New Yorkers can enjoy paid daily fantasy sports (DFS) contests now that five firms have temporary permits as the NFL and college football seasons get underway.
DFS pioneers and giants FanDuel and DraftKings already resumed operations in New York, which in August granted temporary operating permits to five DFS operators.
New York Attorney General Eric Schneiderman last year declared DFS contests to be a game of chance and an unregulated form of gambling. He sent cease and desist letters to the DFS firms, which in March agreed to stop offering paid contests in New York.
Since then, state lawmakers enacted legislation defining DFS as a game of skill, which nixed Schneiderman’s legal action against the operators, although he plans to pursue false advertising claims against them.
FanDuel, DraftKings, Yahoo, FantasyDraft, and Draft now have temporary permits and are taking action on DFS contests tied to football and Major League Baseball.
Meanwhile, in Nevada FanDuel and DraftKings continue trying to gain a foothold in the state where sports betting is legal, but DFS is not.
The state’s Gaming Policy Committee is slated to meet this fall and discuss likely legalization of DFS in the state, but is leaning toward declaring DFS to be a form of gambling, rather than a game of skill.
Gambling operators must have gaming permits to do business in Nevada, and that appears to be the route state gaming regulators want to take in Nevada.
If so, that would require DraftKings and FanDuel to obtain gaming permits to offer paid contests in Nevada.
To prevent that from happening, they intend to continue meeting with Nevada officials to initiate regulatory changes that would enable the out-of-state operators to do business in Nevada.
Meanwhile, the state’s brick-and-mortar casinos say they should have priority over out-of-state firms, which would siphon money out of the state, rather than keeping it within its borders.
It’s too late for paid DFS to resume in Nevada before the college and NFL football seasons kick off, but anticipated changes coming this fall likely will have it back in some form. Whether or not FanDuel and DraftKings will benefit remains to be seen.
Missouri and Kentucky are also moving forward regarding daily fantasy sports regulation. The Missouri Gaming Commission recently proposed two new rules to implement the Missouri Fantasy Sports Consumer Protection Act that recently took effect. And in Kentucky, a legislative committee recently questioned officials from DraftKings and FanDuel.
One rule proposed by the Missouri Gaming Commission would establish the operational framework for daily fantasy contests in the state, including how an operator can obtain a license, eligibility guidelines and dealing with minors playing the game. The second rule would regulate fantasy sports operators’ cash reserves. Currently the commission is now accepting publicly filed comments and will hold a public hearing in November.
The new Missouri Fantasy Sports Consumer Protection Act established consumer protections, including prohibiting contests based on college, high school and youth sports; prohibiting participants under 18 years old and requiring operators to have age-verification procedures; establishing complaint procedures; and requiring licensed operators to conduct and pay for annual independent financial audits to ensure compliance with the act.
The legislation also granted the gaming commission regulatory authority over the industry, including the ability to investigate and license operators. The commission also can penalize businesses that violate the regulations.
Fantasy sports sites must pay $10,000, or 10 percent of revenues from Missouri for the previous year, whichever is less, and also must pay an annual operation fee of $11,500 or 11.5 percent of revenues in Missouri. These fees will fund the commission’s regulatory activities, including investigating and licensing operators.
In Kentucky, the Interim Joint Committee on Licensing and Occupations continues its work on oversight legislation for fantasy sports. FanDuel’s Counsel for Policy and Government Affairs Cory Fox told legislators his industry wants oversight legislation to protect sports fantasy companies as well as consumers. “We’ve been operating in 45 states at the beginning of last fall, but we knew we wanted to put bills in place to ensure our legal clarity was there and also put in place consumer protection,” Fox said.
State Senator Chris McDaniel asked Draft Kings Manager for Governmental Affairs Derek Hein about paid by the fantasy sports companies and winning players. Hein said, “If a consumer wins more than $600 on our site, they are currently issued a 1099, and that’s what we pay currently. There’s nothing in law that requires us to pay anything else.”
State Senator Damon Thayer asked, “How do you co-exist with parimutuel horse tracks in the states where you passed legislation?” Fox replied, “In other states with parimutuel horse racing we’ve co-existed for years. The horse men and the horse tracks have been supportive of our legislation and some had some concerns, but more relating to their own business than the actual competition from fantasy sports, so it hasn’t been an issue in other states.”
