdivision (3) of subsection (g) of section 1 of this act.

Sec. 3. Subdivision (37) of subsection (a) of section 12-407 of the 2018 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective July 1, 2018):

(37) "Services" for purposes of subdivision (2) of this subsection, means:

(A) Computer and data processing services, including, but not limited to, time, programming, code writing, modification of existing programs, feasibility studies and installation and implementation of software programs and systems even where such services are rendered in connection with the development, creation or production of canned or custom software or the license of custom software;

(B) Credit information and reporting services;

(C) Services by employment agencies and agencies providing personnel services;

(D) Private investigation, protection, patrol work, watchman and armored car services, exclusive of (i) services of off-duty police officers and off-duty firefighters, and (ii) coin and currency services provided to a financial services company by or through another financial services company. For purposes of this subparagraph, "financial services company" has the same meaning as provided under subparagraphs (A) to (H), inclusive, of subdivision (6) of subsection (a) of section 12-218b;

(E) Painting and lettering services;

(F) Photographic studio services;

(G) Telephone answering services;

(H) Stenographic services;

(I) Services to industrial, commercial or income-producing real property, including, but not limited to, such services as management, electrical, plumbing, painting and carpentry, provided income-producing property shall not include property used exclusively for residential purposes in which the owner resides and which contains no more than three dwelling units, or a housing facility for low and moderate income families and persons owned or operated by a nonprofit housing organization, as defined in subdivision (29) of section 12-412;

(J) Business analysis, management, management consulting and public relations services, excluding (i) any environmental consulting services, (ii) any training services provided by an institution of higher education licensed or accredited by the Board of Regents for Higher Education or Office of Higher Education pursuant to sections 10a-35a and 10a-34, respectively, and (iii) on and after January 1, 1994, any business analysis, management, management consulting and public relations services when such services are rendered in connection with an aircraft leased or owned by a certificated air carrier or in connection with an aircraft which has a maximum certificated take-off weight of six thousand pounds or more;

(K) Services providing "piped-in" music to business or professional establishments;

(L) Flight instruction and chartering services by a certificated air carrier on an aircraft, the use of which for such purposes, but for the provisions of subdivision (4) of section 12-410 and subdivision (12) of section 12-411, would be deemed a retail sale and a taxable storage or use, respectively, of such aircraft by such carrier;

(M) Motor vehicle repair services, including any type of repair, painting or replacement related to the body or any of the operating parts of a motor vehicle;

(N) Motor vehicle parking, including the provision of space, other than metered space, in a lot having thirty or more spaces, excluding (i) space in a parking lot owned or leased under the terms of a lease of not less than ten years' duration and operated by an employer for the exclusive use of its employees, (ii) space in municipally operated railroad parking facilities in municipalities located within an area of the state designated as a severe nonattainment area for ozone under the federal Clean Air Act or space in a railroad parking facility in a municipality located within an area of the state designated as a severe nonattainment area for ozone under the federal Clean Air Act owned or operated by the state on or after April 1, 2000, (iii) space in a seasonal parking lot provided by an entity subject to the exemption set forth in subdivision (1) of section 12-412, and (iv) space in a municipally owned parking lot;

(O) Radio or television repair services;

(P) Furniture reupholstering and repair services;

(Q) Repair services to any electrical or electronic device, including, but not limited to, equipment used for purposes of refrigeration or air-conditioning;

(R) Lobbying or consulting services for purposes of representing the interests of a client in relation to the functions of any governmental entity or instrumentality;

(S) Services of the agent of any person in relation to the sale of any item of tangible personal property for such person, exclusive of the services of a consignee selling works of art, as defined in subsection (b) of section 12-376c, or articles of clothing or footwear intended to be worn on or about the human body other than (i) any special clothing or footwear primarily designed for athletic activity or protective use and which is not normally worn except when used for the athletic activity or protective use for which it was designed, and (ii) jewelry, handbags, luggage, umbrellas, wallets, watches and similar items carried on or about the human body but not worn on the body, under consignment, exclusive of services provided by an auctioneer;

(T) Locksmith services;

(U) Advertising or public relations services, including layout, art direction, graphic design, mechanical preparation or production supervision, not related to the development of media advertising or cooperative direct mail advertising;

(V) Landscaping and horticulture services;

(W) Window cleaning services;

(X) Maintenance services;

(Y) Janitorial services;

(Z) Exterminating services;

(AA) Swimming pool cleaning and maintenance services;

(BB) Miscellaneous personal services included in industry group 729 in the Standard Industrial Classification Manual, United States Office of Management and Budget, 1987 edition, or U.S. industry 532220, 812191, 812199 or 812990 in the North American Industrial Classification System United States Manual, United States Office of Management and Budget, 1997 edition, exclusive of (i) services rendered by massage therapists licensed pursuant to chapter 384a, and (ii) services rendered by an electrologist licensed pursuant to chapter 388;

(CC) Any repair or maintenance service to any item of tangible personal property including any contract of warranty or service related to any such item;

(DD) Business analysis, management or managing consulting services rendered by a general partner, or an affiliate thereof, to a limited partnership, provided (i) the general partner, or an affiliate thereof, is compensated for the rendition of such services other than through a distributive share of partnership profits or an annual percentage of partnership capital or assets established in the limited partnership's offering statement, and (ii) the general partner, or an affiliate thereof, offers such services to others, including any other partnership. As used in this subparagraph "an affiliate of a general partner" means an entity which is directly or indirectly owned fifty per cent or more in common with a general partner;

