- within Wealth Management topic(s)
Key Takeaways
- Representative Deluzio has introduced the “Let Kids Play Act,” which seeks to significantly restrict private equity investment in youth sports entities, including leagues, clubs, facilities and associated technology platforms.
- The bill creates a “vulture investor” designation and requires firms to certify to the Federal Trade Commission (FTC) that they have never engaged—and will never engage—in specified practices defined as “harmful.” The Act defines these “vulture practices”—many of which are core features to the private equity playbook—to include debt-loading, transferring ownership of certain assets or data, shielding the firm from liability, employing roll-up strategies, converting the entity into a high-risk/high-margin business, imposing operational costs such as management fees and imposing one-sided exclusivity terms. In addition, an anti-evasion provision would authorize regulators investigating such transactions to look past the form of transactions to their substance in making regulatory determinations.
- The Act imposes significant penalties for non-compliance. False certifications trigger a minimum $1 million civil penalty per certification, imposed jointly and severally on the firm and each general partner who executes the certification. Individuals who knowingly submit false certifications face criminal liability, including fines and imprisonment of up to one year. The bill also creates a private right of action with treble damages and attorney’s fees and imposes joint and several liability on vulture investors for all liabilities incurred by the youth sports entity during the period of control.
- Sponsors with existing or contemplated investments in youth sports should assess their exposure under the bill’s broad definitions and strict certification requirements.
Overview
On May 5, 2026, Representative Chris Deluzio (D-PA) introduced the “Let Kids Play Act,” which would impose significant restrictions on private equity investment in youth sports. The bill broadly covers any organization, asset, service or activity associated with organized athletic participation for individuals under 18—including recreational leagues, travel teams, facilities, training camps, tournaments and associated technology platforms.
What the Bill Would Do
The bill establishes a certification-based framework for private equity investment in youth sports. The Act defines “private equity fund” by reference to the Investment Company Act of 1940, covering any person who would be an investment company but for the exemptions in sections 3(c)(1) or 3(c)(7) of that Act and who exercises control. Notably, the definition contains no minimum investment or asset thresholds—any fund meeting this definition would be covered. Any fund with an existing youth sports investment would be presumed to be a “vulture investor” unless it certifies to the FTC that it has not engaged in specified prohibited practices in connection with making that investment. Sponsors considering new investments in potentially covered youth sports businesses would likely need to obtain the same certification before closing under the terms of the statute. The proposed framework does not prohibit private equity investment outright, but it does create a new regulatory gate that could affect the usage of very common deal terms that sponsors would need to navigate.
The certification requirements proposed in the legislation also deserve careful attention. The Act would require sponsors to attest, under penalty of perjury, that they have not engaged in “vulture practices”—across the firm’s entire history (not just youth sports investments), including all corporate affiliates. The Act defines “vulture practices” to include debt-loading acquired assets, roll-up acquisitions, management fee arrangements that burden portfolio companies, data monetization activities and other transactions and agreements. The bill also requires a forward-looking commitment not to engage in such practices in connection with any youth sports investment, and the FTC has the ability to terminate any certification at any time upon notice to the firm and publication in the Federal Register. The Act, if passed, could require sponsors interested in the youth sports space to evaluate their historical practices and consider how to structure fund entities and future investments to satisfy certification standards. In addition, the provisions of the bill could require firms to consider changes to operational practices in connection with youth sports investments and assets.
The penalties for non-compliance are significant. False certifications would carry minimum $1 million penalties per certification imposed jointly and severally on the firm and each general partner who executes the certification. The bill would also create a private right of action with treble damages for claims against firms who violate provisions of the Act and also includes an “anti-evasion” provision authorizing regulators to look past the form of any transaction to its substance in determining whether there are potential violations of the Act. These provisions underscore the importance of thorough due diligence and careful deal structuring for any sponsor considering youth sports investments.
The bill reflects a broader trend of congressional interest in private equity’s role in sectors perceived as affecting consumers and communities. It arrives alongside the Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today (PROTECT) Act targeting private equity investments in college sports investments and amid continued legislative focus on private equity in health care, housing and other areas. For sponsors with an interest in sports—whether youth, college or professional—these developments warrant close monitoring and proactive engagement with counsel to ensure investment strategies and operational practices account for an evolving regulatory landscape.
What Private Equity Sponsors Need to Know
While the bill faces an uncertain path in Congress, sponsors should consider how the framework could affect their investment strategies:
- Assess Portfolio and Pipeline Exposure. Sponsors with existing or contemplated investments in youth sports—including leagues, clubs, facilities, training programs or technology platforms—should evaluate their exposure under the bill’s broad definitions.
- Evaluate Deal Structures Carefully. While the bill prohibits specific practices rather than all private equity investment, the anti-evasion provision could pose real limits on structuring flexibility. Sponsors cannot simply restructure deals to evade the bill’s specific requirements—regulators are authorized to look past form to the substance and effect of underlying transactions.
- Assess Historical Practices. The certification requirement is backward-looking: sponsors must certify they have never engaged in any vulture practice across the firm’s entire history and all affiliated entities, not just in youth sports transactions. This includes debt-loading, roll-up strategies and management fee arrangements. Sponsors with any such historical practices may face significant challenges in obtaining certification.
- Monitor Legislative Developments. This bill is part of broader congressional scrutiny of private equity, including pending legislation targeting investment in college sports. Sponsors with sports-related investments should monitor these developments closely.
We will continue to monitor developments and provide updates as the bill moves through the legislative process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
