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A contentious House committee hearing in Illinois addressed daily fantasy sports legislation, casting doubt on the legislature’s chances of formally legalizing the industry before adjourning next week.
The legislature is considering whether to render moot a negative opinion vis a vis state law issued by Attorney General Lisa Madigan.
The bill would set up consumer protection measures that would impact DFS operators wishing to do business in the state as well as creating a process and fee structure for licensure.
The House Judiciary Criminal Committee held a hearing about a DFS regulatory bill that was approved by the Illinois Senate last week.
It appeared as if the legislation — H 3655 — would come up for a vote at the hearing, but it turned into an informational hearing to present testimony, only.
The bill made it through the House Rules Committee earlier in the week.
The committee will meet again on Sunday, with the chance that an up-or-down vote will be taken.
The bill’s chances are unknown after some very loud opposition was voiced from committee members on Thursday.
The House is up against an adjournment deadline on Tuesday. It seems like the House would almost certainly have to pass an unamended version of the bill, at this point, so it would not have to return to the Senate for concurrence.
Rep. Michael Zalewski — who has long championed regulation of DFS — defended the legislation as good policy during the hearing, as did Fantasy Sports Trade Association chairman Peter Schoenke.
Zalewski made his case for passing a law now, rather than waiting for next session, as a number of DFS companies are serving customers in the state right now. (DraftKings and FanDuel are fighting Madigan’s opinion in court.)
“We can always revisit the legislation down the line, we can always tweak it,” Zalewski said. “But my opinion continues to be: As long as we have constituents playing these games, it’s important for us to try to act in the best interests of them and do our very best to create a mechanism where we have objective regulatory control.”
“This has been billed as DraftKings and FanDuel vs ‘x’,” Zalewski said later in response to questions. “It’s not just that, it’s small businesses. We’ve lost two in Illinois in the last six months as a result of uncertainty.”
Also in the hearing, a lobbyist representing Rivers Casino testified against the bill, and many committee members spoke out against it. That included committee vice chair Scott Drury, long an opponent of legislation as written previously.
There were also allegations of lobbying impropriety on behalf of the DFS industry that had come to light from a report on Wednesday from Capitol Fax.
A major thrust of Thursday’s hearing was a report from Capitol Fax (available only via an email subscription), an online publication that covers the Illinois legislature in depth.
In that report, Rep. Rita Mayfield related communications between a lobbyist for the fantasy sports industry and the charitable foundation of the House Black Caucus. (Mayfield chairs the caucus.)
Mayfield, who is on the committee, verified that report and recounted the incident. Here are her comments. (The hearing was audio only for those not in attendance, but it appears the “you” references were directed at the FSTA and Schoenke:)
I was shown an email by one of your representatives, an individual who was representing fantasy sports, FanDuel, the whole nine, and your lobbyist sent out a very inappropriate email. He did that without consulting myself or other members of the caucus. But what he sent out was unethical and in my opinion illegal. And I immediately reported it to our ethics officer. So I want that on the record.
The email basically alleged in exchange for considerations, donations that he could guarantee votes. That’s illegal. We have a former governor in jail right now for doing that. So it is an issue. It is why I am not comfortable voting on this bill. And I was originally a co-sponsor of this bill when it first came out….
…But because of the actions of your lobbyist, I am no longer comfortable voting on this bill. I know I have several of my members that are not comfortable voting on this bill, simply because of the implications of illegality.
And I really think it needs to be addressed. Particularly the fact that when I talked to one of your head lobbyists, and asked ‘Why is this person even still working for you, why is he still lobbying?’ — I was told that he did nothing wrong.
So the fact that your company is denying that this person committed a crime — which he did, that was a crime — for him to even to allude to that it was criminal, and it was totally unethical.
Legal Sports Report has not been able to obtain the email in question. Some committee members voiced their concern over the incident detailed by Mayfield.
A lobbyist for the DFS industry provided the following statement to Legal Sports Report:
“We categorically reject the implication that DraftKings or FanDuel would partake in such behavior. We do not condone this type of activity. It’s simply not how we do business, here or anywhere in the country,” said Jeremy Kudon, a partner at Orrick, Herrington & Sutcliffe. He is the national lobbying point person for DraftKings and FanDuel.
Zalewski pleaded with members after Mayfield’s comments to vote on the bill on its merits as either good policy or bad, not because of the impropriety that was alleged.
“Rise above it by voting your conscience, that’s the way to defeat that type of behavior,” Zalewski said.
Paul Gaynor — representing Midwest Gaming & Entertainment as the operator of Illinois’ Rivers Casino — appeared to speak against the bill. Gaynor worked for the attorney general’s office previously.
Gaynor called on DFS to be treated much like regulated gambling in the state — something that has not occurred in any legislation passed in a number of states this year.
“We support a strong comprehensive internet gaming bill — not piecemeal — that would allow for numerous games to be fairly and safely played online, while providing significant tax revenue for the state,” Gaynor said.
Gaynor also said the company he represents believes the revenue created by the bill would not cover the regulatory oversight required.
Rivers spearheads opposition to the bill from the Illinois Casino Gaming Association, which is also against the legislation as currently before the House.
Zalewski spoke passionately for legislation in the wake of Gaynor’s testimony — in which he alleged that daily fantasy sites were doing business illegally in the state.
“But to continue to make up stories about these companies and falsely accuse them of criminality, when we’re in the midst of a massive effort — led in part by this committee — to redo our criminal justices laws, is insulting to this committee,” Zalewski said. “It has to stop.
“No one’s committed a crime here. No court order has said they have committee a crime here. So let’s focus on the policy of this bill. You can vote it up, or you can vote it down. But don’t impugn people’s integrity and the integrity of companies, because it’s just not right.”