By Mark Wolf
Will state legislators be dealing with daily fantasy sports (DFS) games in 2016?
You can bet on it.
But the industry wants to throw a challenge flag on those allusions to gambling because, as industry representative Jeremy Kudon told a session on daily fantasy sports at the NCSL Capitol Forum in Washington, D.C., the games are based on skill, not luck or chance.
“Skill-vs-chance is the threshold issue,” said Kudon, who represents the major players, DraftKings and FanDuel. “Daily fantasy is a form of entertainment, not gambling. It gives (players) a deeper appreciation for the games they love.”
In daily fantasy, players pay an entry fee to assemble a team in a given sport using a salary cap, and the players earn them points based on statistical metrics (yards gained, touchdowns, RBI, points scored etc.).
“There is no correlation to who wins or loses the game,” said Kudon, making the industry’s case that distinguishes fantasy competitors from sports bettors.
Congress specifically exempted fantasy sports from the 2006 Unlawful Internet Gambling Enforcement Act, but the DFS industry has been in the regulatory version of a prevent defense as several states have cast a skeptical eye on the legality of the widely advertised games.
Nevada recently ruled that the DFS games, a multibillion dollar industry, were gambling and pulled the plug on them in the nation’s gambling capitol. New York’s attorney general filed a cease-and-desist order last month, halting the games in that state.
Several other states are considering DFS-related law. Kudon said the industry is prepared to accept regulation but wants to be exempted from being considered gambling.
“It’s all about the public policy discussion, and setting up the right set of safeguards to make sure everybody is playing by the same rules,” said Nevada Assemblywoman Maggie Carlton (D), a panelist at the session. “I was a waitress for 35 years in a casino. I had to be fingerprinted to serve you a Bloody Mary, a breakfast or a club sandwich. That’s how seriously Nevada takes the industry.
“We’ve had a lot of discussions today about the dollar amounts. This is big money guys and you need good public policy to make sure that everybody plays by the same rules. I know some people disagree with how Nevada looked at this but we don’t look at skill vs. chance.
“We take the 60,000-foot view. Did you hand over money? Did you make a bet? Then if you did, then we have rules that protect everyone who is within that group.”
Representative Joe Atkins (DFL) of Minnesota cited reports that states could reap as much as $250 million in sales tax from DFS transactions. He is sponsoring legislation that requires registration, background checks and outside independent audits of the DFS industry.
“Doing nothing is not an option when it comes to daily fantasy sports,” he said.
NCSL’s LegisBrief on the legality of fantasy sports.
Mark Wolf is editor of the NCSL Blog.