(EE) Notwithstanding the provisions of section 12-412, except subdivision (87) of said section 12-412, patient care services, as defined in subdivision (29) of this subsection by a hospital, except that "sale" and "selling" does not include such patient care services for which payment is received by the hospital during the period commencing July 1, 2001, and ending June 30, 2003;

(FF) Health and athletic club services, exclusive of (i) any such services provided without any additional charge which are included in any dues or initiation fees paid to any such club, which dues or fees are subject to tax under section 12-543, and (ii) any such services provided by a municipality or an organization that is described in Section 501(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended;

(GG) Motor vehicle storage services, including storage of motor homes, campers and camp trailers, other than the furnishing of space as described in subparagraph (P) of subdivision (2) of this subsection;

(HH) Packing and crating services, other than those provided in connection with the sale of tangible personal property by the retailer of such property;

(II) Motor vehicle towing and road services, other than motor vehicle repair services;

(JJ) Intrastate transportation services provided by livery services, including limousines, community cars or vans, with a driver. Intrastate transportation services shall not include transportation by taxicab, motor bus, ambulance or ambulette, scheduled public transportation, nonemergency medical transportation provided under the Medicaid program, paratransit services provided by agreement or arrangement with the state or any political subdivision of the state, dial-a-ride services or services provided in connection with funerals;

(KK) Pet grooming and pet boarding services, except if such services are provided as an integral part of professional veterinary services, and pet obedience services;

(LL) Services in connection with a cosmetic medical procedure. For purposes of this subparagraph, "cosmetic medical procedure" means any medical procedure performed on an individual that is directed at improving the individual's appearance and that does not meaningfully promote the proper function of the body or prevent or treat illness or disease. "Cosmetic medical procedure" includes, but is not limited to, cosmetic surgery, hair transplants, cosmetic injections, cosmetic soft tissue fillers, dermabrasion and chemical peel, laser hair removal, laser skin resurfacing, laser treatment of leg veins and sclerotherapy. "Cosmetic medical procedure" does not include reconstructive surgery. "Reconstructive surgery" includes any surgery performed on abnormal structures caused by or related to congenital defects, developmental abnormalities, trauma, infection, tumors or disease, including procedures to improve function or give a more normal appearance;

(MM) Manicure services, pedicure services and all other nail services, regardless of where performed, including airbrushing, fills, full sets, nail sculpting, paraffin treatments and polishes;

(NN) Spa services, regardless of where performed, including body waxing and wraps, peels, scrubs and facials; [and]

(OO) Car wash services, including coin-operated car washes; and

(PP) On and after the date sports wagering, as defined in section 1 of this act, is permitted in the state under federal law, sports wager amounts placed with sports wagering operators, as defined in section 1 of this act.

Sec. 4. (NEW) (Effective from passage) (a) As used in this section, "lottery draw game" means any draw game that is available for purchase through a lottery sales agent.

(b) The Connecticut Lottery Corporation shall establish a program to sell lottery tickets for lottery draw games through the corporation's Internet web site, online service or mobile application, provided: (1) Such program does not violate any compact, memorandum of understanding or agreement in force between the state and the Mashantucket Pequot Tribe or the Mohegan Tribe of Indians of Connecticut; and (2) the Keno draw game is offered pursuant to signed agreements with the Mashantucket Pequot Tribe and the Mohegan Tribe of Indians of Connecticut or signed amendments to such agreements, in accordance with the provisions of section 12-806c of the general statutes, as amended by this act.

(c) Such program shall, at a minimum: (1) Verify that a person who establishes an online lottery account to purchase a lottery ticket through such program is eighteen years of age or older and is located in the state; (2) restrict the sale of lottery tickets to transactions initiated and received within the state; (3) allow a person to deposit money into an online lottery account through the use of a verified bank account, prepaid lottery gift card, debit card or credit card; (4) limit a person with an online lottery account to using only one debit card or credit card; (5) provide that any money in an online lottery account belongs solely to the owner of the account and may be withdrawn by the owner at any time; (6) provide a mechanism to prevent the unauthorized use of online lottery accounts; (7) establish a voluntary self-exclusion process to allow a person to exclude himself or herself from establishing an online lottery account or purchasing a lottery ticket through such program; (8) provide a mechanism to prevent a person who participates in the self-exclusion process from establishing an online lottery account; (9) within one year from the date such program is established, be the subject of an application for certification from a national or international responsible gambling compliance assessment program; (10) post a conspicuous link to responsible gambling information on all online lottery account web pages; and (11) after consultation with advocacy groups for individuals with gambling problems, (A) limit the amount of money a person may deposit into an online lottery account, (B) limit the amount of money a person may spend per day through such program, and (C) provide for online messages regarding the importance of responsible gambling when a person is using his or her online lottery account for an amount of time specified by the corporation.

(d) Prior to implementing any procedure, as defined in subdivision (2) of section 1-120 of the general statutes, to assure the integrity of such program, the corporation shall obtain the written approval of the Commissioner of Consumer Protection in accordance with regulations adopted under section 12-568a of the general statutes.

(e) The corporation shall: (1) Implement initiatives to promote the purchase of lottery tickets through lottery sales agents; (2) permit lottery sales agents to sell prepaid lottery gift cards; and (3) conduct an online public awareness campaign designed to educate the public regarding compulsive gambling and to inform the public of the programs available for the prevention, treatment and rehabilitation of compulsive gamblers in the state.

