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SENATE BILL 2136
By Haile
HOUSE BILL 1885
By Cepicky
HB1885
012067
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AN ACT to amend Tennessee Code Annotated, Title 4;
Title 4, Chapter 49; Title 8, Chapter 6, Part 4; Title
40, Chapter 2 and Title 47, relative to illegal
activity.
WHEREAS, there exists a growing presence in Tennessee of illegal online sweepstakes
casinos and other forms of online gambling that are often marketed as legal, free-to-play, social
gaming platforms and that utilize a promotional sweepstakes model; and
WHEREAS, such online sweepstakes casinos generally utilize a system allowing players
to play casino-style games with virtual currency and exchange the virtual currency for cash or
other real-world prizes; and
WHEREAS, in reality, such online sweepstakes casinos and other online-gambling
platforms serve as a façade to hide the fact that players may engage in real-money gambling
through the purchase and use of virtual currency; and
WHEREAS, under this promotional sweepstakes model, consumers are induced to
purchase virtual currency under the false impression that they are not engaged in illegal
gambling when in fact their payments allow them to participate in games of chance that award
real-world prizes; and
WHEREAS, such online sweepstakes casinos generally constitute illegal lotteries and
violate Tennessee gambling and consumer protection laws, and there exists the need to clarify
for the public that such online sweepstakes casinos are expressly illegal given their prevalence
in this State; and
WHEREAS, other forms of illegal gambling are becoming widespread, including
gambling machines and other forms of internet-based and electronic gambling that are
advertised as legal and legitimate; and
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WHEREAS, there exists a need to continue to protect Tennesseans from the potential
risks of illegal gambling and to enact laws and regulations related to consumer protection and
safety as it relates to illegal gaming; and
WHEREAS, the attorney general and reporter should be empowered with the tools to
properly investigate violations of law, including illegal gambling; now, therefore,
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 47, Chapter 18, is amended by adding
the following new part:
47-18-5901. Part definitions.
As used in this part:
(1) "Attorney general" means the attorney general and reporter;
(2) "Gambling" has the same meaning as defined in § 39-17-501;
(3) "Gambling device" means a gambling device or record as defined in §
39-17-501;
(4) "Individual" means a natural person;
(5) "Online sweepstakes game" means gambling in the form of a game,
contest, or promotion that:
(A) Is available on the internet and is accessible on a mobile
phone, computer terminal, or similarly accessible device;
(B) Utilizes a virtual-currency system allowing a player to:
(i) Play or participate with a currency, such as a virtual
coin, token, or other representation of value, that is directly
purchased, received through a bonus or promotion, or received for
free with the purchase of another type of currency or related
product, service, or activity; and
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(ii) Exchange the currency for a prize, award, cash, or
cash equivalent, or the chance to win a prize, award, cash, or
cash equivalent; and
(C) Simulates gambling of any kind, including, but not limited to,
casino-style gaming such as slot machines, video poker, table games,
lottery games, bingo, or unlicensed sports wagering; and
(6) "Person" means an individual, business entity, trust, or other
organization or entity.
47-18-5902. Prohibition.
(a) Gambling; the operation or possession of gambling devices; and the
operation, conducting, or commercial promoting of online sweepstakes games and other
forms of online or app-based gambling are unlawful and are offenses against the public
health, safety, and welfare of this state.
(b) In addition to other penalties imposed by law, a person who commits one (1)
or more of the following acts is subject to the remedies set forth in this part:
(1) Offers wagers or entry fees for gambling to a person located within
this state or accepts wagers or entry fees for gambling from a person located
within this state;
(2) Operates, conducts, or commercially promotes online sweepstakes
games or other forms of online or app-based gambling within this state;
(3) Sells or distributes gambling devices within this state;
(4) Permits gambling devices to be operated upon premises owned,
leased, managed, or otherwise controlled by a person within this state; or
(5) Supports, facilitates, or assists in the operation of online sweepstakes
games or other gambling within this state.
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(c) This section does not make unlawful or otherwise restrict lawful games
permitted under or by the Tennessee Sports Gaming Act or Fantasy Sports Act,
compiled in title 4, chapter 49, Tennessee nonprofit gaming laws under title 3, chapter
17, or the Tennessee education lottery corporation under title 4, chapter 51.
47-18-5903. Penalties.
