Contents 1 Approach No.1: Regulated like gambling 2 Approach No.2: The fantasy industry model bill? 3 Which DFS bill will win? Pennsylvania is still waiting on an actual bill that […]
How Pennsylvania Might Regulate Daily Fantasy Sports: A Tale Of Two Approaches
1 Approach No.1: Regulated like gambling
2 Approach No.2: The fantasy industry model bill?
3 Which DFS bill will win? Pennsylvania is still waiting on an actual bill that would regulate the daily fantasy sports industry. But when the state legislature finally sits down to look at the issue in earnest, it may be faced with two different ways of approaching DFS. Pennyslvania lags far behind the majority of states, which have already introduced bills focusing on daily fantasy sports. Approach No.1: Regulated like gambling The idea of treating DFS much like the regulated gambling industry — either the land-based casino model or online gambling — is an idea that has been floating around Pennsylvania for months. The idea of tying DFS to casinos actually came up nearly a year ago, when a bill that would allow casinos to offer fantasy sports contests surfaced. That bill, however, had no oversight for the industry as it exists currently, and it never went anywhere. When lawmakers have talked about the issue, it has largely been through the lens that it needs to be treated like gambling. To wit:
Rep. George Dunbar planned to amend his casino DFS bill to become a regulatory bill that would put it under the purview of the Pennsylvania Gaming Control Board.
The state passed a bill that commissioned a study of DFS as a “gambling product.” More on that in-progress study here (paywall).
There has been talk that a gaming expansion package — one that includes online gambling and poker — would be the final home of DFS regulation. What the final language of this approach to DFS will look like is unknown, but it appears that it would include heavy licensing fees and taxes on gross revenue, and controls much like already exist for PA casinos (or like what exists for New Jersey online casinos). The biggest issue might be calling DFS gambling instead of a game skill, something the industry has vehemently opposed. That is something that would be rectified in the opposing approach. Approach No.2: The fantasy industry model bill? The more recent effort — which is still in the formative stages, as well — is a potential bill from State Sen. Anthony Williams. His bill would classify DFS as a game of skill. Here’s what else we know about it, from his co-sponsorship memorandum: Operators of websites would be required to register with the PA Gaming Control Board and to remit taxes based on gross revenues earned from play in the state. Following the lead of Virginia, this industry-supported legislation would also protect players over 18 from engaging in problem gambling, protect their personal information, and prohibit employees of fantasy gaming companies from profiting off of “insider information.” If it takes the form of the Virginia legislation — which became law in March — it would be much like the legislation that has been pushed by the Fantasy Sports Trade Association in a variety of states. However, the Virginia law is only truly applauded by the two largest operators — DraftKings and FanDuel — as a licensing fee of $50,000 is too high for most smaller operators to afford. The bill, without seeing the actual language, seems like it would be far less onerous for fantasy sports operators to comply with, both from a monetary and logistical standpoint. Which DFS bill will win? If one were handicapping the two approaches, the gambling approach seems more likely to win out. The state’s lawmakers have had little interest, so far, in performing gymnastics in regards to vocabulary — i.e. calling something they believe to be gambling a “game of skill.” However, Pennsylvania has been moving slowly and thoughtfully on the matter of DFS. The idea that DFS operators may pass on Pennsylvania because they can’t afford to be called a gambling product (from a legal standpoint in the U.S.) could give legislators reason to pause. Is it possible some sort of hybrid approach surfaces — one where DFS is classified as a game of skill but is still treated like other forms of regulated gambling — end up being the winner? That might be the smart bet.