More states took action on DFS regulations last week, but not all of them were resolved.
Mississippi Governor Phil Bryant has signed a law to temporarily allow daily fantasy sports sites to operate in the state, allowing the sites to again accept players from the state.
Most DFS sites—including FanDuel and DraftKings—stopped play in the state after state Attorney General Jim Hood ruled the games were illegal under state law.
The new bill sets up a Fantasy Contest Task Force to review the industry and suggest more comprehensive regulations. The task force is charged with delivering to the governor by Oct. 15 its recommendations on regulations and fees.
Fantasy sports operators must register with the state, but the current bill does not impose a licensing fee. The bill also includes basic consumer protections.
However, the bill is only in effect until July of 2017, by which time the state may act to put in place a more permanent plan.
Under the law, employees of fantasy sports operators and their immediate families in Mississippi would be prohibited from playing in the daily leagues. Players will have to be 18, operating funds for the daily fantasy sports operator will have to be segregated from player funds and players can exclude themselves at any time.
Both DraftKings and FanDuel praised the law.
Fan Duel spokesperson Emily Bass said the state has taken a “deliberate and reasonable approach to legislating fantasy sports” and the company looked forward to working with the task force on regulating the practice.
Draft Kings spokesman Tim Sullivan said the company looked forward to returning to the state and “continuing to work with legislators in Jackson to establish a framework to allow the hundreds of thousands Mississippians who can continue to play the fantasy sports contests they love.”
Also, the Illinois State Senate has approved a bill to regulate daily fantasy sports in that state, where another attorney general has ruled the games illegal under state law. Illinois Attorney General Lisa Madigan made the ruling in a December advisory opinion.
Under the bill, the Illinois Gaming Board would oversee the contests, and operators violating the law would face fines. The proposal would forbid anyone under 21 from participating. A similar plan is under consideration in the state’s House.
Opponents included those who represent Illinois’ existing casinos. They said the proposed regulations are insufficient and questioned the cost of enforcement, according to a report by the Associated Press.
In New York, the most high profile state where an attorney general ruled daily fantasy sports illegal, legislators say they are near to introducing a new bill to regulate the games.
State Assemblymen Gary Pretlow, chair of the Assembly’s Racing and Wagering Committee, told the Buffalo News he was working on the final version of a bill and wants to run it by state Attorney General Eric Schneiderman for his review. He said he expects his bill to match a bill to be introduced in the state Senate by Senator John Bonacic.
“I’m not saying much about it now, but generally it’s going to have licensing, tax and consumer protections in it,” Pretlow said.
The two lawmakers are rushing to get the measure through before the 2016 session ends June 16.
Three other states have passed DFS laws this year—Indiana, Virginia and Tennessee. Colorado and Missouri have also passed bills which have been sent to their respective governors for action.
The re-opening of Mississippi undoubtedly helps the industry, which has been forced to withdraw play from major states such as New York and Texas after negative ruling by those state’s attorneys general.
In a recent annual report, FanDuel’s auditor acknowledged that the uncertainty of daily fantasy sports’ legality state by state is a problem for the company.
“It is possible that the number of states where the state attorney general may issue opinions against the group’s activities could expand and the group’s activities could be determined to be unlawful in those states and therefore prohibited from operating,” the report said. “The potential for such an outcome represents a material uncertainty that casts significant doubt upon the group and the company’s ability to continue as a going concern.”
However, the report also noted that so far, the loss of players in states where the games are banned represents less than 20 percent of the site’s revenue.
In Rhode Island, fantasy sports has hit a brick wall. The state Lottery offered an opinion last week that trying to regulate online daily fantasy sports (DFS) such as Draft Kings and Fan Duel would require amending the state constitution because DFS is a form of gambling.
Several months ago state Attorney General Peter Kilmartin ruled that such sites are legal, but said they ought to be regulated and that the state could collect fees from them.
The state legislature, known as the General Assembly, has several bills pending that would regulate the sites. This prompted the Lottery to send a letter to the House Finance Committee referencing three bills and asserting that the voters would need to vote to change the constitution before they would be legal.
The constitution says that any expansion of gambling requires a referendum. The Lottery asserts that daily fantasy sports fits the legal definition of gambling.
In Minnesota, the state Senate will not debate online fantasy sports legislation in the current session ending May 23. State Senate President Sandy Pappas sponsored the bill that would have legalized fantasy sports in the state, including the daily games of FanDuel and DraftKings. The bill had been opposed by state Senate Majority Leader Tom Bakk and state Senate Tax Chairman Rod Skoe, who said, “Once you pass this, you give it legal standing.” Pappas said, “I think it would be better to consider it again next year.” The House version of the bill passed last month.
Ray Bohn of Allied Charities of Minnesota also opposed the bill. He told members of the Senate Tax Committee that fantasy sports operators pay lower taxes than the required donations from charitable gambling organizations. “We are helping people in our community every day build hockey arenas, put food on the food shelves and things like that. I would hope you do not place us at a competitive disadvantage,” Bohn said. He added if Pappas’ bill became law, “Instead of going to the local American Legion and play, people could sit home in their pajamas and play.”
Under Minnesota law, “betting” and “sports bookmaking” are illegal; opponents believe that would apply to fantasy sports.
A DFS bill in Illinois cleared the state Senate, but was recalled when one of its supporters requested reconsideration. The bill’s progress to the House was halted as a result.
It’s unclear why Chicago Democrat Senator Antonio Munoz filed the motion, but with only one week left in this year’s session, time is running out.
Senator Kwame Raoul, the bill’s sponsor, wants legislators to act quickly in deference to their constituents who play the games. DFS companies estimate that 2 million people in Illinois are customers.
“What we’re doing with this bill is making sure that we’re responsive to the thousands of citizens who play these fantasy sports and making sure we don’t criminalize those citizens who exist in each and every one of our districts,” he said.
