Fantasy Sports Industry Lobbying

by Raymond Pucci 0

The over/under is now set at 16—that would be the number of states that so far this year are considering legislation to provide more legal protection for the Daily Fantasy Sports industry. Not coincidentally, both Draft Kings and Fan Duel are placing their bets on an army of lobbyists to help thwart recent attempts by some states to declare fantasy sports games as illegal gambling.

Facing legal questions that could threaten its survival, the fantasy-sports industry has initiated a lobbying blitz in statehouses across the country.

Since Jan. 1, legislators in 16 states have introduced bills to carve out legal protections for fantasy-sports operators, nearly all of them supported by the operators themselves. Several other states have active bills that were introduced last year. Legislative bodies in California, Virginia and Indiana recently passed bills, while in several other states bills have passed through committees.

The measures may still be months away from becoming law and still face headwinds. They come as some payment processors have begun pulling back from working with fantasy-sports companies amid legal and regulatory concerns.

The bills are careful to distinguish the practice from gambling, particularly since most states aren’t allowed to authorize sports betting under federal law. Most of the bills instead require that operators pay a fee to register with the state and operate with some consumer protections, such as age requirements and measures to protect player funds.

While payments industry player, Vantiv, wants to pull out of this market, and Citibank says they will stop credit card transaction in New York, the sports fantasy action continues. Uncertainty will rule as the legislative and lobbying activities continue indefinitely. Meanwhile, there are some pending court decisions within the next few months that could impact the daily gaming action. Until then, the sports fantasy firms are staying in the game hoping that state legislators will grant them unqualified legal status.

Overview by Raymond Pucci, Associate Director, Research Service at Mercator Advisory Group

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