(a) A violation of this part constitutes a violation of the Tennessee Consumer
Protection Act of 1977, compiled in part 1 of this chapter, is deemed an unfair or
deceptive act or practice affecting trade or commerce, and is subject to the penalties and
remedies as provided in the Tennessee Consumer Protection Act of 1977.
(b) Costs must not be taxed against the attorney general or this state for actions
brought under this section.
47-18-5904. Confidentiality of records.
Information and documents received, created, or maintained by the attorney
general as part of the administration and enforcement of this part are confidential and
are not subject to disclosure pursuant to the Tennessee Public Records Act, compiled in
title 10, chapter 7. Such confidentiality is not waived if the information and data is
shared or has been shared with a state or federal agency or a law enforcement agency.
SECTION 2. Tennessee Code Annotated, Section 47-18-104(b), is amended by adding
the following new subdivision:
( ) Violating § 47-18-5902.
SECTION 3. Tennessee Code Annotated, Section 40-2-102(a), is amended by deleting
the language ", except gaming, which shall be commenced within six (6) months".
SECTION 4. Tennessee Code Annotated, Title 8, Chapter 6, Part 4, is amended by
adding the following new section:
8-6-409. Requests for information and documents.
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(a) If the attorney general and reporter has reason to believe that a person is
engaging in, has engaged in, or is about to engage in an unlawful act or practice under
state law that is a proper subject of inquiry by the attorney general and reporter, or has
reason to believe it to be in the public interest to conduct an investigation to ascertain
whether a person is engaging in, has engaged in, or is about to engage in such act or
practice, the attorney general and reporter may:
(1) Require a person with information relevant to the subject matter of the
investigation to file a statement or report in writing, under oath or otherwise, as to
all the facts and circumstances concerning the alleged violation and to furnish
and make available for examination all documentary material and information
relevant to the subject matter of the investigation;
(2) Examine under oath a person with information relevant to the subject
matter of the investigation; and
(3) Examine or sample all merchandise deemed relevant to the subject
matter of the investigation.
(b) Prior to the return date specified in the attorney general and reporter's
request for information pursuant to subsection (a), or within ten (10) days following
notice of such a request, whichever is shorter, a person from whom information has
been requested may petition the circuit or chancery court of the county containing the
office from which the attorney general and reporter made the request pursuant to
subsection (a), stating good cause, for a protective order to extend the return date for a
reasonable time, or to modify or set aside the request. The attorney general and
reporter must receive at least one (1) days' notice of such a petition and must be given
an opportunity to respond.
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(c) If no protective order from the court is secured and the written request by the
attorney general and reporter is not complied with by its return date, the attorney general
and reporter, upon notice to the person requested to provide information, may apply to
the circuit or chancery court of the county containing the office from which the attorney
general and reporter made the request pursuant to subsection (a), for an order
compelling compliance with the request made pursuant to subsection (a).
(d) Upon a showing by the attorney general and reporter to the circuit or
chancery court of the county containing the office from which the attorney general and
reporter made or could have made the request pursuant to subsection (a) that the
attorney general and reporter has reason to believe that a person is engaging in, has
engaged in, or is about to engage in an unlawful act or practice under state law that is a
proper subject of inquiry by the attorney general and reporter, or has reason to believe it
to be in the public interest to conduct an investigation to ascertain whether a person is
engaging in, has engaged in, or is about to engage in such act or practice; that the
persons who are committing, have committed, or are about to commit such acts or
practices or who possess the relevant documentary material have left this state or are
about to leave this state; and that such an order is necessary for the enforcement of any
state law that is a proper subject of inquiry by the attorney general and reporter, the
court may order such persons to comply with subsection (a) regardless of whether the
attorney general and reporter has made a prior request for information. The court may
also, notwithstanding another law, immediately and without notice, forbid the removal
from any place, concealment, withholding, destruction, mutilation, falsification, or
alteration by any other means of documentary material in the possession, custody, or
control of a person believed by the attorney general and reporter to be connected with
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acts or practices which violate state law that is a proper subject of inquiry by the attorney
general and reporter.
(e) A person who has received notice of a request for information pursuant to
subsection (a), or of an order pursuant to subsection (c) or (d), and with the intent to
avoid, evade, or prevent compliance, in whole or in part, with a civil investigation or
order, removes from any place, conceals, withholds, destroys, mutilates, falsifies or by
any other means alters documentary material in the possession, custody, or control of a
person subject to such notice, is subject to a civil penalty of not more than one thousand
dollars ($1,000) per document, recoverable by this state in addition to any other
appropriate sanction.
