Two major states are now accepting wagers on daily fantasy sports, clearing up legal issues that the industry confronted there.
New York Governor Andrew Cuomo on August 3 signed into law a measure legalizing paid daily fantasy sports (DFS) in the state.
The new law defines DFS as a game of skill, which negates the New York Attorney General Eric Schneiderman’s central argument against it when he banned DFS based upon it being a game of chance.
DFS requires participants to compile teams made players from professional team roster in football, basketball, baseball, soccer, hockey, and other sports. Team scores are based upon player performance in real games, and DFS participants can create new teams every day.
DFS operators FanDuel and DraftKings agreed to stop offering paid DFS contests in New York while the state’s Legislature debated and eventually approved the measure Cuomo signed Wednesday.
Cuomo said the new law strikes a balance between state regulation and consumer protection, and includes a state education-funding component.
State lawmakers in June approved the measure, but Cuomo delayed signing until Wednesday to assess its potential impact and to assess other bills. Cuomo had until August 14 to review the measure, sign it, or ignore it.
The New York Gaming Commission said it would post information instructing gaming operators, who must pay an annual licensing fee of up to $50,000 and a 15 percent tax on revenues.
With the new law in place, Schneiderman said he won’t prosecute FanDuel and DraftKings for illegal gaming, but he said he will continue pursing claims of fraud and false advertising for claiming DFS is legal in the state.
Meanwhile, Regional Off-Track Betting agreed to host FanDuel DFS at its betting parlors in western New York and at Batavia Downs.
Meanwhile, the Massachusetts legislature last week passed a bill legalizing daily fantasy sports. The bill requires the signature of Governor Charlie Baker to become law.
The provisions were included in an economic development package that lawmakers rushed to pass on the final day of the session. It was passed unanimously in the House and with one no vote in the Senate.
Last month lawmakers considered creating a commission to study fantasy sports as part of the economic package, however the commission never happened but the vote did.
The bill does not seek to regulate DFS, to tax it or to charge a license fee for operators. However, Attorney General Maura Healey had already previously announced regulations of the industry, which she had ruled was legal under state law. The bill works with that action.
The bill may be seen as a temporary Band-Aid for dealing with the industry since it only allows the status quo to remain until July 31, 2018. During that period the games may offer cash prizes, and the games are excluded from the definition of “gambling.”
Also during the interim the bill calls for creating a fantasy sports commission to study the industry as well as online gaming, looking at the following: “economic development, consumer protection, taxation, legal and regulatory structures, implications for existing gaming, burdens and benefits to the commonwealth.” This is similar to advice that the Massachusetts Gaming Commission MGC gave when it suggested an “omnibus approach” to dealing with all forms of online gaming.
Although the economic package does not authorize online lottery sales, it does authorize the new commission to study the issue.
Despite not being allowed to expand into the internet for another year, the state lottery set another record. It brought in about $5.2 billion for the fiscal year just ended, which is $217 million higher than the year before.
The commission will be chaired by the House and Senate chairmen of the Joint Committee on Economic Development and Emerging Technologies, with the MGC and the attorney general each appointing a member, along with two appointees each from the Senate and the House.
The commission is expected to suggest possible legislation to regulate and tax the industry beginning next year or in 2018.
