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Can I offer contests that involve entry fees in Alabama? What are the requirements?

Offering Contests with Entry Fees in Alabama

Yes, you can offer contests that involve entry fees in Alabama, but you must first register with the regulator and pay the required fees and taxes. The requirements for registration and fees are outlined in ALCA 8-19F-3.

According to the law, no fantasy contest operator can offer any fantasy contest with an entry fee in Alabama without first being registered with the regulator. The initial registration fee for a fantasy contest operator that has national gross fantasy contest revenues in excess of ten million dollars ($10,000,000) is eighty-five thousand dollars ($85,000), while all other fantasy contest operators shall pay an initial registration fee of one thousand dollars ($1,000). The annual registration renewal fee for both types of operators is the same as the initial registration fee.

On the anniversary date of the fantasy contest operator’s registration, the fantasy contest operator shall annually pay a tax equal to ten and one-half percent of the fantasy contest operator’s gross fantasy contest revenues from the immediately preceding 12-month period. The revenues shall be deposited to the credit of the state General Fund.

A fantasy contest offered pursuant to this chapter does not constitute a lottery or gift enterprise pursuant to Section 65 of the Official Recompilation of the Constitution of Alabama of 1901, as amended [1.2].

To apply for registration, you must submit an application form provided by the Attorney General. The regulator shall make applications for operators available by November 27, 2019. Any operator applying for registration, renewal, or transfer of a registration may operate during the application period unless the regulator has reasonable cause to believe that the operator is or may be in violation of this chapter, and the regulator requires the operator to suspend the operation of any fantasy contest until registration, transfer, or renewal of registration is approved [1.1].

Fantasy contest operators who operate fantasy contests with an entry fee shall implement commercially reasonable procedures that are intended to accomplish all of the following: (1) Prevent the fantasy contest operator, employees of the fantasy contest operator, and relatives living in the same household as the employees, from competing in any public fantasy contest offered by any fantasy contest operator in which the operator offers a cash prize to the general public. (2) Prevent sharing of confidential information that could affect fantasy contest play with third parties until information is made publicly available. (3) Verify that a fantasy contest player in a fantasy contest is 19 years of age or older. (4) Prevent the fantasy contest operator from offering contests based on the performances of participants in high school or youth athletic events. (5) Prevent the fantasy contest operator from offering a fantasy contest open to the general public that does not establish and make known all prizes and awards offered to winning participants in advance of the game or contest. (6) Provide that no winning outcome is based on the score, point spread, or performance of a single team or combination of teams or solely on any single performance of an individual athlete or player in a single event [1.3].

Fees and Taxes

  • The initial registration fee for a fantasy contest operator that has national gross fantasy contest revenues in excess of ten million dollars ($10,000,000) is eighty-five thousand dollars ($85,000).
  • All other fantasy contest operators shall pay an initial registration fee of one thousand dollars ($1,000).
  • The annual registration renewal fee for both types of operators is the same as the initial registration fee.
  • On the anniversary date of the fantasy contest operator’s registration, the fantasy contest operator shall annually pay a tax equal to ten and one-half percent of the fantasy contest operator’s gross fantasy contest revenues from the immediately preceding 12-month period. The revenues shall be deposited to the credit of the state General Fund.
[1.1]

Preventing Conflicts of Interest

Fantasy contest operators who operate fantasy contests with an entry fee shall implement commercially reasonable procedures that are intended to prevent conflicts of interest. These procedures include:

  • Preventing the fantasy contest operator, employees of the fantasy contest operator, and relatives living in the same household as the employees, from competing in any public fantasy contest offered by any fantasy contest operator in which the operator offers a cash prize to the general public.
  • Preventing sharing of confidential information that could affect fantasy contest play with third parties until information is made publicly available.
  • Verifying that a fantasy contest player in a fantasy contest is 19 years of age or older.
  • Preventing the fantasy contest operator from offering contests based on the performances of participants in high school or youth athletic events.
  • Preventing the fantasy contest operator from offering a fantasy contest open to the general public that does not establish and make known all prizes and awards offered to winning participants in advance of the game or contest.
  • Providing that no winning outcome is based on the score, point spread, or performance of a single team or combination of teams or solely on any single performance of an individual athlete or player in a single event.
[1.3]
Source(s):
Jurisdiction

Alabama