Sec. 5. Subdivision (4) of subsection (b) of section 12-806 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(4) (A) To introduce new lottery games, modify existing lottery games, utilize existing and new technologies, determine distribution channels for the sale of lottery tickets, introduce keno pursuant to signed agreements with the Mashantucket Pequot Tribe and the Mohegan Tribe of Indians of Connecticut, in accordance with section 12-806c, as amended by this act, and, to the extent specifically authorized by regulations adopted by the Department of Consumer Protection pursuant to chapter 54, introduce instant ticket vending machines, kiosks and automated wagering systems or machines, with all such rights being subject to regulatory oversight by the Department of Consumer Protection; and

(B) To offer certain lottery games through the corporation's Internet web site, online service or mobile application in accordance with section 4 of this act, except that the corporation shall not offer any interactive [on-line] online lottery games, including [on-line] online video lottery games for promotional purposes, unless such online video lottery games for promotional purposes are offered as part of the program established pursuant to section 4 of this act;

Sec. 6. Section 12-810 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) The Freedom of Information Act, as defined in section 1-200, shall apply to all actions, meetings and records of the corporation, except (1) where otherwise limited by subsection (c) of this section as to new lottery games and serial numbers of unclaimed lottery tickets, [and] (2) with respect to financial, credit and proprietary information submitted by any person to the corporation in connection with any proposal to provide goods, services or professional advice to the corporation as provided in section 12-815, and (3) where otherwise limited by subsection (d) of this section as to information submitted by any person to the corporation regarding such person's participation in the corporation's voluntary self-exclusion process established pursuant to subdivision (7) of subsection (c) of section 4 of this act.

(b) The records of proceedings as provided in subsection (a) of section 12-805 shall be subject to disclosure pursuant to the provisions of subsection (a) of section 1-210.

(c) Any new lottery game and the procedures for such game, until the game is publicly announced by the corporation, and any serial number of an unclaimed lottery ticket shall not be deemed public records, as defined in section 1-200, and shall not be available to the public under the provisions of section 1-210. The president shall submit a fiscal note prepared by the corporation with respect to the procedures for a new lottery game to the joint standing committees of the General Assembly having cognizance of matters relating to finance, revenue, bonding and public safety after approval of such game by the board.

(d) The name and any personally identifying information of a person who is participating or participated in the corporation's voluntary self-exclusion process shall not be deemed public records, as defined in section 1-200, and shall not be available to the public under the provisions of section 1-210. The president may disclose the name and any records of such person if such person claims a winning lottery ticket from the use of the program established pursuant to section 4 of this act.

Sec. 7. Section 12-818 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

For each of the fiscal years ending June 30, 2010, and June 30, 2011, the Connecticut Lottery Corporation shall transfer one million nine hundred thousand dollars of the revenue received from the sale of lottery tickets to the chronic gamblers treatment rehabilitation account created pursuant to section 17a-713, as amended by this act. For the fiscal years ending June 30, 2012, to June 30, 2013, inclusive, the [Connecticut Lottery Corporation] corporation shall transfer one million nine hundred thousand dollars of the revenue received from the sale of lottery tickets to the chronic gamblers treatment rehabilitation account. [created pursuant to section 17a-713.] For the fiscal [year] years ending June 30, 2014, [and each fiscal year thereafter] to June 30, 2018, inclusive, the [Connecticut Lottery Corporation] corporation shall transfer two million three hundred thousand dollars of the revenue received from the sale of lottery tickets to the chronic gamblers treatment rehabilitation account. [created pursuant to section 17a-713.] For the fiscal year ending June 30, 2019, and each fiscal year thereafter, the corporation shall transfer two million four hundred thousand dollars of the revenue received from the sale of lottery tickets to the chronic gamblers treatment rehabilitation account.

Sec. 8. Section 17a-713 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2018):

(a) The Department of Mental Health and Addiction Services shall establish a program for the treatment and rehabilitation of compulsive gamblers in the state. The program shall provide prevention, treatment and rehabilitation services for chronic gamblers. The department may enter into agreements with subregional planning and action councils and nonprofit organizations to assist in providing these services, provided not less than twenty-five per cent of the amount received pursuant to section 12-818, as amended by this act, annually shall be set aside for contracts with subregional planning and action councils established pursuant to section 17a-671 and nonprofit organizations and not less than five per cent of the amount received pursuant to section 12-818, as amended by this act, annually shall be set aside for a contract with the Connecticut Council on Problem Gambling. The department may impose a reasonable fee, on a sliding scale, on those participants who can afford to pay for any such services. The department shall implement such program when the account established under subsection (b) of this section is sufficient to meet initial operating expenses. As used in this section, "chronic gambler" means a person who is chronically and progressively preoccupied with gambling and the urge to gamble, and with gambling behavior that compromises, disrupts or damages personal, family or vocational pursuits.

(b) The program established by subsection (a) of this section shall be funded by imposition of: (1) A fee of one hundred thirty-five dollars on each association license, for each performance of jai alai or dog racing conducted under the provisions of chapter 226, provided no such licensee shall contribute more than forty-five thousand dollars in any one year; (2) a fee of twenty-five dollars for each teletheater performance on each operator of a teletheater facility; and (3) the amount received from the Connecticut Lottery Corporation pursuant to section 12-818, as amended by this act. The Commissioner of Consumer Protection shall collect the fee from each association licensee or such operator on a monthly basis. The receipts shall be deposited in the General Fund and credited to a separate, nonlapsing chronic gamblers treatment and rehabilitation account which shall be established by the Comptroller. All moneys in the account are deemed to be appropriated and shall be expended (A) for the purposes established in subsection (a) of this section, and (B) in an amount not to exceed one hundred thousand dollars to fund the study described in subsection (d) of this section.

(c) The department shall adopt regulations in accordance with the provisions of chapter 54 to carry out the purposes of this section.

