Daily fantasy sports ran into problems this week, even in states where it seemed legalization was certain.
Massachusetts legislators have kicked the Daily Fantasy Sports can down the road two years, at which time they will need to have made a decision how they want to regulate the practice.
Meantime Governor Charlie Baker has signed a bill that allows DFS, e.g. FanDuel and Boston-based DraftKings, to function under regulations set down by Attorney General Maura Healey earlier this year. She set age limits on play, and specified that the games may offer cash prizes.
The bill expires in July 31, 2017, leaving lawmakers time to hammer together a bill that will apply a permanent fix.
Rep. Joseph Wagner, who co-chairs the Joint Committee on Economic Development and Emerging Technologies, which hammer together the temporary fix, told the Boston Globe, “We have dealt with the issue of legality here in the short-term. But I think there has been a sense in the legislature in each branch that we want to take a deeper dive on this.”
The legislation creates a nine-seat commission, with appointees from the legislature, the governor and the Massachusetts Gaming Commission. One of its jobs will be to study the games with an aim to regulate them, and issue a report to the legislature in about a year.
Wagner said, “A fair way of saying it is, we have put issues relating to daily fantasy sports on the front burner rather than the back burner or further back in the queue.” The commission will also consider whether to tax the games.
Since DFS games propelled themselves into the public spotlight as part of a widespread publicity campaign that occurred at the start of last year’s NFL season, they have gotten the attention of law enforcement officials in all 50 states.
And while paid daily fantasy sports (DFS) contests now are legal in New York, potential legal entanglements might some or all once again.
Washington D.C.-based Stop Predatory Gambling says it might sue to stop New York from allowing paid daily fantasy sports in the state.
New York Governor Andrew Cuomo signed enabling legislation into law early this month that legalized paid DFS contests, in which participants choose teams each day and can win money based upon the actual performance of professional athletes competing that day.
New York law now defines DFS as a “game of skill,” rather than chance. That negated New York Attorney General Eric Schneiderman’s lawsuit against DFS operators for illegally operating games of chance in the state.
Schneideman said he still is pursuing fraud and false advertising claims against DraftKings and FanDuel, for telling customers the paid contests were legal at the time.
Stop Predatory Gambling National Director Les Bernal says his organization hasn’t decided whether or not it will file a lawsuit in state court, but says it is looking for potential individual plaintiffs for a possible lawsuit.
Six DFS operators have filed applications for gaming licenses with the New York Gaming Commission. Those include industry leaders FanDuel and DraftKings.
The New York Gaming Association opposed DFS legalization on grounds that it would remove money from the state and its brick-and-mortar casinos. Instead, it wants DFS contests done through the casinos, rather than out-of-state online firms.
The Gaming Association says it is not planning a legal challenge to DFS legalization in the state, though.
Barring a legal challenge, New Yorkers will be able to compete in DFS contests during the upcoming football season, which kicks off in less than a month.
DFS contests involving NASCAR and golf, however, might run into a problem with New York’s DFS law.
The law references contests that involve players on sports teams, not individuals competing in tournaments and other contests of short duration.
That might put at least a temporary halt to DFS contests involving one-race and single-tournament sports formats.
Such contests likely take in much less than team-oriented DFS, but it’s a potential revenue stream that might be dammed for at least a short while.
Meanwhile in Maine, state Senator Roger Katz recently submitted a bill title for consideration in the next legislative session that would regulate fantasy sports betting. If the bill passes, Maine would join the growing number of states set to consider fantasy sports gambling next year. Currently eight states have laws regulating fantasy sports leagues.
Katz said more than 57 million players in the U.S. participate in fantasy sports betting. “Should there be some regulation of these leagues to make sure that consumers are being protected when these leagues come into a state? Secondly, is this a possible revenue source as well?” he asked. A recent study estimated players paid $2.6 billion last year, and that total will reach $14 billion-plus in 2020.
Katz recently met with fantasy sports betting company officials at the National Conference of State Legislatures in Chicago. Also in attendance, state Rep. Matt Pouilot urged proceeding with caution, noting, “There was some pretty big blow up with Draft Kings and, you know, a while back with some reports of insider baseball, no pun intended, going on with one of their employees.” As a result, some states passed laws to regulate the gambling sites; others are turning to the Unfair Trade Practices Act and other existing laws.
Maine’s criminal code is vague about whether fantasy sports betting is a game of chance or a game of skill, noted state Attorney General Janet Mills, who said that will have to be clarified. She added lawmakers should consider limiting who may play and how much they can bet. She also said disclaimers should be required to reveal the odds of winning.
“It’s fun to, you know, to pretend you are the manager of a gazillion teams, you are going to put this quarterback together with this linebacker, this, that and the other thing. That can be a lot of fun, but when it comes to putting a lot of money at risk, and putting your family savings at risk, that’s something that causes me great concern.”
