New York Seeks to Regulate Fantasy Sports, While Massachusetts Declines DFS Regulations
State Representative Felix Ortiz has introduced a daily fantasy sports bill to the floor of the New York Assembly. The purpose of the bill, named AO8554, is to give authority over fantasy sports to the New York Gaming Commission.
The wording of the Ortiz DFS bill is simple. The words “fantasy sports gaming” would be amended to the state gambling code. Such a phrase would need to be defined in a legal sense, so Felix Ortiz has included a legal definition of what “fantasy sports gaming” is.
Defining “Fantasy Sports Gaming”
If the bill passed into New York State law, fantasy sports would be defined in the state “to mean any gaming conducted over an internet website in which game winnings are paid to participants based upon the outcomes of games played by virtual teams of real players of a professional sport, where such teams are assembled by such participants and the outcomes of games are determined by the statistical performance of such real players in actual games.”
Regulating the Whole Fantasy Sports Industry
The scope of the bill is notable. While most American politicians and officials who have weighed in on the DraftKings and FanDuel debate have discussed regulating “daily fantasy sports”, AO8554 would regulate all forms of fantasy sports. That would mean legal fantasy football leagues and old-fashioned Rotisserie baseball leagues could face government oversight.
It also means that fantasy sports league management sites might face regulations. Yahoo, CBS, and ESPN each administer massive networks of fantasy sports local leagues, some free and some with paid services. Each has millions of active players.
While Felix Ortiz cites the Ethan Haskell controversy as the reason the bill is being proposed, the definition is wide enough to put all forms of fantasy sports under the aegis of the New York Gaming Commission. While the law might never be used by officials for yearly or seasonal gaming, the authority to do so clearly would exist.
No Mention of the NCAA
Another curious part of AO8554 is the fact it only mentions professional sports. That means NCAA football and basketball, which are playable on platforms like FanDuel and DraftKings, would remain legal and unregulated in New York.
Early speculation is the omission is deliberate. The possibility exists that Rep. Ortiz left out any mention of college sports in order to avoid a legal showdown with the NCAA. Some legal experts believe the 1992 PAPSA law, which outlaws sports betting in 46 states, could be used to stop daily fantasy sports in those same states. The NCAA was one of the original plaintiffs in the lawsuit against New Jersey over sports betting and it has shown signs it might go after the DFS companies.
Last month, Pac-12 commissioner Larry Scott said that the 5 major football conferences had asked DraftKings and FanDuel to stop offering NCAA football and basketball games (labeled CFB and CBB on FanDuel). The NCAA also announced it would not allow DFS companies to advertise on men’s or women’s basketball games this year. Rep. Ortiz might have left out a mention of college sports in the New York bill, in hopes of avoiding a legal challenge by the NCAA.
New Jersey Lawmaker Seeks to Regulate DFS
In New Jersey, a similar move to regulate the industry is afoot. New Jersey State Senator Jim Whelan plans to introduce a bill which would regulate daily fantasy sports sites in the Garden State.
If the bill passed, companies like FanDuel and DraftKings would have to apply for a gaming license to operate in the New Jersey market. Those applications would be reviewed by the Division of Gaming Enforcement, much like the applications would be reviewed by the Nevada Gaming Commission in the State of Nevada.
Applying for a license would be an admission that daily fantasy sports is gambling, which is something none of the DFS companies wish to admit. If such a bill passed, the DraftKings and FanDuel likely would leave the New Jersey market.
Jersey Politician Protects AC Gaming
In many ways, this was to be expected. Nevada protected its local sportsbooks with its quick action against the DFS companies. New Jersey, which has its own land-based gambling enterprises to protect, were likely to do the same. It is no coincidence that Jim Whelan represents the district which encompasses Atlantic City.
Upon releasing word of his bill, Jim Whelan released a statement which read, “The meteoric rise of daily fantasy sports, particularly with large sums of money being won by players, has led to accusations of insider information and corruption which could hurt consumers.”
Massachusetts Gaming Commission Will Not Regulate DFS
Massachusetts appears to have gone in a different direction than the states of New York and New Jersey appear to be headed. The Massachusetts Gaming Commission considered taking a similar stance that Nevada did, but eventually decided daily fantasy sports was not within the scope of its authority. MGC Chairman Steven Crosby described his commission’s stance, saying DFS cannot be regulated under current Massachusetts law.
Crosby did say his commission has experience with licensing and regulating gaming companies, so his group was open to the idea of regulation in the future, if a new law was passed. Fellow commissioner Enrique Zuniga suggested the same thing in a WBUR Radio interview, though he was more emphatic. Zuniga said, “There’s enough similarities to other forms of gambling that have been widely accepted as gambling that it merits the regulation that Commissioner Cameron and everybody seems to be coalescing around.”
The decision of the Massachusetts Gaming Commission is important particularly for DraftKings, because it is a Boston-based company. If Steven Crosby’s committee made a snap decision the way A.G. Burnette, his Nevada counterpart, did, then DraftKings could face all sorts of difficulties trying to operate from Boston. The much-maligned Crosby’s decision gives DraftKings and its competitors time to lobby lawmakers and make contingency plans, if the worst was to happen. Under the circumstances, it looks like Massachusetts officials are content to support a local business.
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