New Hampshire has joined the ranks of 13 states—and the third this year—to pass a daily fantasy sports law.
The law, now signed by Governor Chris Sununu, is unusual as it does not charge DFS companies a licensing fee or tax their revenue. It does, however, put consumer protections in place.
Previous versions of the bill had included a licensing fee and a proposed five percent tax on gross revenue, but state officials said they wanted to promote competition in the industry.
“In some jurisdictions, the rate of tax was so high as not to allow other businesses to do it, other than the giant companies, so a lack of tax and fee structure actually allows more competition,” Charlie McIntyre, head of the state lottery said in a press statement.
Under the law, the New Hampshire Lottery Commission will regulate DFS sites and will be able to create rules overseeing contests. Operators have to apply for registration in order to provide services, but any already in operation may continue to offer services as the law takes effect. The rule applies to any organization organizing fantasy sports leagues or contests.
Consumer protections in the law include DFS site employees being banned from game play, a requirement that player funds remain segregated from operational funds and an age restriction for those under 18.
Also, “highly experienced” players who played in more than 1,000 fantasy competitions, or have won three or more contests with prizes totaling more than $3,000 from the same game operator must be identified on sites in a way that other players would be able to see, according to a report by NH1.com.
The law also outlines rules for “scripts,” or lines of code, that allow for people to automate and sometimes create an unfair advantage over other players, the report said.
In Massachusetts, the Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports is recommending that the Bay State’s legislature legalize DFS as a form of “online gaming.”
Although the official report isn’t complete yet, a draft of the final report has been released.
In one section the commission writes: “At this time, the Special Commission recommends legalizing DFS as a subset of online gaming and enacting legislation that would put into law the proposed regulatory, governance, and taxation system described above.”
It recommends that the legislature, “work to balance regulation with innovation and develop a robust framework as to how all online gaming should be governed, taxed, and regulated generally.”
The commission doesn’t recommend legalizing other online gaming, such as poker or online casinos as a consideration to the two casinos that haven’t opened yet: MGM Springfield and the Wynn Boston Harbor. It wants time to figure out what impact online gaming might have on their operations.
There is no unanimous policy among the states as to whether DFS is gambling or not. The Bay State appears to be taking the position that it is.
DraftKings, the largest DFS operator in the U.S. swiftly reacted against the definition that what it is doing is “gaming” rather than a game of skill. A spokesman, James Chisholm, declared, “We fundamentally disagree with some of the recommendations in the Commission’s draft report, particularly its proposal to define fantasy sports as ‘online gaming,’ ” adding, “No other state in the country has characterized fantasy sports this way.”
He added, “DraftKings is proud to call Boston and Massachusetts home. We have more than 300 employees from 79 cities and towns across the state, and while we are committed to growing and innovating here, this provision, if adopted, could impact our ability to do that,”
The legislature empaneled the special commission last year to look into all of the issues of online gaming. The report states: “Legalizing DFS as a subset of online gaming and enacting legislation that would put into law the proposed regulatory, governance and taxation system.”
The report has not yet been officially adopted by the commission. A final vote is scheduled for July 31.
The report reflects the view of the state gaming commission chairman Stephen Crosby that the state should, whenever possible, sidestep the question of whether games or skill or luck based gives regulators the most flexibility in dealing with new technological developments by taking in a large field of activities and dubbing them “gambling.”
He said recently, “There have been millions of dollars spent litigating whether DFS is a game of skill or a game of chance, and if it’s some skill is it enough skill to make it avoid the regulations of games of chance. That just makes no sense to me.”
The legislature has until July 21, 2018 to adopt regulations pertaining to DFS, a deadline lawmakers set themselves when they authorized the ad hoc commission.
The legislature may need to address the one online activity it left off the commission’s plate: the lottery, before it turns to the panel’s recommendations. State Treasurer Deborah Goldberg has said repeatedly that giving the lottery the ability to sell online tickets is vital to maintaining its current profitability.
In June Goldberg declared: “The reality is that if anybody is going to get any kind of online capacity, it needs to be the Lottery before any kind of other gambling would be online. We don’t think that casinos and those folks should be online and then keep us out. We really need to be owning our marketplace in Massachusetts and interacting with people who are our customers.”
What might prompt the Massachusetts legislature to act with alacrity is the fact that neighboring Pennsylvania is mulling a bill that would legalize both online gaming and DFS while authorizing online lottery sales. New Hampshire just legalized online lottery and keno sales.
