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The recommendation? Treat DFS much like the regulated gaming industry.
The report was written after a law was passed by the legislature mandating its completion by the PGCB, to examine DFS as a “gambling product.”
You can read the full report here.
The report echoes the sentiment that has existed all along in Pennsylvania: That the same rigor that is applied to licensing and oversight of the state’s casinos should be applied to the DFS industry, in an ideal scenario.
From the summary near the start of the report:
If the Gaming Control Board should be given oversight responsibility, the Board suggests that the play of fantasy sports in Pennsylvania be provided through the existing slot machine licensees as a gaming related amenity operated through the licensee’s web-site.
DFS providers would contract with slot machine licensees much like current gaming service providers and would be vetted and licensed as determined appropriate by the Board.
Operating DFS through the already-licensed slot machine licensees provides several significant advantages to the Commonwealth.
But If Pennsylvania goes down that route, it would be the first state to take that legislative path. A number of states have passed much less onerous legislation for operating a DFS site.
Currently, only Nevada has a similar stance toward the DFS industry.
The report does, however, suggest this is not the only way to regulate the industry.
It appears that DFS may end up being tied to legislation already active in the state.
That bill — HB 649 — would regulate online poker and casino games, as well as provide for a number of other gambling expansions in the state.
The PGCB suggests that DFS would be best handled alongside online gambling legalization:
More recently, House Bill 649 was introduced which, among other things, would have authorized intra-state Internet gaming to be conducted within Pennsylvania’s borders and only through Pennsylvania licensed casino facilities. … The Board cites to the research as to Internet gaming because fantasy sports are in their simplest form just another means of Internet gaming.
In light of the similarities, the regulation of fantasy sports could fit within the established regulatory authority of the Board as contemplated in HB 649.
Online Poker Report’s Steve Ruddock suggested that the iGaming bill could be the vehicle for DFS regulation as well, after a recent conversation with the bill’s sponsor, Rep. John Payne.
In general, the report prescribes rigorous consumer protections and oversight for the DFS industry.
In many ways the report is modeled after the Massaschusetts attorney general’s regulations, but with the addition of a casino licensing regime in charge.
The DFS industry — namely DraftKings and FanDuel — has generally opposed the idea of licensure in this manner. For example, it has not gone through the licensing process to become regulated in Nevada.
The larger sticking points, however, would be:
However, some smaller operators have been hoping for a chance to partner with the regulated gaming industry, and Pennsylvania could provide that opportunity.
The House Gaming Oversight Committee will be presented with the report, although apparently not at a scheduled May 27 scheduled that was canceled. Tentatively, it appears the subject of DFS will be the subject of a June 1 hearing, per the aforementioned Online Poker Report story.
After that, expect legislation to be drafted, and likely added to HB 649.
Pennsylvania has been thinking about the issue for awhile — including a hearing last year. The commonwealth has been on the sidelines in considering actual DFS legislation, but that appears set to change this summer.