DFS Legislation Recap
It’s coming down to the wire, folks. DFS “lost” a big prize this week when a bill to make the games clearly legal and regulated faltered on Sunday. But the biggest battleground state is still in play, as bills in New York inch forward.
Here’s what you need to know about the ever-changing legal landscape for DFS as we head into the weekend.
Overview
States with bills signed into law: Indiana, Tennessee, Virginia, Mississippi
States with bills pending signature by governor: Missouri, Colorado
States were most DFS companies do not operate: Alabama, Arizona, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada, New York, Texas (DraftKings still active), Washington
State-By-State Updates
NEW YORK
What happened: Bills that would legalize and regulate DFS in the industry’s largest market have now been introduced in both chambers and each passed through their first committee votes this week.
What it means: It’s good news, no doubt, but a long climb remains before the session adjourns on June 16. The committees that approved the bills this week are each chaired by their respective authors, Sen. John Bonacic and Assemblymember Gary Pretlow, so the approval was expected.
What players need to know: The bills now head to second committees, where votes could be held next week. Predictably, opponents of daily fantasy are railing loudly against the bills, but how much their opposition amounts to remains a matter of conjecture at this point. Getting DFS back in New York is crucial to the long-term health of the industry, as it is estimated to hold more active players than any other state. Those players have been sidelined since FanDuel and DraftKings agreed to pull out of New York in March after a long and public skirmish with state Attorney General Eric Schneiderman.
ILLINOIS
What happened: The legislative session in the state adjourned Tuesday, leaving DFS legislation in a key market dead on the vine. The situation in Illinois had been rife with political maneuvering recently and took a turn for the worse last week when allegations of improper lobbying on behalf of the fantasy sports industry emerged. Then at Sunday’s House Judiciary Committee hearing, the bill’s sponsor, Rep. Michael Zalewski, opted against calling for a vote and shelved the legislation for the 2016 session.
What it means: Unless a special session is called, the immediate fate of DFS in Illinois could be decided by the courts. Attorney General Kathleen Madigan issued an opinion in December that DFS equates to illegal gambling under state law, and FanDuel and DraftKings responded with lawsuits challenging the opinion. A trial date has been set for June 27.
What players need to know: Zalewski told Legal Sports Report this week that he is going to continue to push the bill and attempt to sway his colleagues on its merits, but for now the situation appear tenuous. Legal experts say the success or failure of FanDuel’s and DraftKings’ lawsuits will likely come down to whether DFS contests are covered by an exemption in Illinois law for “bona fide contests for the determination of skill,” and whether entry fees for fantasy contests are the legal equivalent of a bet in the state.
h3. NEW JERSEY
What happened: A state Assembly subcommittee unanimously passed a bill that would prohibit employees of DFS operators from participating in contests on any site. Representatives of FanDuel and DraftKings spoke at the hearing in support of the bill.
What it means: With the blessing of the industry’s leading companies, it seems clear this bill will breeze through.
What players need to know: While it’s a bummer for site employees, this bill would only make law of policies that have already been instituted by most operators in the wake of the Ethan Haskell incident of Oct. 2015.
ALSO OF NOTE
MISSISSIPPI – FanDuel is now back in Mississippi, joining Yahoo and FantasyDraft. There’s been no update from DraftKings, which remains inactive in the state since February when most operators pulled out of the state following a negative opinion on DFS legality from the attorney general. That opinion was rendered moot, however, when regulatory bill was passed in Mississippi in April and signed into law in May. (UPDATE: DK is now also live in Mississippi.)
MISSOURI – We could be waiting for a while on final passage of House Bill 1941 in Missouri, where the governor is expected to sign the legislation which excludes fantasy contests from the legal definition of gambling. Part of the reason for delay seems to be that though the bill passed in in mid-May, it shows as being delivered to governor on May 25. Since it was officially sent to the governor’s office after the legislative session adjourned, he has 45 days to sign, veto or take no action. If the bill is signed, or if no action is taken, the bill will go into effect on Aug. 28. It’s received some pushback from smaller operators due to the fees and taxes associated with the bill, but Gov. Jay Nixon called for those measures in his State of the State speech in January, so it’d be a surprise if he opts for the veto. If no action is taken, the bill automatically becomes law.
COLORADO – Colorado players are also in holding pattern nearly a month after a similar bill was passed in the state legislature. It was officially sent to the governor’s office on May 18 and he has 30 days to sign, veto or take no action. As in Missouri, if no action is taken, the bill will become law. It’s set to go into effect on Aug. 10.