Daily Fantasy Updates: Florida, Massachusetts and Indiana

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In continuing a months-long trend in which an increasing number of states are looking into daily fantasy sports, we have news out of three states. Lawmakers in each state are either considering new legislation or opining on the need to tackle the issue soon. Where the latter half of 2015 was full of concerning news, the opening weeks of 2016 are giving us bit-sized bits of optimism.

What’s Happening With Florida Daily Fantasy Sports

The most interesting development over the past few days occurred in Florida. There, it was reported that State Representative Matt Gaetz (R – Fort Walton Beach) filed a regulatory bill that subsequently passed the House Business and Professions Subcommittee by a 10-3 vote.

The bill (HB 707) seeks to exempt Florida daily fantasy sports sites and contests from existing state laws against gambling and introduce regulations to govern the industry. If enacted, the bill would require fantasy providers such as FanDuel and DraftKings to register with the Department of Agriculture and Consumer Services. The registration fee would be set at $500,000 followed by an ongoing annual fee of $100,000.

Registered fantasy sites would then be allowed to host real money contests in Florida provided the sites verify that all customers are at least 18 years old and segregate customers’ funds from sites’ normal operational funds. Fantasy sites would also be required to restrict their employees, athletes that are members of teams included in fantasy contests and other league officials from participating.

Additionally, registered fantasy sites would be required to offer self-exclusion programs, disclose the number of entries a single contestant may purchase and to enforce maximum entry rules. The bill also requires all sites to submit to an annual audit conducted by a third party to ensure compliance with all terms set forth in the bill.

One interesting aspect of the bill is its apparent determination to draw a clear line between daily fantasy sports and traditional fantasy leagues. Any “person or entity” that offers fantasy contests to fewer than 750 members of the public per year is not considered an operator and has no obligation to register or comply with these regulations. In other words, this regulation wouldn’t affect you and your buddies’ annual $10 fantasy football league.

The proposal looks great for the most part outside the insanely high registration fees. Larger fantasy sites could manage those sorts of fees no problem, but smaller sites are going to have a hard time justifying spending that much cash on a single state. However, some say the bill could be amended to level the field for smaller DFS companies.

Latest News from Massachusetts

On Tuesday, the Massachusetts Attorney General’s office held a public hearing to hear comments from the general public and interested groups on the AG’s November proposals to regulate the daily fantasy sports industry. Fantasy sports representatives and opponents both had chances to voice their opinions.

A list of the proposals includes the following:

  • Minimum age of 21 to participate in Massachusetts daily fantasy sports contests
  • DFS employees and contractors not allowed to participate in contests
  • Tagging skilled players and professionals with a mark that makes them easily identifiable to other players
  • Sites required to provide tutorials for newbies
  • Enforce limits on number of entries players may purchase for any one contest
  • Prohibiting the use of “automated scripting tools” used by players to gain an advantage
  • Limit players to depositing no more than $1,000 per month
  • Sites must implement self-exclusion programs
  • Banning contests that revolve around college sports
  • Prohibiting athletes from participating in contests that include their sports

An attorney for DraftKings DFS spoke at the hearing and said that many of the AG’s recommendations would be costly and complicated to implement. A number of industry proponents took particular issue with the $1,000-per-month deposit limit, the minimum age of 21 rule and the banning of hosting contests for college sports.

On one hand, the news out of Massachusetts is a positive development for the simple fact that the state is even open to allowing fantasy sports at all. Things could have gone much worse for the industry – such as what we’ve seen recently in New York and Illinois, where state AGs have opined that DFS is nothing more than illegal gambling.

On the other hand, some of the proposed regulations fall on the burdensome side. Awkwardly-phrased proposals leave many questions about how the sites would even implement some of these suggestions. For example, questions regarding how “scripts” are defined remain unanswered.

Indiana Lawmakers Invite FanDuel to Relocate from New York

The Indianapolis Star reported last week that two Indiana lawmakers have extended an invitation to FanDuel to move its headquarters away from New York and to the Hoosier State. Representative Alan Morrison and Senator Jon Ford issued a joint press release on January 4th that called out New York Attorney General Eric Schneiderman for his heavy-handed approach to daily fantasy sports.

The statement explains how Schneiderman has attempted to ban daily fantasy sports outright (and to later demand repayment to all customers) in just the state’s latest move to push businesses out of New York. By comparison, the lawmakers argue, Indiana is a business-friendly state with low unemployment and ranks as a top-10 state for businesses according to Forbes.

Morrison and Ford also promised to introduce sensible legislation that would clarify Indiana daily fantasy sports legal status as contests of skill and include basic consumer protections to ensure the legitimacy of the budding industry. If nothing else, the statement paints a clear picture of the two wildly different approaches states around the nation are taking regarding daily fantasy sports. Where one state seeks to ban the industry outright, another steps forward to welcome DFS providers with open arms. 2016 sure is shaping up to be an interesting year for fantasy sports.

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