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Can I obtain a fantasy sports license in Tennessee? What are the requirements?

October 18, 2023

Yes, you can obtain a fantasy sports license in Tennessee by meeting the requirements outlined in TNCO 47-18-1603 ^[1.1] and complying with the additional requirements for fantasy sports operators outlined in TNCO 47-18-1605 ^[1.2].

Requirements for obtaining a fantasy sports license in Tennessee

To obtain a fantasy sports license in Tennessee, you must meet the following requirements:

Submit an application, along with the required fee, to the secretary of state.
Provide sufficient documentation to the secretary of state to assure that you meet the requirements for licensure, including, but not limited to:
The name of the applicant;
The location of the applicant’s principal place of business;
A complete disclosure of the true ownership of the applicant;
The applicant’s criminal record, if any;
Any ownership interest held by a director, officer, policy-making manager, or principal stockholder in any entity previously or currently licensed by another entity that licenses fantasy sports operators or similar entities;
A description of any physical facility operated by the fantasy sports operator in this state, the facility’s employees, and the nature of the facility’s business;
Information sufficient to show that the applicant limits individual player deposits to no more than two thousand five hundred dollars ($2,500) per month, unless the player provides reasonable certification or proof to the fantasy sports operator that the player’s deposit limit should be increased;
Information sufficient to show that the applicant protects player funds on deposit by, at a minimum, segregating player funds from operating funds and maintaining a reserve for the benefit and protection of authorized players’ funds in fantasy sports accounts;
Information sufficient to show that the applicant limits each player to one (1) active and continuously used account;
Information sufficient to show that the applicant is in good standing with the department of revenue; and
Any other information the secretary of state deems necessary.
Maintain records of all player accounts, retain such records for five (5) years from the date the account was created, and submit annual reports of all fantasy sports accounts opened or maintained by Tennessee consumers to the secretary of state.
Comply with the additional requirements for fantasy sports operators outlined in TNCO 47-18-1605 ^[1.2].

Additional requirements for fantasy sports operators

In addition to the requirements for licensure, fantasy sports operators must comply with the following requirements outlined in TNCO 47-18-1605 ^[1.2]:

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;
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;
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;
Fantasy sports operators shall not knowingly allow a minor to participate in any fantasy sports contest;
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;
Fantasy sports operators’ advertisements for fantasy sports contests shall not target minors;
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;
Fantasy sports operators’ representations or implications about average winnings from fantasy sports contests shall not be unfair or misleading;
Fantasy sports operators shall comply with the Federal Trade Commission, Guides Concerning Use of Endorsements and Testimonials in Advertising, compiled in 16 CFR § 255;
Fantasy sports operators’ advertisements for fantasy sports contests shall, where feasible, clearly and conspicuously disclose information concerning assistance available to problem gamblers;
Fantasy sports operators shall implement and enforce procedures for fantasy sports contests that 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;
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;
Fantasy sports operators shall protect player funds on deposit;
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;
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;
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: 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 any sports agent, team employee, referee, or league official associated with any athletic competition that is the subject of fantasy sports contests;
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;
Fantasy sports operators shall offer introductory procedures for fantasy sports contests for beginning players;
Fantasy sports operators shall clearly and conspicuously identify highly experienced players in fantasy sports contests;
Fantasy sports operators shall offer some fantasy sports contests open only to beginning players and that exclude highly experienced players;
Fantasy sports operators shall prohibit the use of scripts in fantasy sports contests that give players an unfair advantage over other players;
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; and
Fantasy sports operators shall make all authorized scripts readily available to all fantasy sports players.

Additionally, TNCO 47-18-1611 ^[1.3] states that any fantasy sports operator operating in Tennessee without a license after the later of the events described in subsection (a) shall be in violation of § 39-17-503. Furthermore, TNCO 47-18-1608 ^[1.4] outlines the penalties for violating the requirements for licensure, including suspension, refusal to renew, or revocation of a license, fines of up to $25,000 per violation, and ineligibility to apply for a license for a period of twelve (12) months after the violation occurred. Finally, TNCO 47-18-1607 ^[1.5] establishes the creation of a fantasy sports fund, which collects all fees and penalties collected pursuant to this part and ten percent (10%) of the tax levied pursuant to the Fantasy Sports Tax Act, compiled in title 67, chapter 4, part 9.

Source(s):

Jurisdiction

Tennessee

Gaming