Maryland’s Complicated Daily Fantasy Sports History Now Includes Proposed Regulations

Written By Dustin Gouker on July 14, 2016
Maryland DFS regulations

[toc]Maryland Comptroller Peter Franchot announced proposed regulations for the daily fantasy sports industry on Thursday.

You can read the proposed regulations here. The news was first reported by the Washington Post.

The top-line look at Maryland’s DFS plans

Franchot proposed regulations that generally fall in line with what other states around the US have either enacted or proposed. The regulations provide baseline oversight of the industry and consumer protections.

From a press release issued with the regulations:

“Daily online fantasy sports games have established a significant presence in Maryland,” Franchot said. “It is entirely appropriate that we begin making sure the games are fair, anticompetitive abuses are declared out of bounds, and appropriate taxes are paid.”

The regulations are a draft only, and do not have the force of law yet. A law passed in 2012 legalizing fantasy sports gave oversight power of the industry to the comptroller’s office.

There will be a review period that allows for public comment and will give industry stakeholders the chance to weigh in. The comptroller’s office is also seeking input from the state legislature’s Joint Committee on Administrative, Executive and Legislative Review.

A closer look at the proposed Maryland regs

What do the regulations do, as written? There is nothing terribly ground-breaking in them, vis a vis other state’s laws and regulations:

  • A minimum age of 18 is set for DFS players.
  • Employees of DFS companies are not allowed to play in DFS contests.
  • Fantasy contests on amateur sports — including college games — are prohibited.
  • “Highly experienced” players need to be identified by operators on DFS platforms.
  • The use of third-party automated scripts is banned.
  • An initial limit of $1,000 in deposits per month is set for all players, although players can ask for their limit to be increased.
  • Operational and player funds must be segregated.

One thing that appears to be different than regulations proposed or enacted in other jurisdictions is a proposal that “requires game operators to notify Marylanders of their potential tax obligations.”

The regulations only appear to apply to paid-entry DFS sites.

DFS industry reaction

FanDuel was supportive of the proposed regulations in a statement provided to Legal Sports Report:

“Comptroller Franchot took a thoughtful approach, with proposed regulations modeled after some of the best and strongest fantasy regulations installed in states across the country. We are still reviewing the details and look forward to working with the comptroller through the comment period.

We have strongly supported regulations – and our call has been heard, with six states passing laws to regulate fantasy sports this year. Maryland has long been leader on the topic, passing a fantasy sports law in 2012, and the Comptroller’s regulations would keep Maryland at the forefront of smart policymaking – striking a balance between ensuring fans can continue to play, embracing a growing industry that can be an economic engine and installing firm regulations for fantasy sports companies to protect consumers.”

Griffin Finan, DraftKings Director of Public Affairs, offered this statement;

“DraftKings is committed to working closely with regulators across the country and globally to establish the best consumer protections and policies that allow our sport-tech company to grow while protecting consumers.  

We applaud the Comptroller of Maryland for putting forth a thoughtful and measured approach to regulating daily fantasy sports contests in Maryland and we look forward to working with regulators to ensure our customers in Maryland have the best experience possible while playing the games they love.” 

Backstory on Maryland and DFS

Maryland was well ahead of the curve on the fantasy sports front, legalizing the industry in 2012, years before regulatory scrutiny came down upon the industry in late 2015.

The legality of that law, however, was called into question by the office of Attorney General Brian Frosh, who opined that it wasn’t clear if a referendum should have been held to enact it.

Frosh advised the state legislature to take up the issue of DFS legality, but the statehouse failed to pass a bill this spring.

Now, Franchot is using the powers of his office to take action. The DFS industry has been on his and other Maryland officials’ radar since last fall.

What other states have done with DFS

In 2016, six states have passed laws regulating daily fantasy sports:

In New York, a bill awaits the signature of Gov. Andrew Cuomo. 

The states above have enacted varying levels of licensure fees and taxation.

The Maryland model resembles what happened in Massachusetts, where Attorney General Maura Healey created regulations under the power of her office.

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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