Enacts the New York prediction market regulation act

S T A T E   O F   N E W   Y O R K
        ________________________________________________________________________

                                          11521

                                  I N  A S S E M B L Y

                                      May 28, 2026
                                       ___________

        Introduced by M. of A. McDONALD -- read once and referred to the Commit-
          tee on Racing and Wagering

        AN ACT to amend the financial services law, in relation to licensing and
          regulation of prediction market platforms

          THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
        BLY, DO ENACT AS FOLLOWS:

     1    Section 1. This act shall be known and may be cited as the  "New  York
     2  prediction market regulation act".
     3    §  2. The financial services law is amended by adding a new article 11
     4  to read as follows:
     5                                 ARTICLE 11
     6                        PREDICTION MARKET REGULATION
     7  SECTION 1100. DEFINITIONS.
     8          1101. LICENSE REQUIRED.
     9          1102. APPLICATION AND QUALIFICATION.
    10          1103. STANDARDS OF CONDUCT.
    11          1104. ENFORCEMENT AUTHORITY.
    12    § 1100. DEFINITIONS. FOR PURPOSES OF THIS ARTICLE, THE FOLLOWING TERMS
    13  SHALL HAVE THE FOLLOWING MEANINGS:
    14    1. "PREDICTION MARKET" MEANS ANY  PLATFORM,  ELECTRONIC  OR  PHYSICAL,
    15  THAT ALLOWS PARTICIPANTS TO PLACE WAGERS, TRADES, OR FINANCIAL POSITIONS
    16  ON THE OUTCOME OF FUTURE EVENTS, INCLUDING BUT NOT LIMITED TO POLITICAL,
    17  ECONOMIC,  WEATHER,  OR  OTHER  CONTINGENCIES, WHERE PAYOUTS ARE TIED TO
    18  EVENT OUTCOMES.
    19    2. "OPERATOR" MEANS ANY ENTITY THAT OWNS, CONTROLS, MANAGES, OR OTHER-
    20  WISE PROVIDES ACCESS TO A PREDICTION MARKET.
    21    3. "PARTICIPANT" MEANS ANY PERSON WHO ACCESSES OR  USES  A  PREDICTION
    22  MARKET TO PLACE WAGERS OR FINANCIAL POSITIONS.
    23    §  1101. LICENSE REQUIRED. NO PERSON OR ENTITY SHALL OPERATE A PREDIC-
    24  TION MARKET ACCESSIBLE TO NEW YORK RESIDENTS WITHOUT FIRST  OBTAINING  A
    25  LICENSE FROM THE DEPARTMENT IN ACCORDANCE WITH THIS ARTICLE.
    26    § 1102. APPLICATION AND QUALIFICATION. 1. A PREDICTION MARKET OPERATOR
    27  SEEKING LICENSE SHALL SUBMIT TO THE DEPARTMENT:
    28    (A) BUSINESS INFORMATION AND FINANCIAL STATEMENTS;

         EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD14389-02-6
        A. 11521                            2

     1    (B) ANTI-MONEY LAUNDERING (AML) PROGRAMS CONSISTENT WITH FEDERAL LAW;
     2    (C)  CONSUMER  PROTECTION  POLICIES,  INCLUDING,  BUT  NOT LIMITED TO,
     3  DISPUTE RESOLUTION PROCESSES; AND
     4    (D) EVIDENCE OF  INTERNAL  CONTROLS  FOR  MARKET  INTEGRITY  AND  RISK
     5  MANAGEMENT.
     6    2. THE DEPARTMENT MAY REQUIRE BACKGROUND CHECKS, FINANCIAL AUDITS, AND
     7  SUCH DEMONSTRATIONS OF FITNESS AS NECESSARY TO PROTECT PUBLIC INTEREST.
     8    § 1103. STANDARDS OF CONDUCT. LICENSED OPERATORS SHALL:
     9    1. COOPERATE WITH DEPARTMENT INVESTIGATIONS AND EXAMINATIONS; AND
    10    2.  COMPLY  WITH  DEPARTMENT  ANTIFRAUD,  RECORDKEEPING, AND REPORTING
    11  REQUIREMENTS.
    12    § 1104. ENFORCEMENT AUTHORITY. 1. THE DEPARTMENT MAY:
    13    (A) SUSPEND, REVOKE, OR REFUSE RENEWAL OF A LICENSE;
    14    (B) IMPOSE FINES OR CIVIL PENALTIES FOR VIOLATIONS; AND
    15    (C) ORDER RESTITUTION FOR HARMED PARTICIPANTS.
    16    2. OPERATORS SHALL BE SUBJECT TO EXAMINATION AND AUDIT BY THE  DEPART-
    17  MENT.
    18    § 3. This act shall take effect on the one hundred eightieth day after
    19  it shall have become a law.