Daily fantasy sports set to become big Beacon Hill issue in next two years
An economic development bill signed into law by Gov. Charlie Baker last week cemented the legality of daily fantasy sports games, like those offered by Boston-based DraftKings. But it also puts pressure on lawmakers to develop further rules for the games within two years.
The law says the games offered by DraftKings, New York-based FanDuel, and similar companies are legal, provided they follow regulations previously put in place by Attorney General Maura Healey.
The law essentially wipes out any ambiguity in Massachusetts about the legality of the games, which critics say are a form of illegal online gambling. However, the measure expires on July 31, 2018 — the final day of the next two-year legislative session.
Healey’s regulations went into effect in the spring and set age limits and other restrictions on the games, which allow users to win money based on the performance of professional athletes.
Once the language cementing the games’ legal status expires in two years, the AG’s regulations would remain in place. But the legality of the games would again be open to interpretation.
“We have dealt with the issue of legality here in the short-term,” said Rep. Joseph Wagner, who co-chairs the legislature’s Joint Committee on Economic Development and Emerging Technologies. “But I think there has been a sense in the legislature in each branch that we want to take a deeper dive on this.”
The law establishes a nine-person commission to take that deeper dive starting this summer, with appointees from the legislature, Gov. Charlie Baker, the Massachusetts Gaming Commission, and Healey. The group is expected to study the games and the best ways to regulate them before filing a report and recommended legislation by next July.
Between the expiration date on the games’ legal certainty and the creation of the commission, daily fantasy seems likely to be a big issue on Beacon Hill next session. Lawmakers will likely push to create a more robust regulatory system by the end of the session, Wagner said.
“We wanted to do this on a reasonable timeline, as well as an expedited timeline,” Wagner said. “A fair way of saying it is, we have put issues relating to daily fantasy sports on the front burner rather than the back burner or further back in the queue.”
While Healey’s regulations focus on consumer protections, the commission is expected to consider a number of separate factors related to the games — including whether or not to tax them.
“The issue of taxation is one that gets kicked around a little bit,” Wagner said.
DraftKings celebrated as Baker signed the bill last week. CEO Jason Robins called it a “special day” that “gives us the foundation we need so that we can continue to grow right here in Boston.”
But in a separate statement, DraftKings attorney Griffin Finnan acknowledged the company’s work to further establish itself at the State House isn’t over.
“We will be fully engaged with the study commission next session as we work to grow jobs, promote innovation, and protect consumers in Massachusetts,” Finnan said.
Daily fantasy games ignited public policy debates last fall amid a massive publicity push aligned with the start of the 2015 NFL season. Across the country, some regulators expressed concerns with the games on two separate fronts: Whether they violate gambling laws, and whether they featured proper consumer safeguards.
Since then, the companies have lobbied hard in several states to solidify their legality. In Massachusetts, DraftKings and FanDuel combined to pay lobbyists more than $100,000 between 2015 and 2016, according to state records.
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