(d) Not later than January 1, 2022, the Commissioner of Mental Health and Addiction Services shall develop and issue a request for proposals to study the socioeconomic impact of the program established by the Connecticut Lottery Corporation pursuant to section 4 of this act on problem gambling in this state. Such study shall be performed by an institution of higher learning located in this state with expertise in problem gambling and addiction and submitted for peer review to ensure accuracy, validity and reliability. The Connecticut Lottery Corporation shall provide any information and data needed by the institution of higher learning to perform the study, provided the information and data does not disclose the identity of individuals. Not later than July 1, 2023, the commissioner shall submit the results of such study, in accordance with the provisions of section 11-4a, to the joint standing committee of the General Assembly having cognizance of matters related to public safety and security.

Sec. 9. Section 12-806c of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Notwithstanding the provisions of section 3-6c, the Secretary of the Office of Policy and Management, on behalf of the state of Connecticut, may enter into separate agreements with the Mashantucket Pequot Tribe and the Mohegan Tribe of Indians of Connecticut concerning the operation of keno by the Connecticut Lottery Corporation in the state of Connecticut. Any such agreement shall provide that the state of Connecticut shall distribute to each tribe a sum not to exceed a twelve and one-half per cent share of the gross operating revenue received by the state from the operation of keno. The corporation may not operate keno until such separate agreements are effective. Any such agreement may be amended concerning the operation of keno on the corporation's Internet web site, online service or mobile application pursuant to the program established in accordance with section 4 of this act. The corporation may not operate keno through such program until such separate agreements are amended and such amendments are effective. For the purposes of this section, "gross operating revenues" means the total amounts wagered, less amounts paid out as prizes.

Sec. 10. Section 52-553 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

All wagers, and all contracts and securities of which the whole or any part of the consideration is money or other valuable thing won, laid or bet, at any game, horse race, sport or pastime, and all contracts to repay any money knowingly lent at the time and place of such game, race, sport or pastime, to any person so gaming, betting or wagering, or to repay any money lent to any person who, at such time and place, so pays, bets or wagers, shall be void, provided nothing in this section shall (1) affect the validity of any negotiable instrument held by any person who acquired the same for value and in good faith without notice of illegality in the consideration, (2) apply to the sale of a raffle ticket pursuant to section 7-172, [or] (3) apply to the participation in the program established by the Connecticut Lottery Corporation pursuant to section 4 of this act, or (4) apply to any wager or contract otherwise authorized by law.

Sec. 11. Section 52-554 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

Any person who, by playing at any game, or betting on the sides or hands of such as play at any game, excluding any game permitted under chapter 226 or any activity not prohibited under the provisions of sections 53-278a to 53-278g, inclusive, loses the sum or value of one dollar in the whole and pays or delivers the same or any part thereof, may, within three months next following, recover from the winner the money or the value of the goods so lost and paid or delivered, with costs of suit in a civil action, without setting forth the special matter in his complaint. If the defendant refuses to testify, if called upon in such action, relative to the discovery of the property so won, he shall be defaulted; but no evidence so given by him shall be offered against him in any criminal prosecution. Nothing in this section shall preclude any person from using a credit card to participate in the program established by the Connecticut Lottery Corporation pursuant to section 4 of this act.

This act shall take effect as follows and shall amend the following sections:

Section 1

July 1, 2018

New section

Sec. 2

July 1, 2018

New section

Sec. 3

July 1, 2018

12-407(a)(37)

Sec. 4

from passage

New section

Sec. 5

from passage

12-806(b)(4)

Sec. 6

from passage

12-810

Sec. 7

from passage

12-818

Sec. 8

October 1, 2018

17a-713

Sec. 9

from passage

12-806c

Sec. 10

from passage

52-553

Sec. 11

from passage

52-554

Statement of Legislative Commissioners:

In Section 1(a)(4), "therein" was changed to "in such sporting event" for clarity; in Section 1(b)(2)(A), "to individuals who appear" was inserted for accuracy; in Section 1(h)(1), "(1)" and "(2)" were changed to "(A)" and "(B)" for accuracy and in Subpara. (A), "subdivision (3)" was changed to "subdivision (4)" for accuracy; in Sections 5, 6 and 8 to 11, inclusive, "section 1 of this act" was changed to "section 4 of this act" for accuracy; in Section 6(a)(3), "subsection (b)" was changed to "subsection (c)" for accuracy; and in Section 10, the provisions of Subdiv. (3) and Subdiv. (4) were swapped for consistency with standard drafting conventions.

FIN

Joint Favorable Subst. -LCO

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 19 $

FY 20 $

Connecticut Lottery Corporation

GF - Potential Revenue Gain

Up to 2 million

Up to 4 million

Consumer Protection, Dept.

GF - Potential Revenue Gain

At least $40,000

At least $20,000

Department of Revenue Services

GF - Potential Revenue Gain

See Below

See Below

Department of Revenue Services

Sports Betting Right and Integrity Fee account - Potential Revenue Gain

See Below

See Below

Resources of the General Fund

GF - Potential Revenue Gain

See Below

See Below

Mental Health & Addiction Serv., Dept.

Chronic Gamblers Fund - Revenue Gain

100,000

100,000

Mental Health & Addiction Serv., Dept.

GF - Cost

See Below

See Below

Consumer Protection, Dept.

GF - Potential Cost

155,785

155,785

State Comptroller - Fringe Benefits1

GF - Cost

56,597

56,597

Correction, Dept.; Judicial Dept.

