Industry Updates

Daily Fantasy Scores a Win in Florida but Loses in Hawaii

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Two states known for the sunshine and beaches have little in common when it comes to daily fantasy sports. We just got word today that two measures to legalize and regulate the industry have made progress in Florida, but that the Attorney General for Hawaii has just ruled that fantasy sports contests constitute illegal gambling under state law. 2016 is shaping up to be a pivotal year with news on the regulatory front coming fast and furious so far in the new year.

Good News in Florida

Two separate but similar bills seeking to regulate and legalize fantasy sports in Florida made significant progress on the long road to becoming the law of the land. One of these bills, HB 707 sponsored by State Representative Matt Gaetz, had previously made it through the House Business and Professions Subcommittee by a 10-3 vote earlier this month.

Today, that bill made it through the House Finance and Tax Committee. The bill will have to survive one more committee vote before it goes to the state House for a vote. The Tampa Bay times also reported that both bills contain text that definitively declares fantasy sports contests not forms of gambling and not subject to state gaming laws.

In the senate, SB 832 passed the Senate Regulated Industries Committee by an 8-2 vote. This one was introduced by State Senator Joe Negron. His bill also explicitly affirms the legality of daily fantasy sports. He told the Miami Herald that he doesn’t think “anyone wants to criminalize an activity that 3 million law abiding citizens are engaged in.” SB 832 was later amended to create an “Office of Amusements” within the Department of Business and Professional Regulation to oversee the industry.

Both bills originally required fantasy site operators to apply to the Department of Agriculture and Consumer services for a license. Both were amended such that operators would need to seek licensure from the Florida Department of Business and Professional Regulation. That is the same department that currently oversees parimutuel racing betting in the state.

One other thing both bills have in common is a licensing fee of $500,000 imposed on operators the first time they apply for a Florida fantasy sports license. That would be followed by an annual renewal fee of $100,000. However, the bills also contain a provision preventing licensing fees from exceeding 10% of any one site’s annual intake from paid entries minus payouts.

Neither bill has become law, but both have made significant progress already this year. This is especially good news in Florida, where an investigation last year threatened to destroy the entire DFS industry. Needless to say, even the smallest move towards legalization is important progress in Florida.

Bad News in Hawaii

Fantasy sports in Hawaii received a totally unsurprising, but still disappointing bit of news from that state’s attorney general. Attorney General Douglas Chin issued a formal advisory opinion on Wednesday stating that daily fantasy sports contests are illegal according to state gaming laws.

From the press release:

“Gambling generally occurs under Hawaii law when a person stakes or risks something of value upon a game of chance or upon any future contingent event not under the person’s control. The technology may have changed, but the vice has not.”

The opinion later explains that Hawaii law provides two definitions for gambling, and the fantasy contests offered by providers such as DraftKings and FanDuel meet both. Under one definition, any “contest of chance” includes fantasy sports contests “because chance is a material element for most people participating in them.”

The second definition covers any future event not under direct control of the person placing the wager. The opinion then explains that fantasy sports contests are “entirely outside the participants’ influence or control” and therefore meet that definition as well.

Hawaii has long been one of the most anti-gambling states in the union. Under Hawaiian law, casinos, poker rooms, bingo halls and even the lottery are illegal. An unsympathetic opinion from the state’s AG comes as no surprise.

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