DFS news roundup: Virginia General Assembly passes DFS legislation
25 Feb 2016
By Gary Trask
By Gary Trask
Amid news of nine other states offering "negative opinions" of the industry over the last few months, on Wednesday the Virginia General Assembly passed legislation by a 31-9 vote that would legalize and regulate the industry, meaning the Fantasy Contests Act (SB 646) will become law if Democratic Gov. Terry McAuliffe signs it.
Considering Wednesday's decisive vote, it is unlikely the governor will exercise his right to veto the bill, which has industry folks feeling optimistic.
"Today the Virginia General Assembly took an important step toward ensuring that fans in Virginia can continue to enjoy fantasy sports contests with thoughtful and appropriate consumer protections in place," said DraftKings Director of Public Affairs Griffin Finan in a statement. "We thank Delegates Jackson Miller and Marcus Simon and Senator Ryan McDougle for their leadership in bringing a commonsense regulatory framework through the legislature. We are grateful for their support and are actively engaged with dozens of legislatures around the country to replicate this success."
The bill calls for DFS operators to pay a $50,000 fee to register in the state and an annual audit is required.
According to DraftKings, more than 1.2 million Virginians annually play DFS and the new bill "includes important consumer protections for fantasy sports players as well as additional state oversight."
Those "protections" includes preventing DFS operator employees and "relatives living in the same household" from competing in contests "offered by such operator" and from sharing "confidential information that could affect fantasy contest play with third parties until the information is made publicly available." This stipulation, of course, stems from last fall's well-publicized "insider info" controversy involving DraftKings and FanDuel.
The news comes after the Indiana State Senate voted 38-11 earlier this month to pass DFS legislation in the state along with industry supported consumer protection provisions.
Elsewhere in DFS industry news:
- There was similar positive news last week in Arizona, where a bill that would legalize DFS won approval in a Senate committee by a 5-2 vote. Sen. Adam Driggs' Bill 1515 includes an amendment that would explicitly exclude fantasy sports league competitions from the state's definition of gambling. The bill now moves to the Senate, where it will need a full vote before advancing to the House.
- On Monday, DraftKings and FanDuel filed paperwork for their case against the state of New York, which lobbed a cease-and-desist order at the two DFS giants back in November, and was then granted a preliminary injunction one month later.
"Today's filing emphasizes what the legal precedents and undisputed evidence make clear, and what experts, fans and policymakers are saying in state after state — daily fantasy sports are skill-based games that are, and should be, legal," said David Boies, counsel to DraftKings and Chairman of Boies, Schiller & Flexner LLP.
"Our contests are no less legal than season-long fantasy sports, which the Attorney General has repeatedly conceded are legal. We look forward to arguing our appeal so that the merits of our case get the fair hearing we deserve. As this matter plays out, we will preserve the status quo and continue to engage with the New York legislature, as we are in dozens of states around the country."
Meanwhile, DraftKings lawyer Joshua Schiller minced no words regarding the case in New York when he told the Boston Globe that a loss would have a "catastrophic effect," enough to put the company "out of business."
- FantasyHub players got a jolt late last week when they logged onto the site and saw a message on the home page saying it had "temporarily suspended operations." It went on to say that the company is "currently in discussions with a strategic third party regarding the future of FantasyHub and its players." The news comes about five weeks after the abrupt shutdown of fellow operator FantasyUp.
- According to the Daily Fantasy Sports Industry Update released last week by Eilers & Krejcik Gaming, California was the most active DFS state in 2015, making up 11.4% of the entire U.S. market with the 359,360 users spending an average of $994 in entry fees. Earlier this year, California became the first state to pass a DFS regulation bill out of a committee hearing when the Internet Fantasy Sports Game Protection Act (AB 1437) was approved by the Assembly Governmental Organization Committee by a resounding 18-1 margin.
New York was second with its 284,535 active users making up 8.5% of the market and spending an average of $939 in entry fees, followed by Florida, which had
202,886 active users, making up 6.7% of the market and spending an average of $1,040. Last month, a pair of bills that would further define fantasy sports as legal and establish various consumer protections passed the Senate Regulatory Affairs Committee and the House Finance and Tax Committee in the Sunshine State.
The state with the highest spend in average entry fee was Michigan, which has the 10th most active users (113,180), but they spent an average of $1,070 each.