GF - Potential Cost

See Below

See Below

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill authorizes sports wagering (to the extent allowed under federal law) and requires the Connecticut Lottery Corporation (CLC) to establish an online lottery program. The fiscal impact of these provisions is outlined in detail below:

Online Lottery

The bill requires the CLC to establish a program to sell lottery tickets online, including purchase through the use of a credit card. This results in a potential revenue gain to the General Fund of up to $2 million in FY 19 and up $4 million in FY 20. It is anticipated that General Fund revenue gain could reach up to $16 million by FY 23.2

The bill also requires the Department of Mental Health and Addiction Services (DMHAS) to develop and issue a request for proposals for a study to be performed by a Connecticut institution of higher learning. This results in a cost for DMHAS to execute a contract with such institution to study the socioeconomic impact of the program established by the CLC on problem gambling in the state. The bill allocates up to $100,000 via a transfer of CLC funding for such purposes.

To the extent DMHAS contracts with a higher education constituent unit, such entity would experience a revenue gain associated with the contract to conduct the study.

Sports Wagering

The bill also establishes a tax and regulatory framework for sports wagering in the state. To the extent such betting becomes legal under federal law and does not interfere with the current tribal compact agreement, this results in a significant revenue gain at that time.3

To the extent such betting becomes legal under federal law and does not interfere with the current tribal compact agreement, this bill results in a potential cost to various agencies and a potential revenue gain to the Department of Consumer Protection (DCP) and the General Fund.

The bill results in a potential cost to DCP due to the department needing two additional full-time employees and one part-time employee to license, regulate, monitor, and investigate sports betting in the state. The agency would need an accountant ($66,213 salary and $24,055 fringe benefits), Consumer Protection Gaming Regulation Officer ($53,179 salary and $19,320 fringe benefits), and a part-time Attorney 1 ($36,393 salary and $13,222 fringe benefits).

The bill results in a revenue gain to DCP of at least $40,000 in FY 19 and at least $20,000 in FY 20 due to an estimated four entities who will pay the initial $10,000 application fee in the first year and then the $5,000 renewal fee in the following years. The commissioner has the ability to issue a civil penalty of up to $5,000 per violation and results in a potential revenue gain to the extent that violations occur.

The bill lists certain illegal violations as offenses that can be fined up to $5 million and a prison sentence of not more than ten years. To the extent violations occur, this results in a potential cost for increased incarceration or probation and a potential revenue gain for the General Fund.  On average, the marginal cost to the state for incarcerating an offender for the year is $1,9004 while the average marginal cost for supervision in the community is less than $7005 each year.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

OLR Bill Analysis

sSB 540

AN ACT AUTHORIZING SPORTS WAGERING AND ONLINE LOTTERY DRAW GAMES IN THE STATE.

SUMMARY

This bill establishes a regulatory framework for sports wagering in the state. It authorizes certain gaming entities, to the extent allowed under federal law (see BACKGROUND), to offer sports wagering in the state, either at specified facilities or through an interactive online platform.

The bill imposes on sports wagering operators a (1) 15% tax on sports wagering gross revenue (see COMMENT) and (2) 0.25% sports betting right and integrity fee on all wagers placed. It directs the revenue from the fee to a new account to fund disbursements to sports governing bodies (e.g., MLB, NBA, or NFL), based on the percentage of wagers attributable to each body's sporting events. The bill additionally subjects sports wager amounts to state sales and use tax, which is currently 6.35%.

The bill also requires the Connecticut Lottery Corporation (CLC) to establish a program to sell lottery tickets through its website, an online service, or a mobile application, as long as doing so does not violate any compact or agreement between the state and the Mashantucket Pequot or Mohegan tribes (see BACKGROUND). (The bill does not specify who determines whether a program violates such agreements.) The bill establishes requirements CLC must meet in designing and operating the online lottery program (e.g., over age 18 and located in Connecticut).

The bill makes other CLC-related changes, including among other things:

EFFECTIVE DATE: July 1, 2018, for the sports wagering provisions; upon passage for the internet lottery provisions; and October 1, 2018, for the DMHAS provision.

SPORTS WAGERING

Definitions

Under the bill, "sports wagering" means accepting wagers in-person, through an interactive sports wagering platform, or by any other system or method on (1) a sporting event or a portion of it or (2) the individual performance statistics of an athlete or athletes in a sporting event or a combination of sporting events. Types of sports wagering include, single-game bets, teaser bets, parlays, over-under bets, moneyline, pools, exchange wagering, in-game wagering, in-play bets, proposition bets, and straight bets.

The bill defines a “wager” or “bet” to mean an individual who stakes or risks anything of value, upon the agreement or understanding that such individual or another individual will receive something of value in the event of a specific outcome. "Wager" or "bet" does not include (1) any activity governed by federal or state securities laws, (2) any indemnity or guaranty contract, (3) any insurance contract, or (4) participation in any game or contest where (a) the participants do not stake or risk anything of value other than their personal efforts in playing the game or contest or obtaining access to the Internet or (b) the game or contest's sponsor provides points or credits to the participants free of charge and such points or credits may only be used or redeemed for games or contests the sponsor offers.

“Sports wagering operator” is a gaming entity that offers sports wagering or an interactive sports wagering platform.

The bill defines “interactive sports wagering platform” (i.e., platform) as an individual or entity that offers sports wagering over the Internet, including through a website or mobile device on a gaming entity's behalf.

Authorization

The bill only authorizes sports wagering offered by a gaming entity and only to the extent permitted under federal law (see BACKGROUND). A gaming entity may offer wagering (1) through a platform to individuals located in Connecticut or (2) in person at its facility. (It is unclear at which facility CLC could conduct in-person sports wagering.)

