Virginia may be the first state to legalize and regulate daily fantasy sports sites under a bill that has now been sent to state Governor Terry McAuliffe.
The bill has been passed in both houses of the state legislature.
The bill introduced by state Senator Ryan T. McDougle exempts the contests from the state’s definition of illegal gambling and requires players be at least 18 years old. It also requires DFS companies to register with the state and pay an annual $50,000 fee, according to the Virginia Pilot.
DFS sites must also ensure that funds dedicated to pay players are kept separate from the company’s operations. They must also prevent DFS employees from participating in the games, ensure the security of data and create self-exclusion programs.
The bill passed in the state House of Delegates 80-20 and in the Senate with a vote of 30-9. The law, which would take effect July 1 after it’s signed by the governor, doesn’t include a tax. The companies would register with Virginia’s Department of Agriculture and Consumer Services, according to the Pilot.
The industry has been lobbying hard in an estimated 29 state considering DFS legislation for certain policies and came out in support of the Virginia bill.
“Today the Virginia General Assembly took an important step toward ensuring that fans in Virginia can continue to enjoy fantasy sports contests with thoughtful and appropriate consumer protections in place,” said Grifin Finan, DraftKings director of public affairs in an emailed statement to the Pilot.
The Virginia situation is a far cry from daily fantasy sports classification in New York where that state’s attorney general Eric Schneiderman is seeking to bar DraftKings and rival FanDuel from operating in the state.
In that case, the two DFS giants have asked a court to delay a hearing on their legality until after an appeal of a New York court order to shut down has been heard. That order was appealed and the two companies have been allowed to keep operating under a stay, but the full appeal of the order has not been heard.
New York Supreme Court Justice Manuel Mendez is scheduled to hear the state’s case against the sites on March 9. DraftKings and FanDuel argue that the trial should be put on hold until the appeal is decided in court papers.
The New York Attorney General’s Office called the motion by the DFS sites to delay the hearing “a transparent and legally defective ploy,” according to court documents cited by USA Today.
“Not only do DraftKings and FanDuel overlook the ravages of gambling on New York communities highlighted by the court in its decision, they ignore the basic precept that justice delayed exacts its own price,” the attorney general’s motion said.
However, DraftKings argued that being forced to close in New York could have a devastating effect on the DFS industry and is hoping for a lifeline from the appeals court.
Without relief from the appeals court, the company could be hit with a “domino effect” of business partners, investors, and service providers fleeing the industry, DraftKings lawyer Joshua Schiller said in an interview with the Boston Globe.
“It would have a catastrophic effect. It could be enough to put us out of business, I think,” Schiller said. “There have been those kind of pressures put on us already.”
The appellate court isn’t scheduled to hear oral arguments in the case until May at the earliest and a decision isn’t likely to be announced for several weeks afterward. Analysts told USA Today they find it unlikely that Mendez would postpone the trial.
In other developments:
In Indiana, a bill clarifying the legality of daily fantasy sports advanced in the state’s House of Representatives with the minimum age to play staying at 18, according to the Indianapolis Star. Members of the House Public Policy Committee had discussed raising the minimum age to 21, but approved the bill keeping the age at 18, which has been lobbied for by the industry.
Changes in the bill included a hike in the fees that daily fantasy sports companies would have to pay to do business in Indiana. The initial fee is $75,000 followed by $20,000 annual fees. Both amounts were previously $5,000 according to the Star. There is also a provision that requires fantasy companies to withhold winnings of people who are behind on child support.
The state Senate has already passed the bill.
Also, the fantasy site FantasyHub appears to have folded and players at the lesser known site have reportedly not been able to access funds.
Players saw this message when signing onto the site: “FantasyHub has temporarily suspended operations. Further updates have been made via email. We apologize for any inconvenience this may cause, but we are currently in discussions with a strategic 3rd party regarding the future of FantasyHub & its players.”
The closing follows the closing of another small DFS operator FantasyUp, which closed in January by informing its players that it no longer had the funds to continue and that it could not afford to return their balances.
That company was later rescued a DFS white-label platform founded by former MGM and Galaxy Resorts exec Gabe Hunterton and poker marketing agent Brian Balsbaugh according to Casino.Org news.
Also, The National Council on Problem Gambling and the Campaign for a Commercial-Free Childhood also have sent letters asking the NFL to stop sponsoring their own youth-based version of fantasy sports on the website NFL Rush.
The groups charge that the league heavily promoted NFL Rush Fantasy to children 6 to 12 years old and awarded prizes to winners.
Josh Golin, executive director of the Campaign for a Commercial-Free Childhood, a Boston-based group that opposes child-targeted marketing, called the league’s fantasy sports-based curriculum “particularly egregious.”
“NFL Rush Fantasy–Learn, Play, Score! was a math and language arts program that required students to sign up for the NFL’s fantasy football game in order to access lesson materials and complete assignments,” he said in the letter. “Educators should not be called upon to assist the NFL in promoting an activity which is potentially harmful and addictive when engaged in by children.”
An NFL spokesman told the Associated Press that the curriculum initiative in the game was shut down in 2014, and parental consent is needed for children to play.
Finally, Bloomberg News reports that adult entertainment company Vivid Entertainment will debut a daily fantasy sports site. Called Vivid Sports 4 Money, the site will be built and operated by DraftDay Gaming Group. The companies will share profits, the report said.
