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California, which just happens to be the world’s eighth largest economy, is the latest state to examine the legality of Daily Fantasy Sports.
A bill introduced by Assemblyman Adam Gray went to a committee vote in Sacramento Wednesday (January 6, 2016). Had it failed to pass the Assembly by the end of the month, the process would then need to begin anew.
Those of us following attempts to legalize online poker in that state over the past few years won’t be holding our breath, nor do we have much concerns over the likes of DraftKings and FanDuel encountering roadblocks operating in California (a la overzealous prosecutors). To put it bluntly, the California legislative process is an utter mess and has been for years. This, after all, is a legislature that shuts down for the year at the end of August.
The bill — AB 1437 — passed through the Governmental Organization Committee unanimously with the exception of Assembly member Marc Levine, an outspoken voice against the DFS sector.
The bill must now move to the full assembly for vote.
Outside of California, The Fantasy Sports Trade Association (FSTA) has mounted a campaign in nearly two dozen states to help craft a regulatory framework for these contests. They have hired top lobbyists to assist in these efforts.
"Unlike other industries, I think these guys were ahead of the game," said FSTA outside legal counsel Jeremy Kudon in an interview with CBS Money Watch last month. "We started hiring lobbyists for the states last February before anyone had ever heard of DraftKings or FanDuel. By May we already had lobbyists in 10 states."
According to Kudon, many states are showing little interest in taxing daily fantasy games, noting "that's not so popular with an election coming up." The industry also is willing to accept paying fees to cover the costs of regulation and is prepared to adapt more stringent procedures when it comes to age verification and other consumer protections.
"We may not love the consumer protection statutes ... but we recognize they are important, and they are necessary," he said.
Keeping up with the DFS legal landscape within the US is not always easy.
Legal reviews of the industry are underway in Maryland, Pennsylvania, Michigan and Georgia, the later of which believes its state lottery should oversee the sector (and presumably profit from it). This has resulted in leading Daily Fantasy Sports software firms the likes of Star Fantasy Leagues focusing their attention on providing state lotteries and other government enterprises – in the US and worldwide – with a platform to offer these types of contests.
New York, Florida and Illinois have taken on a more aggressive approach while Indiana lawmakers are working on ways to capitalize on the current turbulence by enticing industry leader FanDuel to set up a headquarters in that state.
"The approach in Indiana — where FanDuel is proud to sponsor both the Colts and Pacers — underscores that growing technology businesses and sensible consumer protections are hardly mutually exclusive," the spokesman said in an email. "We hope to be able to stay in our home state but are grateful to know that we are wanted and recognized for our ability to create jobs elsewhere."
- Aaron Goldstein, Gambling911.com
