Mich. Admin. Code 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.
Notes
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