Gaming Commission Punts on Regulating Daily Fantasy Sports

The Massachusetts Gaming Commission. Photo by Garrett Quinn

The Massachusetts Gaming Commission’s first discussion on the legality of daily fantasy sports (DFS) concluded with the promise to have more discussions on the legality of daily fantasy sports and release a paper on their findings in coming months.

The five commissioners, including outgoing Commissioner James McHugh, did not dive too deep into the weeds but did conclude they do not have the legal authority to regulate the popular online gambling sites.

“As the Gaming Act is currently drafted, the MGC has no ability to regulate DFS without formal legislative action broadening its oversight powers,” read a lengthy memo presented to the commission in-house counsel Justin Stempeck.

There’s a massive gray area in Massachusetts and federal law as to whether the games are legal, because the laws don’t exactly apply nicely.

“It’s really hard to figure where in the scheme of federal and state law this fits,” said Stempeck.

The commission is aiming to release a white paper on the legality of the games in Massachusetts in a few months. Commissioner Gayle Cameron raised several potential issues about daily fantasy sports, broadening her scope of interest beyond the mere legality of the topic. Cameron said she was particularly concerned about the addiction and consumer protection for players, citing a paper from the National Center for Problem Gaming.

“I’ve seen the harm. Now, I am in no way comparing fantasy to illegal activities around sports betting, other than when an industry goes unchecked, there are real possibilities for things to happen [where] certainly we would want to protect the consumer, ” said Cameron.

The commission is in a much different place from its fellow gaming travelers in other states. In Nevada, where you can bet on pretty much anything, the commission came down hard on daily fantasy sports companies by declaring them gambling establishments operating without a license. As a punishment for their violations of state law, the Nevada Gaming Control Board ordered the companies to cease all operations in the Silver State, a humiliating blow, as the sites have hosted and planned many promotional events in the state around football games. The companies grudgingly complied with the decision.

Commission Chairman Stephen Crosby said the ultimate decision on the regulation and legality of of daily fantasy sports will be made by the legislature, not the commission.

“The legislature will probably have to step up and make a statement whether it wants (DFS) to be (regulated) or not,” said Crosby.

During their hourlong discussion regarding the gambling sites, the commissioners heard only from Stempeck, though representatives from DraftKings and FanDuel were in the room throughout.

A FanDuel attorney speaking with reporters after the meeting said his company welcomes regulatory oversight but they are deeply concerned about being treated like “brick and mortar” casinos.

“My perspective is one of working with regulators to see what their goals are to achieve an appropriate balance that protects consumers and looks at the issues which were cited by the commission today,” said Steven Martino of Duane Morris, the law firm representing FanDuel.

DraftKings representatives at the hearing declined to speak with reporters.