Mich. Admin. Code R. 432.551

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

Section R. 432.551 - Fantasy contest operator and licensed management company procedures and internal controls

Rule 551.

(1) A fantasy contest operator and any licensed management company that manages day-to-day fantasy contest operations of the fantasy contest operator must submit to, and receive approval from, the board commercially reasonable procedures and internal controls intended to accomplish all of the following:

(a) Ensure compliance with R 432.532h, including, but not limited to, procedures designed to do both of the following:

(i) Prevent a person from establishing a fantasy contest player account if the person is prohibited from establishing a fantasy contest player account under R 432.532a to R 432.532g.

(ii) Prevent a person from entering or participating in any fantasy contest the person is prohibited from entering or participating in under R 432.532a to R 432.532g, or from entering or participating in a fantasy contest in any other manner in violation of R 432.532a to R 432.532g.

(b) Prevent the owners, directors, officers, employees, agents, contractors, and third-party providers of the fantasy contest operator or licensed management company from sharing protected information with third parties unless the protected information is otherwise made publicly available in accordance with R 432.532g. The procedures must include the means by which a fantasy contest operator or licensed management company shall provide notice to a fantasy contest player related to the sharing of protected information that includes the fantasy contest player's personal identifiable information.

(c) Establish the maximum number of entries a single fantasy contest player may enter in each fantasy contest and take reasonable steps to prevent fantasy contest players from submitting more than the allowable number of entries in accordance with R 432.532(3).

(d) Ensure compliance with R 432.532a addressing beginning and highly experienced players including, but not limited to, procedures to do all of the following:

(i) Identify each highly experienced player by a symbol attached to the highly experienced player's username.

(ii) Offer some fantasy contests that are open only to beginning players.

(iii) Offer some fantasy contests that are open only to players other than highly experienced players.

(e) Ensure compliance with R 432.535a addressing fantasy contest player funds.

(f) Ensure compliance with the applicable state and federal requirements and these rules to protect the privacy and online security of a fantasy contest player and the fantasy contest player's account, including procedures to prevent any withdrawal from the fantasy contest player's account that is not authorized by the fantasy contest player.

(g) Ensure the security of personal identifiable information and financial information of a fantasy contest player, funds in a fantasy contest player account, and other information as required by the board. The procedures must include the means by which a fantasy contest operator or licensed management company will provide notice to a fantasy contest player related to the sharing of personal identifiable information.

(h) Identify and report fraud, unusual activity, and suspicious conduct and ensure compliance with R 432.534a.

(i) Ensure compliance with all provisions of 31 USC 5311 to 5336, commonly referred to as the bank secrecy act, that are applicable to the fantasy contest operator's or licensed management company's fantasy contest operations as required under R 432.534.

(j) Ensure access to the fantasy contest platform and assets are properly restricted from unauthorized access.

(k) Ensure promotional funds for fantasy contests are properly authorized and approved.

(l) Ensure tournaments, bonuses, and promotions are conducted in accordance with R432.537.

(m) Ensure all advertisements are conducted in accordance with the act and these rules, including R 432.533.

(n) Ensure compliance with all requirements of the act and these rules related to fantasy contest player accounts including, but not limited to, all of the following:

(i) Procedures for the creation, suspension, and closing of fantasy contest player accounts.

(ii) Procedures for the handling of dormant accounts.

(iii) Procedures to ensure the fantasy contest operator or licensed management company completes, within 10 business days of the fantasy contest player's request, all of the following:

(A) Deposit of cash or cash equivalent prizes or awards into the fantasy contest player account.

(B) Fund withdrawal request from a fantasy contest player account in accordance with R 432.544d.

(C) Closing of a fantasy contest player account.

(iv) Procedures to ensure compliance with all other fantasy contest player account requirements contained in parts 3 and 4 of these rules.

(o) Ensure the security, operation, and maintenance of a fantasy contest platform and other equipment used to conduct fantasy contests.

(p) Ensure that the fantasy contest platform meets or exceeds current standards generally accepted in the fantasy contest industry in the United States and fantasy contest platform requirements contained in these rules.

(q) Ensure the geolocation system functions in accordance with R 432.539.

(r) Detect and prevent the misuse of proxy servers and ensure compliance with R 432.532f.

(s) Ensure the proper recording of fantasy contest adjusted revenues and payment of taxes required under the act.

(t) Ensure the accurate recordation of all fantasy contest transactions and reconciliation of account balances including fantasy contest adjusted revenues and fantasy contest player account balances.

(u) Ensure unclaimed funds are processed in accordance with the uniform unclaimed property act, 1995 PA 29, MCL 567.221 to MCL 567.265.