Under the bill, the authorized gaming entities include (1) a casino gaming facility in the state; (2) CLC; (3) licensed race tracks; (4) jai alai frontons; (5) licensed off-track betting (OTB) facilities; and (6) any other Connecticut residents, entities, or facilities licensed by the Department of Consumer Protection (DCP) to offer wagering. (It appears that a casino gaming facility in the state would not include either the Foxwoods or Mohegan Sun casinos because both are located on sovereign tribal land. The state currently does not have any licensed race tracks and jai alai frontons or other DCP-licensed residents, entities, or facilities.)

Interactive Sports Wagering Platform

The bill requires each platform to be licensed by DCP and renew the license annually. Each applicant must submit an application in the form and manner the commissioner prescribes, with a $10,000 application fee and $5,000 annual renewal fee.

The bill allows the commissioner to deny, not renew, suspend, or revoke a license for cause after issuing a written decision to the applicant or licensee stating the basis of her action. Any applicant or licensee aggrieved by such actions may appeal in accordance with the Uniform Administrative Procedure Act (UAPA).

Under the bill, any proprietary, financial, or personal information or trade secrets included in a platform license application or in any documents, reports, and data the platform submitted is exempt from disclosure under the state FOIA, unless required by a court order.

The bill allows a platform to enter into agreements to offer sports wagering on behalf of one or more gaming entities, but the agreements must not be a prerequisite for obtaining a platform license. (It is unclear what type of equipment is needed to operate the platform and whether it would be considered a prohibited gambling device under existing law (CGS 53-278a(4).)

Sports Wagering Operator Requirements

Employee Requirements. Under the bill, each sports wagering operator must require each (1) applicant for employment to submit to comprehensive background checks, including state and national criminal history records checks, and (2) current employee to submit to such background checks annually. The bill prohibits operators from employing anyone who was convicted of any crime involving corruption, manipulation of any sporting event, or any association with organized crime.

Age Restriction and Self-Exclusion. The bill also requires each operator to verify that an individual placing a wager is at least age 21. It allows individuals to restrict themselves from placing wagers with an operator, including imposing wager limits, and any operator that has been notified of such restriction must take reasonable steps to prevent such individual from exceeding such restriction or limit.

Sports Data. Under the bill, operators may use whatever data source they deem appropriate to determine the results of “tier one wagers,” which are sports wagers determined solely by the sporting event's final score or outcome and placed before the sporting event has begun. Operators must use only official sports governing body data to determine the results of “tier two wagers,” (i.e., all wagers that are not tier one). This is contingent on the relevant sports governing body possessing a feed of official league data and making it available for purchase by the operator on commercially reasonable terms.

The bill defines “sports governing body” to mean the organization that prescribes final rules and enforces codes of conduct for a sporting event and its participants (e.g., MLB, NBA, or NFL). "Official league data" means statistics, results, outcomes, and other data relating to a sporting event, obtained from the relevant sports governing body or an entity expressly authorized to provide such information to a sports wagering operator.

Recordkeeping. The bill requires operators, for at least three years after the sporting event occurs, to maintain records of all bets and wagers placed, including (1) the bettor's personally identifiable information; (2) the bet amount and type; (3) the time the bet was placed; (4) the bet's location, including any Internet protocol address; (5) the bet's outcome; records of abnormal betting activity; and (6) for in-person wagers, video camera recordings. Each operator must make such records and recordings available for inspection upon the DCP commissioner's request or by court order.

Security and Confidentiality. Under the bill, operators must securely maintain wagering data, customer data, and other confidential information to prevent unauthorized access and dissemination. The bill does not preclude the use of any Internet-based hosting of such data or information or its disclosure under a court order.

Additionally, the bill requires operators to maintain the confidentiality of information a sports governing body provides them, unless disclosure is required by a court order.

Reporting. The bill requires operators to immediately report to the DCP commissioner any information relating to:

Operators must immediately report to the relevant governing body the information listed above, except for the information on criminal or disciplinary proceedings and suspicious or illegal wagering activities.

Advertising

Under the bill, any sports wagering advertisement must not target minors (presumably, those under age 21) or other individuals or demographics who are ineligible to place wagers, problem gamblers, or other vulnerable individuals. The DCP commissioner may adopt regulations to specify the form, quantity or frequency, timing, and location of such advertisements.

The bill also requires advertisements to (1) disclose the operator's identity; (2) include information about or website links to resources on gambling addiction; and (3) not be false, misleading, or deceptive to a reasonable consumer.

Prohibited Wagers

The bill prohibits operators and their officers, directors, owners, or employees, from placing a wager with such operator. The same prohibition applies to those individuals' family members who reside in the same household.

The bill also prohibits certain people involved in the sport from placing a wager on any sporting event overseen by that sport's governing body. This includes any athlete, coach, referee, team owner, or employee of the governing body or member teams, and any personnel of any bargaining unit from the governing body's athletes or referees. In determining which individuals are prohibited from placing a wager, an operator must use publicly available information and any lists the relevant sports governing body provides to DCP.

The bill prohibits individuals from placing a wager (1) for a sporting event for which they have access to an operator's nonpublic, confidential information on the event or (2) as an agent or proxy for another person.

Under the bill, operators must take reasonable steps to prevent any of these prohibited wagers and must immediately notify DCP if they believe such conduct has occurred.

Tax

The bill imposes a 15% tax on sports wagering gross revenue. "Sports wagering gross revenue" means the amount equal to the total amount of all wagers placed on sporting events not excluded from sports wagering that an operator collects from all bettors, less the total amount of all sums paid out as winnings to bettors, which does not include the cash equivalent value of any merchandise or thing of value awarded as a prize. In the case of exchange wagering, such gross revenue is the amount equal to the total amount of commissions retained by an operator on winning sports wagers placed by bettors.

