HomePublicationsNewsletter ArchiveNewslettersVolume 22DAILY FANTASY SPORTS LEGISLATION UPDATE

Several jurisdictions have considered how best to authorize or regulate daily fantasy sports, with several state officers introducing legislation or other policy measures regarding these operations. Some jurisdictions, such as the state of New York, have sought to challenge daily fantasy operations through legal actions, while others, such as Massachusetts, have introduced regulations under consumer protection laws in an attempt to provide a regulatory framework for the activity.

Below is an overview of daily fantasy sports oversight measures being considered in Michigan and other key jurisdictions.

Michigan

On September 9, 2015, Senate Bill 459(“SB 459”) was introduced in the Michigan Senate, legislation that, if passed, would clarify that certain fantasy sports games that meet federal legal standards are exempt from the state’s general Penal Code restrictions on unauthorized wagering. The bill, however, remains in the Senate Committee on the Judiciary and has not progressed since it was first introduced.

In addition, at the January 12, 2016 Michigan Gaming Control Board (“MGCB”) public meeting, Chairman Robert Anthony requested that MGCB staff complete a review of the current status of the daily fantasy sports industry. Executive Director Richard Kalm has responded to the request by stating that staff will complete a report to be presented at either the March or May MGCB meeting. Chairman Anthony noted that he is interested in gaining a better understanding of the state of the industry, its impact on the state, as well as the role that the MGCB may play with respect to the emerging industry. Director Kalm has also stated that the report would include information on the potential effects that daily fantasy sports operations may have on the Detroit and tribal casinos.

Virginia

On March 7, 2016, Virginia Governor Terry McAuliffe signed into law the Fantasy Contests Act (“Act”), which is considered the country’s first law that explicitly authorizes and regulates daily fantasy sports. The law establishes basic consumer protection requirements and delegates oversight of the activity to the Virginia Department of Agriculture and Consumer Services (“Department”).

Under the Act, fantasy sports operators are required to be registered by the Department on an annual basis, which includes an initial $50,000 registration application fee. Applicants must meet basic suitability requirements and provide evidence that the applicant maintains certain internal policies to protect the integrity of contests. These include prohibitions on employee or family member participation, ensuring player information is kept confidential, prohibiting those under 18 from participating, maintaining self-exclusion programs, publishing the number of entries into contests, and other similar internal controls. 

Indiana

On Friday, March 4, 2016, the Indiana legislature became the second state, behind Virginia, to advance legislation that would provide a regulatory framework for the industry. On March 3, 2016, the Indiana House passed Senate Bill 339 (“SB 339”)82-12, with the Senate approving the amended legislation 34-10 on March 4, 2016. The legislation now goes before Indiana Governor Mike Pence for consideration. If he does not act on the legislation, it will automatically become law without his signature.

The Indiana Legislative Service Agency assembled a detailed summary as to the legislation and noted the following highlights:

SB 339 provides that a paid fantasy sports game does not constitute gaming for any purpose, but that the contests would be regulated by the Indiana Gaming Commission. It provides that paid fantasy sports games may be conducted through an Internet web site maintained and operated by a game operator or on the premises of certain licensed facilities under a contract between the game operator and the owner of the licensed facility. The bill provides for the regulation of paid fantasy sports games by the Paid Fantasy Sports Division of the Indiana Gaming Commission (“Division”). It provides that the Division has certain powers and duties for purposes of administering, regulating, and enforcing paid fantasy sports. The legislation provides that an individual must be at least 18 years of age to participate in a paid fantasy sports game. Any prize awarded in a paid fantasy sports game must be made known before the paid fantasy sports game begins. It also requires a game operator to implement certain procedures concerning: (1) preventing certain individuals from competing in paid fantasy sports games; (2) verifying that a game participant is at least 18 years of age; (3) allowing individuals to restrict themselves from entering paid fantasy sports games; and (4) disclosing the number of paid fantasy sports games a single game participant may enter.

Nevada

On March 7, 2016, the Nevada Gaming Policy Committee (“Committee”) held a public meeting to discuss various matters relating to interactive and daily fantasy sports activities. The Committee convened as a result of an Executive Order issued by Governor Brian Sandoval on January 15, 2016.

The Committee heard testimony from a number of interested parties, including the American Gaming Association, the Association of Gaming Equipment Manufacturers, and the Nevada Resort Association. Legal and policy professionals also provided commentary related to the legal status of daily fantasy sports in the state and the potential market for contests as the industry develops. Executives from Draft Kings, Fan Duel, and William Hill US were also present to discuss current and future options for daily fantasy games in the state.

Notably, on October 16, 2015, the Nevada Attorney General issued an opinion concluding that daily fantasy sports contests constituted sports wagering under Nevada law and, therefore, operators would be required to obtain approvals as a sports book in order to properly operate in the state.

Information from the Committee meeting, including copies of public comments, is available here: http://gaming.nv.gov/index.aspx?page=43

New Jersey

On March 7, 2016, legislation was introduced in the New Jersey Senate that, if passed, would authorize and regulate daily fantasy sports contests in the state. Senate Bill 1927 (“SB 1927”)seeks to allow the New Jersey Department of Law and Public Safety to issue permits to qualified daily fantasy sports operators offering games within the state. Each operator would be subject to an annual registration fee of 9.25% of gross revenue.

Daily fantasy contests would be required to rely on the performance of athletes in real-world contests, to disclose all prizes prior to the contest start, allow the use of advanced deposit or mobile wagering accounts, be limited to those 18 years of age or older, and a range of other conditions. Similar to proposals in other jurisdictions, operator employees and their family members would be prohibited from participating in contests and self-exclusion policies must be put into place.

 

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