Gaming Commission to Look at Legality of Daily Fantasy Sports

"First, are fantasy sports legal?"

Steve Crosby

Massachusetts Gaming Commission Chairman Steve Crosby photo by UMASS Boston

The Massachusetts Gaming Commission announced on Wednesday that they will discuss the legality of popular daily fantasy sport sites like DraftKings and FanDuel. The MGC’s opinions, according to the statement from commission chair Steve Crosby, will be advisory rather than binding, because it is ultimately up to the other regulatory entities to take action.

Full statement from Crosby:

In response to multiple indications of interest from senior public-policy makers seeking the Commission’s assessment of the complex issues associated with fantasy sports, I have directed MGC staff to prepare for the Commission’s first conversation on this topic at our next public meeting on Thursday, October 29th. At that time, the Commission will begin to determine its views on the broad-based public policy questions that our policy makers will need to address:  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?

In no case will our opinions be dispositive. The final decisions rest with the Legislature, the Governor, and perhaps the courts. But given the make-up of our Commission and staff, and the extraordinary public policy-making process of our past three and a half years, I believe the Commission will be able to provide constructive advice on the complex issues raised by the meteoric emergence of online fantasy sports.

The announcement by Crosby comes in the aftermath of an insider trading scandal that revealed DraftKings and FanDuel employees were making serious money while playing daily fantasy sports games on competing sites. The fallout from the scandal resulted in increased scrutiny from regulators, an investigation by the FBI, and an avalanche of lawsuits against the companies. Commissions in other states are starting to rule on the legality of the games. Nevada, for example, has banned the games until they obtain a gambling license in the state. In response to the intensified scrutiny, DraftKings and FanDuel have started to fight back against possible new regulations.

Boston reached out to electeds and DraftKings and FanDuel for reaction to the news. We’ll add to this post as we hear back from them:

Senate President Stanley Rosenberg:

“I applaud Chairman Crosby and the Massachusetts Gaming Commission for beginning to analyze the numerous issues that have come to light with regards to 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.  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.”

Governor Charlie Baker:

“Governor Baker looks forward to reviewing the Gaming Commission’s findings,” said Baker press secretary Lizzy Guyton.

Attorney General Maura Healey:

“We welcome the Gaming Commission’s involvement in this important discussion and believe it is appropriate for the commission to be involved in evaluating and determining how we as a state are going to address the growing industry of daily fantasy sports. It’s critical that we have a strong legal and regulatory framework in place.”

House Speaker Robert DeLeo:

“What could happen after we talk with the attorney general and see what the gaming commission does is it could very well fall into our court in terms of setting regulations. Quite frankly, I want to hear from the membership if they consider this to be gambling or not. I am not sure there is any comfort level among folks if this is gambling or not.”