Mich. Admin. Code R. 432.535a

Current through Vol. 24-15, September 1, 2024

Section R. 432.535a - Fantasy contest player funds

Rule 535a.

(1) A fantasy contest operator or licensed management company must do 1 of the following:

(a) Segregate deposits in fantasy contest player accounts and other fantasy contest player funds from operational money of the fantasy contest operator or licensed management company. The segregated funds must be maintained in a United States bank account.

(b) Maintain a reserve that meets all of the following conditions:

(i) The reserve must be in 1 of the following forms:

(A) Cash or cash equivalents maintained in a United States bank account segregated from the fantasy contest operator's or licensed management company's operational funds.

(B) An irrevocable letter of credit.

(C) A bond.

(D) Any combination of the allowable forms described in subparagraph (A) to (C) of this paragraph.

(ii) The aggregate amount of the reserve must exceed the total dollar value of deposits in fantasy contest player accounts and other fantasy contest player funds.

(iii) The reserve must not be used for operational activities of the fantasy contest operator or licensed management company.

(2) Unless otherwise approved by the board, the segregated funds or reserve required under subrule (1) of this rule must be maintained by or otherwise under the control of the fantasy contest operator or licensed management company or an independent special purpose entity established by the fantasy contest operator or licensed management company or an affiliate of the fantasy contest operator or licensed management company to hold the funds.

(3) A fantasy contest operator or licensed management company must ensure that fantasy contest player funds are shielded from creditors other than fantasy contest players for whose benefit and protection the segregation or reserve required under subrule (1) of this rule is established.

(4) Funds held in fantasy contest player accounts must not be automatically transferred by a fantasy contest operator or licensed management company. A fantasy contest operator or licensed management company must not require a fantasy contest player to transfer funds from his or her fantasy contest player account in order to circumvent this rule.

(5) A fantasy contest operator or licensed management company must have access to all fantasy contest player account and transaction data to ensure the amount of its segregated funds or reserve is sufficient.

(6) The board may audit a fantasy contest operator's or licensed management company's segregated funds or reserve at any time and may direct a fantasy contest operator or licensed management company to take any action necessary to ensure the purposes of this rule are achieved, including, but not limited to, requiring the fantasy contest operator or licensed management company to modify the form of its reserve or increase the amount of its segregated funds or reserve.

Mich. Admin. Code R. 432.535a

2023 MR 20, Eff. 10/11/2023