(v) Ensure security incidents and fantasy contest platform failure incidents are timely identified, responded to, and corrected. The following must be performed on each incident:

(i) Analysis and cause of the incident.

(ii) Containment.

(iii) Planning and implementation of corrective action to prevent recurrence.

(iv) Recovery from and correction of the incident in a careful and controlled manner.

(v) Communication with those affected by or involved with recovery from the incident.

(vi) Reporting of the incident and corrective action to the board as follows:

(A) Any incident involving a breach of privacy or confidentiality or malicious intrusion of a fantasy contest platform, website, device, or other equipment used to conduct fantasy contests must be promptly reported to the board.

(B) Incidents other than those described in subparagraph (A) of this paragraph must be reported as directed by the board. This includes, but is not limited to, any failure, malfunction, or loss of service of a fantasy contest platform.

(w) Establish and operate a self-restriction program in accordance with R 432.532d.

(x) Ensure compliance with R 432.532 addressing the conduct of fantasy contests.

(y) Provide fantasy contest players with fantasy contest rules or terms in accordance with R 432.536.

(z) Identify authorized scripts, detect and prevent unauthorized scripts, and ensure compliance with R 432.532e.

(aa) Ensure that all third-party audits required under the act and these rules, including those required under R 432.554 and R 432.554a, are completed in accordance with the act and these rules.

(bb) Ensure all fantasy contest player complaints, including complaints that a violation of the act or these rules has occurred, are received, investigated, and responded to by the fantasy contest operator or licensed management company in a timely manner in accordance with R 432.535.

(cc) Ensure that monitoring, identification, investigation, correction, and reporting to the board is performed for any violations of the procedures and internal controls adopted pursuant to the act and these rules.

(dd) Ensure procedures are adopted, implemented, and maintained for establishing and using test accounts.

(ee) Otherwise ensure the integrity of fantasy contests.

(2) To the extent a third party is involved in or provides any of the procedures and internal controls required in these rules, the fantasy contest operator's or licensed management company's procedures and internal controls must document the roles and responsibilities of the third party and must include procedures to evaluate the adequacy of and monitor compliance with the third party"s procedures and internal controls.

(3) A fantasy contest operator or licensed management company shall comply with the procedures and internal controls that are submitted to the board under these rules and are approved by the board or otherwise allowed to be implemented in accordance with these rules. If a fantasy contest operator or licensed management company fails to comply with any provision of its procedures and internal controls, the board may initiate a disciplinary action.

(4) Unless otherwise determined by the board, all of the following provisions apply to technical adjustments and amendments to the procedures and internal controls:

(a) A fantasy contest operator or licensed management company must notify the board in advance of making any technical adjustment to its procedures and internal controls. The technical adjustment may be implemented immediately if it is not material and the procedures and internal controls continue to meet or exceed standards required by the act and these rules. If at any time the board determines that the technical adjustment is material, the fantasy contest operator or licensed management company must do either of the following:

(i) Submit the material technical adjustment to the board in accordance with subdivision (b) of this subrule. The fantasy contest operator or licensed management company must not implement the material technical adjustment until it is approved by the board under subdivision (b) of this subrule or allowed to be implemented under subdivision (c) of this subrule. If the material technical adjustment was previously implemented, the material technical adjustment may remain in effect during the pendency of the submission unless otherwise directed by the board.

(ii) Withdraw the material technical adjustment. If the material technical adjustment was previously implemented, the fantasy contest operator or licensed management company has 15 days to cease implementation.

(b) Except as otherwise provided in subdivision (c) of this subrule, all material technical adjustments and amendments to the procedures and internal controls must be submitted to and approved by the board, in writing, prior to implementation.

(c) If within 15 days, the board has not approved, denied, or otherwise provided written notice regarding a material technical adjustment or amendment to the procedures and internal controls, a fantasy contest operator or licensed management company may implement the material technical adjustment or amendment, as submitted, with the board retaining its authority to require further amendment, approval, or denial.

(d) If the board requests additional information, clarification, or revision of a proposed technical adjustment or amendment to the procedures and internal controls and the fantasy contest operator or licensed management company fails to satisfy the request within 30 days, the board may consider the proposed technical adjustment or amendment withdrawn. If the technical adjustment or amendment was previously implemented under subdivision (a) or (c) of this subrule at the time it is considered withdrawn, the fantasy contest operator or licensed management company has 15 days to cease implementation of the technical adjustment or amendment. If the fantasy contest operator or licensed management company subsequently wants to implement or seek board approval of the proposed technical adjustment or amendment, the fantasy contest operator or licensed management company must resubmit the notification or request.

Mich. Admin. Code R. 432.551

2023 MR 20, Eff. 10/11/2023