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Daily Fantasy Sports Legalization in the US

The industry of daily fantasy sports is a vast business which provides many people with the opportunity to perceive their dreams. People who are invested in the sports industry and are very interested in how the various sports events are progressing, often find themselves making predictions about the outcome of a certain match or which team has the bigger chance to prevail and emerge victorious from the battle. The daily fantasy operators give such people the chance not only to express their own prediction but also to make easy money from the whole process, by betting on the outcome.

With the beginning of the seasonal sports championships in the United States, the daily fantasy sports operators see even higher rates of interest among the sports enthusiasts and many people make their first steps in the sector. The two leading companies in this field are undoubtedly FanDuel and DraftKings which combined make for most of the DFS industry. The two giants have faced many hardships through the years when states have issued various laws aiming to ban their operation in a given state, but with the right reasoning, they often manage to return back to business in the area.

Since October 2015 there have been several states when a certain state bans the industry as a whole and proclaims it a form of illegal gambling according to the state regulations. According to the DFS operators, they are providing their customers with a game of skill, which heavily relies on the sports knowledge of the person who participates in it. They state that there is no element of luck involved in the betting on the outcome of a certain gaming match and this is why the DFS industry should not be considered a game of luck. This makes it a game which does not break any laws and this position has been held by the industry leaders DraftKings and FanDuel for many years now. Regardless of the many claims and reasonable explanation of the situation, there have still been many cases of banning of the operators.

In May 2016 the participation in DFS with the objective of winning money was deemed illegal in a total of 12 states. The reasons for each state were varying – for example, in New York and Texas, the authorities stated that DFS was violating the state gambling regulations, whereas in Nevada the DFS operators needed to issue a gambling license in order to continue their work. In the meantime, as many as 20 other states were working on their own regulation, striving to provide a mutually-beneficial legislation.

States Welcome DFS Industry

Since the beginning of 2017 many states have welcomed daily fantasy sports industry back and given their permissions for legal operation in the region. Many states are still negotiating their conditions under which the industry could flourish and there are lobbyists which aim to change the status quo and introduce the leading operators as legally operating entities. As stated by the Wall Street Journal and Legal Sports Report, there are currently 20 states which are working on the legislation for the daily fantasy sports sector and many of them are expected to soon give green light to the process. The most important point in the regulation of the field is the law which aims to protect the customers and work in their best interest.

Arkansas was the first state which began the process of legalization of DFS in 2017 by enacting a new law. The Governor of the state Asa Hutchinson gave the nod in April and propelled the whole process ahead. This move gave permission to cash-based DFS to operate in the state, taxing the revenue for companies operating in the state. Following a voting the Arkansas Senate approved the bill by a vote of 25-5, thus giving green light to the industry for development and its thousands of participants the chance to get back to their favorite pastime.

The state of Vermont was next to legalize the DFS industry in the state with the signing of a bill in June. Governor Phil Scott signed the bill into law and allowed cash-based daily fantasy in the state. This decision came a year after the Attorney General stated that the fantasy sports are considered illegal in the state. According to the new legislation, there is now a requirement that all player funds are segregated from the operating accounts, in order to guarantee the security of the participants.

The next state to legalize the DFS sector was New Hampshire, which made the step this July. Governor Chris Sununu inked the fantasy sports bill into law and thus legalized the operation of the leading entities. An important part of the new law was the numerous consumer protection features which were applied, among which the crucial minimum age of participation, which was settled to 18, accounting audits, and restrictions on unauthorized scripts. As a further condition, wagering on “collegiate, high school, or youth athletic events” is strictly prohibited in the state.

This August saw the legalizing of daily fantasy in the state of New Jersey, considered being the gambling hub on the east coast of the US. Governor Chris Christie signed the bill which authorizes and regulates all daily fantasy activities in the state, which also made New Jersey the sixteenth state to regulate the industry. According to the new law, such fantasy sports activities should be offered through operators exclusively, among which casino licensees and racetracks which operate under a permit by the Division of Consumer Affairs in the Department of Law and Public Safety. All DFS operators should segregate participant funds, as well as securing the players’ deposits and file audited financial reports with the DCA on an annual basis.

Pending Proposals for Regulation

In the last few weeks, there have been discussions about the regulation of the DFS in other states in the US, among which the state of Wisconsin and the state of Minnesota. For the time being, the residents of Wisconsin have the permission to access the web ages of DraftKings, but the overall legality of the industry is up for discussion. Wisconsin Attorney General, Brad Schimel, has not fully prohibited the access to such sites and the residents of the state have the chance to access them and even log in. State Rep. Tyler Vorpagel is taking the issue seriously and he is striving to provide a legislation to the industry, making it legal and regulating it to the best of the authorities’ abilities.

The state of Minnesota is also considering the idea of legalizing the fantasy sports industry and allowing giants in the industry such as FanDuel and DraftKings to conduct their business within the state. This decision, however, will have to be further discussed with the eleven tribes which are responsible for the tribal gaming structure in Minnesota. At the moment the state has no casino gambling, so the implementation of the DFS sector is yet to be discussed.

 Author: Harrison Young

Harrison Young is an experienced writer, who started his career almost 8 years ago. Prior to joining our team at CasinoGamesPro, he worked as an editor for a small magazine.