Under the bill, each operator must file a return with the Department of Revenue Services (DRS) commissioner in the form and manner he prescribes. Operators must file the return within 30 days after each calendar quarter ends and remit the tax due with the return (see COMMENT).

Sports Betting Right and Integrity Fee

The bill also imposes a 0.25% sports betting right and integrity fee on all placed wagers that generate revenue distributed to sports governing bodies. In the same timeframe as the tax (see above), operators must remit the fee and file a return with the DRS commissioner in the form and manner he prescribes. They must identify in each return the percentage of wagers in the reporting period that is attributable to each sports governing body's sporting events. The fees must be deposited in the sports betting right and integrity fee account the bill establishes (see below).

Under the bill, beginning in the second calendar year immediately after the year that sports wagering is permitted in the state under federal law, a sports governing body (1) may annually submit by April 30, a request to the DRS commissioner to distribute the fees the operators remitted and (2) must notify the DCP commissioner of this request.

The DRS commissioner must (1) disburse the funds to the sports governing body on a pro rata basis of the total amounts reported wagered in the previous calendar year on sporting events and (2) distribute any unclaimed fees on a pro rata basis to the sports governing body or bodies that submitted eligible and timely distribution requests.

The bill requires the DCP and DRS commissioners to cooperate with the sports governing body and operators to ensure the timely, efficient, and accurate sharing of information and distribution of the fees to the governing body.

The DRS commissioner must annually publish a report stating the amount of fees each operator received and the amount disbursed to each sports governing body.

Sports Betting Right and Integrity Fee Account. On and after the date sports wagering is permitted in the state under federal law, the bill establishes the sports betting right and integrity fee account, which is a separate nonlapsing General Fund account. The account must contain any money required by law to be deposited into it. DRS must expend the money to disburse funds to the sports governing bodies in accordance with the bill (see above).

Sports Governing Body

The bill allows a sports governing body to notify the DCP commissioner that real-time information sharing for sport wagers is necessary and desirable. Upon such notification, operators may share in real time, at the account level and in pseudonymous form, the records, other than the video camera recordings, with governing bodies in order to determine tier two wagering outcomes.

A governing body may also notify the commissioner, in a form and manner she prescribes, if it desires to restrict, limit, or exclude sports wagering on an event. If the commissioner denies the request, the governing body may appeal in accordance with the UAPA and no operator may accept wagers on such sporting event or events during the appeal. The commissioner may adopt regulations to specify any sporting event or events that a governing body desires to restrict, limit, or exclude from wagering on a permanent basis in the state.

Investigations

The bill requires each operator and the DCP commissioner to cooperate with a law enforcement agency or governing body's investigation. This includes providing or facilitating account-level betting information and any audio or video camera recordings related to individuals placing wagers.

Penalty

Under the bill, any individual or entity that knowingly violates any of the bill's sports wagering provisions, except the sales and use tax provision, may be subject to a civil penalty of up to $5,000 for each violation and up to $50,000 for multiple violations from the same transaction or occurrence.

The bill imposes a criminal penalty of up to a $5 million fine, up to 10 years imprisonment, or both for any individual or entity that (1) places or causes to be placed a wager on the basis of material, nonpublic information relating to such wager or (2) knowingly engages in, facilitates, or conceals conduct intended to influence a betting outcome for financial gain. A wager is placed on the basis of material nonpublic information if the individual or entity placing the wager or causing the wager to be placed was aware of such information when he or she placed the wager or caused it to be placed.

Under the bill, any individual or entity that is found to have knowingly influenced a betting outcome for financial gain is liable to the relevant governing body, which may sue in equity or any court with jurisdiction.

Regulations

The bill allows the DCP commissioner to adopt regulations to implement the sports wagering regulatory framework within its authority (e.g., the non-tax and non-integrity fee provisions).

ONLINE LOTTERY

The bill requires CLC to establish a program to sell lottery tickets for lottery draw games through its Internet website, an online service, or mobile application, as long as doing so does not violate any compact, memorandum of understanding, or agreement between the state and the Mashantucket Pequot or Mohegan tribes (see BACKGROUND). A “lottery draw game” is any draw game that is available for purchase through a lottery sales agent (e.g., Powerball, Mega Millions, or Lucky for Life).

Online Program

The bill establishes certain requirements for the program. At a minimum, the program must:

In addition, after consulting advocacy groups for individuals with gambling problems, the program must (1) limit the amount of money a person may deposit into an online lottery account and spend per day through the program and (2) provide for online messages on the importance of responsible gambling when a person is using his or her online lottery account for an amount of time CLC specifies.

Before implementing any procedures designed to assure the program's integrity, CLC must obtain the DCP commissioner's written approval in accordance with the department's regulations on operating the lottery.

CLC Requirements

The bill requires CLC to:

Promotional Interactive Online Lottery Games

Current law prohibits CLC from offering interactive online lottery games, including games for promotional purposes. The bill allows online video lottery games for promotional purposes, as long as they are offered as part of the online lottery program.

FOIA

The bill specifies that the name and any personally identifying information of a person who participates or participated in CLC's voluntary self-exclusion process are not public records and are exempted from disclosure under FOIA, with one exception. The CLC president may disclose the name and any records of a person who claims a winning lottery ticket from using the online program.

By law, FOIA applies to the CLC. This means, among other things, that most of CLC's records are considered public and subject to disclosure, with limited exceptions (e.g., unclaimed lottery ticket serial numbers).