(f) Documentary material or merchandise requested pursuant to this section
must be produced for inspection and copying during normal business hours at the
principal office or place of business of the person possessing such documentary material
or merchandise, or at such other time and place as may be agreed upon by the
possessor and the attorney general and reporter.
(g)
(1) All testimony, books, documents, or other writings, records, or
tangible objects obtained by the attorney general and reporter pursuant to this
section are confidential and must not be publicly divulged by the office of the
attorney general and reporter except in the discharge of the duties of the office or
in legal proceedings in which the state is a party.
(2) All other documentary material, answers to written interrogatories,
and transcripts of oral testimony that are voluntarily provided to the attorney
general and reporter as part of an investigation under this part must be treated as
if obtained pursuant to a request issued under this part if said materials were
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obtained pursuant to an investigative demand or similar process issued by
another state or federal attorney general or law enforcement agency, obtained
from a state or federal attorney general or law enforcement agency pursuant to a
statutory obligation to produce, or provided by a person with information relevant
to the subject matter of the investigation. In conducting an inquiry pursuant to
this section, the attorney general and reporter, whenever such aid is determined
to be necessary and desirable, may request the aid of an agency of this state;
and such agency, as requested, shall give full aid, support, and cooperation to
the attorney general and reporter in such investigation.
(h) Service of a notice, order, or request for information by the attorney general
and reporter may be made in compliance with the Tennessee Rules of Civil Procedure
or by:
(1) Delivering a duly executed copy of the notice, order, or request for
information to the person to be served or to a partner or to an officer or agent
authorized by appointment or by law to receive service of process on behalf of
the person to be served;
(2) Mailing by registered or certified mail a duly executed copy of the
notice, order, or request for information addressed to the person, to be served at
the person's principal place of business in this state, or if the person has no place
of business within this state, to the person's principal office, place of business,
home, or last known address; or
(3) Personal service, pursuant to §§ 20-2-214 - 20-2-220.
(i) This section does not apply to requests by the attorney general and reporter
under the Tennessee Consumer Protection Act, compiled in title 47, chapter 18, or the
Tennessee Human Rights Act, compiled in title 4, chapter 21.
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(j) No provision of this section shall be construed to limit, modify, or supersede
the Tennessee Consumer Protection Act or the Tennessee Human Rights Act.
SECTION 5. Tennessee Code Annotated, Section 4-49-204(a)(6), is amended by
deleting the language "§§ 4-49-203, 4-49-204," and substituting "this section and §§ 4-49-203,
4-49-205," and by adding the language "and other persons" after the word "licensees".
SECTION 6. Tennessee Code Annotated, Section 4-49-206(b), is amended by deleting
the subsection and substituting:
(b) In addition to the authority of the sports wagering council to investigate
violations of and enforce compliance with this part, the attorney general and reporter
may investigate violations of § 4-49-205 in accordance with the Tennessee Consumer
Protection Act of 1977, compiled in title 47, chapter 18. The attorney general and
reporter may institute proceedings involving alleged violations of § 4-49-205 in
Williamson County circuit or chancery court or another venue otherwise permitted by
law.
SECTION 7. Tennessee Code Annotated, Section 4-49-208, is amended by deleting
subsection (a) and substituting:
(a) The Uniform Administrative Procedures Act, compiled in chapter 5 of this
title, governs all matters and procedures regarding the hearing and judicial review of any
contested case arising under §§ 4-49-203 - 4-49-205 and 4-49-208 to which the sports
wagering council is a party.
SECTION 8. Tennessee Code Annotated, Section 4-49-208, is amended by deleting all
language before the colon in subsection (b) and substituting:
(b) The sports wagering council may investigate and conduct a hearing with
respect to a licensee or any other person upon information that a licensee or other
person has violated this part, or upon receipt of a credible complaint from a person that a
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licensee or other person has violated this part. If the sports wagering council determines
that the licensee or other person has violated this part, the sports wagering council may
do any of the following or both:
SECTION 9. Tennessee Code Annotated, Title 4, Chapter 49, Part 2, is amended by
deleting the language "sports wagering advisory council" wherever it may appear and
substituting "sports wagering council".
SECTION 10. If any provision of this act or its application to any person or circumstance
is held invalid, then the invalidity does not affect other provisions or applications of the act that
can be given effect without the invalid provision or application, and to that end, the provisions of
this act are severable.
SECTION 11. This act takes effect upon becoming a law, the public welfare requiring it.