HomePublicationsNewsletter ArchiveNewslettersVolume 22Issue 17 PENNSYLVANIA GAMING CONTROL BOARD RELEASES REPORT ON DFS INDUSTRY

In January of this year, the Michigan Gaming Control Board (MGCB) asked the Executive Director to prepare a report on the topic of Daily Fantasy Sports (DFS).  The Executive Director has been working on this report in cooperation with the Attorney General’s office, and a report is expected to be released within the next few months.   The State of Michigan is not alone in this regard, as numerous state governments have been actively involved in examining the issue and taking positions with regard to DFS. 

Most recently, the Pennsylvania Gaming Control Board (“PGCB”) released a  report on the DFS industry. This was done in response to the passage of a law in February of this year which mandated the completion of a report by the PGCB and required DFS to be examined as a “gambling product.”

The report issued by the PGCB included a recommendation that the same licensing and oversight applied to the casinos of Pennsylvania should also be applied to the DFS industry. If given the responsibility and oversight of the industry, the PGCB suggested that existing casino licensees be the exclusive providers of DFS. The report suggested that providers of DFS gaming, such as DraftKings and FanDuel, should contract with casino licensees under regulations to be put in place by the PGCB. The PGCB saw “several significant advantages” of such a system, including DFS operators teaming up with “established entities” who show “regard for Pennsylvania’s regulatory environment.”

Although the report suggested having casino licensees operate DFS in Pennsylvania, the PGCB conceded that this is not the only way to regulate the industry and it appears that DFS may end up being tied to already pending legislation which would regulate online poker and casino games, as well as provide for a number of other gambling expansions in Pennsylvania. 

Notably, the PGCB appeared to side-step the question of whether DFS operations in Pennsylvania are a form of illegal gambling.   The report addressed this by stating the following:

Pennsylvania law defines gambling as an activity involving consideration (a bet or wager), an outcome predominated by chance, and a reward or prize for winning the contest. The determination of whether DFS constitutes gambling and hence is illegal in Pennsylvania depends on whether chance or skill is the predominant factor in determining the winner of the contest. While there undoubtedly are elements of both chance and skill involved in the DFS contest, no Pennsylvania court or other body has issued an authoritative pronouncement relative to this issue.

Although the board did not officially opine on the legality of DFS, the PGCB suggested the need to create consumer protections such as prohibiting the use of scripts or algorithms to set lineups, a minimum age requirement of 21, and especially the implementation of help for potential problem gamblers.

Industry leaders DraftKings, FanDuel, and Fantasy Sports Trade Association have not commented directly on the report yet.

The PGCB will present the report to Pennsylvania House Gaming Oversight Committee. Tentatively, it appears that daily fantasy sports will be the subject of a June 1 committee hearing.

 

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