Chronic Gamblers Treatment Rehabilitation Account

The bill increases, from $2.3 million to $2.4 million, the revenue from lottery ticket sales that CLC must transfer to the chronic gamblers treatment rehabilitation account. The increase applies to FY 19 and each fiscal year thereafter.

DMHAS Study

By January 1, 2022, the bill requires the DMHAS commissioner to develop and issue a RFP to study the online lottery program's socioeconomic impact. The study must be (1) performed by a Connecticut institution of higher learning with expertise in problem gambling and addiction and (2) submitted for peer review to ensure accuracy, validity, and reliability. CLC must provide any information and data needed for the study, provided the information and data do not disclose an individual's identity. By July 1, 2023, the DMHAS commissioner must submit the results to the Public Safety and Security Committee.

Keno

Existing law allows the Office of Policy and Management (OPM) secretary, on behalf of the state, to enter separate agreements with the Mashantucket Pequot and Mohegan tribes concerning CLC's operation of keno (CGS 12-806c). (The OPM secretary entered into separate agreements with the tribes in 2015.)

The bill allows any existing agreement to be amended to include operating keno through CLC's Internet website, online service, or mobile application. It prohibits CLC from operating keno online until the separate agreements are amended and the amendments are effective.

Online Lottery on Credit

The bill specifically allows online lottery program tickets to be bought using credit cards. It does this by exempting participation in the program from the laws voiding and recovering certain wagering contracts.

BACKGROUND

Sports Gambling

The federal (1) Wire Act prohibits the use of wire communications to wager on any sporting event (18 U.S.C. 1081 et seq.) and (2) Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibits states from legalizing sports gambling (28 U.S.C. 3701 et seq.). The U.S. Supreme Court is currently deciding the constitutionality of PASPA with a decision expected later this year (Murphy v. NCAA, et al. No. 16-476).

Casino Gaming at the Foxwoods and Mohegan Sun Casinos

The Mashantucket Pequot and Mohegan tribes currently operate the Foxwoods and Mohegan Sun casinos, respectively, on their reservations under the federal Indian Gaming Regulatory Act (IGRA). Gambling at the Foxwoods Casino is conducted under federal procedures, which are a legal substitute for an IGRA-negotiated compact. The Mohegan Sun Casino is conducted under a legally negotiated IGRA tribal-state compact. Both the compact and procedures are like federal regulations. As such, they supersede state law.

Moratorium on Video Facsimiles (e.g., Slot Machines)

Neither the Foxwoods or Mohegan Sun casinos are explicitly authorized to operate video facsimile machines, which includes slot machines, under the procedures or compact. The federal procedures and the compact only authorize the tribes to operate video facsimile games pursuant to (1) an agreement between the tribe and state (e.g., MOU); (2) a court order; or (3) a change in state law that allows the operation of video facsimile games by any person, organization, or entity. Currently, both tribes are able to operate video facsimile games through an MOU each has with the state (see below). If the state enacts a law authorizing a game (e.g., online lottery) that is deemed a video facsimile game, the tribes could continue to operate video facsimile machines without paying the state any of their slot revenue.

Tribal-State MOUs

The Mashantucket Pequots and Mohegans have separate binding MOUs with the state that give the tribes the exclusive right to operate slot machines and other commercial casino games in exchange for a monthly contribution of 25% of their gross slot machine revenue to the state. If the state enacts a law authorizing a game (e.g., sports wagering) that is deemed a commercial casino game, the tribes could cease making slot revenue payments, but would not be able to continue to operate video facsimile games.

Additional Negotiations Under Procedures and Compact

The procedures and compact ( 17(d)) allow the tribes to ask the state to negotiate over amending the agreements with respect to Class III gaming (which sports betting is under federal law) that Connecticut did not allow when the agreements were enacted, but subsequently allowed.

Attorney General Opinion on Sports Betting

The attorney general opinion concluded that if the federal ban on sports betting is found to be unconstitutional, the tribes would not have the exclusive right to provide sports betting in Connecticut (AG Opinion 2018-01). Further, if Connecticut were to legalize sports betting, amendments to the gaming agreements would be needed to allow the tribes to offer sports betting.

Finally, it states the attorney general's view that sports wagering is not a video facsimile, but whether it is a commercial casino game is an open question.

Related Bill

HB 5307, reported favorably by the Public Safety and Security Committee, specifies the DCP commissioner must adopt regulations to regulate sports wagering when federal law allows it.

COMMENT

Conflicting Statutes

The law exempts CLC from paying taxes on any of its money or property, among other things (CGS 12-816). However, the bill requires CLC, as a sports wagering operator, to pay a 15% tax on sports wagering gross revenue.

COMMITTEE ACTION

Finance, Revenue and Bonding Committee

Joint Favorable

Yea

31

Nay

16

(04/05/2018)

TOP

1 The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller. The estimated active employee fringe benefit cost associated with most personnel changes is 36.33% of payroll in FY 19 and FY 20.

2 These estimates assume that establishing online lottery sales does not violate any compact or agreement between the state and the Mashantucket Pequot or Mohegan tribes which is a prerequisite under the bill.

3 The bill specifies that sports wagering is subject to: 1) a 15% tax on gross wagers, 2) a 0.25% sports betting right and integrity fee, and 3) the state's 6.35% Sales and Use Tax.

4 Inmate marginal cost is based on increased consumables (e.g. food, clothing, water, sewage, living supplies, etc.). This does not include a change in staffing costs or utility expenses because these would only be realized if a unit or facility opened.

5 Probation marginal cost is based on services provided by private providers and only includes costs that increase with each additional participant. This does not include a cost for additional supervision by a probation officer unless a new offense is anticipated to result in enough additional offenders to require additional probation officers.