Mass. officials inching closer to fantasy sports regulation

Printed from:

STATE HOUSE — The free unregulated ride for the burgeoning daily online fantasy sports industry in Massachusetts appears to be coming to an end.

Along with the Massachusetts Gaming Commission’s announcement that it plans to discuss daily fantasy sports at a public meeting next week, Beacon Hill leaders seemed to signal that the question is no longer if the state will impose regulations, but rather what form those regulations will take.

House Speaker Robert DeLeo said fantasy sports is “going to have to be something that does set forth some regulations” and Attorney General Maura Healey said the industry is one that “cries out for a regulatory legal framework and structure,” as her office continues its review of websites like DraftKings and FanDuel.

Senate President Stanley Rosenberg has previously called for the industry to be regulated and taxed.

“There’s an ambiguity, I think, it’s not black and white how this new industry fits in with existing couple hundred-year-old law dealing with gambling,” Healey said during an appearance on Boston Herald Radio on Wednesday morning. “I think what we’ve seen is that this is an issue that cries out for a regulatory legal framework and structure that will match the modern reality of what is happening here.”

The attorney general said a law passed by Congress years ago included a carve out for fantasy sports and gave states the ability to regulate or ban online sports. Five states, she said, have done so, but “Massachusetts hasn’t acted yet.”

Healey said that Boston-based DraftKings’ hiring of former attorney general and Democratic gubernatorial nominee Martha Coakley is “completely irrelevant,” and that she is “not concerned about DraftKings’ message,” but instead is focused on putting the fledgling industry in context.

“I (couldn’t) care less about what DraftKings’ message is to the public,” she said. “What we’re concerned about in the office is what’s the conduct, what’s going on here and making sure that we provide some clarity and recommendations about what we think would be various options and what would be helpful in the face of this new industry where the law isn’t so black and white.”

Healey has since last month been reviewing DraftKings and similar daily fantasy sports gaming websites. Earlier this month she announced that after reviewing the business model of the sites she found nothing in federal or Massachusetts law that would prohibit the activity, but indicated she wanted to talk with executives further about consumer protections.

“Among the things we’re going to look at, though, as we look at these companies and the conduct, is what kind of disclosures are made to participants? Are those disclosures accurate? What kind of marketing is going on? What is the treatment of revenue with respect to taxation, for example, and what other administrative controls are in place?” the attorney general said Wednesday.

The attorney general said her office will look at the approach taken last week by the Nevada Gaming Control Board, which issued a cease and desist order stating that daily fantasy sports sites engage in gambling and will need a license to operate a sports pool, which Healey called “a reasonable suggestion and approach.”

She also said she has had conversations with other attorneys general about fantasy sports, many of whom share concerns, especially when it comes to young people participating in such games.

“That’s a problem from my perspective because we know how addicting this kind of activity can be,” Healey said. “People are plunking down $100 at a whack on a credit card to play a game.”

Healey said she “personally wouldn’t play” daily fantasy sports, but said it is important for she and her team to fully understand the industry and then “be clear with the public and with policy makers about what this landscape looks like, about what’s happening so that the Legislature can make informed decisions about where we want to go.”

The Massachusetts Gaming Commission announced Wednesday that it, too, will take a look at daily fantasy sports, and whether the industry is legal and if it should be regulated at a public meeting on Oct. 29.

“First, are fantasy sports legal? The Attorney General and others have already spoken to this issue. Second, if it is legal, should it be regulated? Third, if it should be regulated, who should be the regulator? And finally, if it is regulated, what are the critical variables that should be addressed by regulation?” Gaming Commission Chairman Steve Crosby said in a statement.

He added, “I believe the Commission will be able to provide constructive advice on the complex issues raised by the meteoric emergence of online fantasy sports.”

Crosby and Healey both said that the ultimate decision rests with the Legislature, and Healey said she expects to work with Gov. Charlie Baker, Crosby, legislative leaders and Treasurer Deborah Goldberg to tackle the issue.

“My thinking would be that we would all work together as policy makers and stakeholders in this to arrive at what we think makes sense for public safety, for protecting consumers, for protecting young people,” she said. “A Legislature might decide to ban daily fantasy sports here, a Legislature might decide that we’re going to focus on these kinds of consumer protections. We’ll see.”

Speaking to reporters Wednesday, DeLeo said he is planning to meet with Healey soon and said leaving fantasy sports unregulated could be a “slippery slope” to betting on sporting events.

“What could happen, after talking to the attorney general and seeing what the Gaming Commission does, it very well could fall into our court in terms of setting of regulations,” he said. “And quite frankly I want to hear from the membership whether they consider this to be gambling or not.”

DeLeo mentioned that the Legislature could amend the state’s gaming law to give the Gaming Commission some authority to take action in connection to fantasy sports sites, though he said he is “not sure if we want to take that up.”

Senate President Stanley Rosenberg, too, weighed in on Wednesday, signaling his own support for regulating the world of online fantasy sports.

“We clearly need to take a look at how Draft Kings and Fan Duel fit into the current regulatory and legal structure of the Commonwealth,” Rosenberg said in a statement. “I believe the combined efforts of the Gaming Commission, Attorney General Healey, and Treasurer Goldberg will provide the Legislature with a framework to how we go about crafting common sense regulations for this new industry to protect consumers.”

One person Healey said she will not be working with on the issue is her onetime boss, Coakley, who has been retained by DraftKings as an outside adviser for legislative and governmental affairs.

“I didn’t really have a reaction. Candidly, it’s completely irrelevant to me personally and certainly to the work of the office,” Healey said on Herald Radio. “We’re not engaged with her nor could we be on this issue.”

Coakley, who was serving as attorney general when the Legislature passed the Expanded Gaming Act, was back at the State House on Tuesday, but declined to answer a News Service reporter’s questions about her work on behalf of DraftKings.

“You know, we’ve issued a statement. We have a written statement that we’ve put out,” Coakley said. When asked a second question about the subject she said, “it’s why we put out a statement” as she walked into an elevator.

Coakley referred the reporter to a spokeswoman at Foley Hoag, the law firm at which she has been working since the spring. The spokeswoman sent the News Service a statement from Coakley in which the former attorney general said, “DraftKings is committed to working cooperatively with all state regulators to implement policies that protect consumers.”

— Written by Collin A. Young

[Matt Murphy and Antonio Caban contributed reporting]

Copyright State House News Service