Tuesday, March 8, 2016
Gov. Terry McAuliffe on Monday signed into law the nation’s first state regulations for fantasy sports, making Virginia the first state to formally legalize and regulate companies such as FanDuel and DraftKings.
The legislation, called the Fantasy Contests Act, passed the General Assembly with bipartisan support, and will require daily fantasy sports sites to undergo audits, pay a $50,000 fee to operate in Virginia and ensure that players are at least 18 years old, as well as other regulations.
Brendan Dwyer, Ph.D., director of research and distance learning at the Center for Sport Leadership in the Virginia Commonwealth University School of Education, is an expert on fantasy sports, having done a significant amount of research on the media consumption habits of fantasy sport participants.
Other states just see dollar signs when it comes to daily fantasy sports, and it appears Virginia is choosing to inform consumers and let them act sovereignly.
Dwyer said that while he is “quite torn” about the new law, he believes it will pave the way for additional states to regulate fantasy sports sites.
“On one hand, I am encouraged that the commonwealth was able to create a protective partnership with the daily fantasy providers where they are responsible for auditing the age requirements, not the commonwealth. Also, I am encouraged that the bill is focused on regulation and not simply on increasing revenue through taxation. Other states just see dollar signs when it comes to daily fantasy sports, and it appears Virginia is choosing to inform consumers and let them act sovereignly. I have a feeling other states will follow the lead of Virginia because the game is so popular among the public, and the current public perception is that it is not gambling.
“If the commonwealth truly regulates the activity in a way that clearly outlines the risks of playing, especially for participants 18-24, I believe this is an appropriate compromise. I believe consumers should have the ability to choose how they spend their money; however, this activity comes with the risk of losing substantial amounts of money. If Virginia can help spread this message and create more informed consumers, I think this bill is an important first step because preliminary research on daily fantasy sports suggests it all provides a number of positive outcomes including friendly competition, escape and diversion, and social interaction.
“On the other hand, how will it be regulated going forward? How often will it be reviewed, and does regulation include any control over advertising? Are DraftKings and FanDuel still allowed to advertise like they have been? Because they are not advertising a skill-based game, they are advertising the lottery. These messages are misleading and damaging in my opinion.”
When asked how the new legislation will affect other, more traditional fantasy sports, Dwyer explained that more legislation is likely looming on the federal level.
“There is also a potential that the bill will require traditional, season-long providers (ESPN, Yahoo! and CBSSports) to meet the same registration process. Daily fantasy sports and traditional fantasy sports are very different games. In daily fantasy sports, money changes hands immediately. In traditional, it takes months. Also, many traditional players do not play for money. There is much more luck in daily fantasy sports than traditional, and in general, daily fantasy sports is much riskier. Thus, it would be a shame if this bill limited participation in other, more innocuous forms of fantasy sports.
“Ultimately, while the battle for legality is at the state level right now, daily fantasy sports is operating under a federal exemption that was created in 2006 for traditional fantasy sports. At some point the federal government will revisit this exemption because the differences between daily fantasy sports and traditional fantasy sports are vast. At that point, the commonwealth will be forced to revisit this bill, and legislators appear to understand this.”
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