Fantasy Sports Legalization Passes Massachusetts State House, Out Of Nowhere

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Massachusetts DFS Law

Massachusetts’ General Court passed a bill late on Sunday night that would formally legalize the daily fantasy sports industry.

The effort came pretty much out of nowhere in the commonwealth’s legislature, which had not seriously considered any legislation dealing with fantasy sports to date.

The bill still needs to be signed by Gov. Charlie Baker.

It’s another victory in the home state of DraftKings for the DFS industry.

How did DFS get passed?

The provisions regarding fantasy sports were included in an economic development package — H 4569. The legislature was rushing to pass measures on the last day in which it could do so for the current session.

The package was passed late in the night unanimously in the House and with just one “no” vote in the Senate.

Early in July, the statehouse was considering a commission to further study fantasy sports as a part of the economic package. But at some point in the process, that package was amended to legalize paid-entry fantasy sports contests.

Bills that have been passed so far in the US have made it to the finish line as standalone items. This marks the first time DFS legalization was passed as part of a much larger package.

What’s in the Massachusetts DFS bill?

The bill, unlike others that have been passed in 2016, does not regulate DFS. It also does not seek to tax or charge license fees to operators.

It does two things:

Legalizes DFS

The most important part of the bill is the legalization language, which acts in tandem with regulations put into effect by Attorney General Maura Healey earlier this year. Healey had opined that DFS was legal under state law in late 2015.

The bill allows any fantasy sports operator to offer contests with cash prizes, legally, through July 31, 2018, as long as it is in “accordance with regulations promulgated by the attorney general.”

It also excludes fantasy sports from the definition of gambling in the state (“…A fantasy contest shall not be considered illegal gaming.”) It also defines “fantasy contest” much like it is addressed in the federal Unlawful Internet Gambling Enforcement Act.

“Fantasy contest” includes any fantasy or simulated game or contest, in which:

Creates a fantasy sports commission

The bill creates a special commission to conduct a study on fantasy sports and online gambling. What will it look at?

The commission shall review all aspects of online gaming, fantasy sports gaming and daily fantasy sports including, but not limited to: economic development, consumer protection, taxation, legal and regulatory structures, implications for existing gaming, burdens and benefits to the commonwealth and any other factors the commission deems relevant.

The commission language appears to be taking its cues from the Massachusetts Gaming Commission, with suggested an “omnibus approach” to dealing with online gambling.

An earlier version of the larger economic package included language authorizing online lottery sales, but this commission is also tasked with looking at that issue.

Who will be on the commission? It will be co-chaired by the House and Senate chairs of the Joint Committee on Economic Development and Emerging Technologies.

Also on the commission:

The first meeting of the commission will take place before November, with a report due by July of next year.

Impact of the new DFS law

In reality, the impact in the short term appears to be fairly minimal. Massachusetts was already one of the most friendly states for DFS, given the actions of AG Healey.

Still, its another victory on the ledger for DFS, and it helps take away any possibility of a legal gray area in yet another jurisdiction.

The bigger impact could come from the commission, which will help frame the industry for the legislature to possibly regulate and tax the industry in 2017 or 2018.

The eighth legislature to pass a DFS law in 2016

Massachusetts joins a growing list of states that have passed bills dealing with DFS this year.

The Massachusetts bill is somewhat like the one in Mississippi, in that it creates an end date for the law. The intent is for the legislature to pass new language before it expires in 2018.

New York also passed a bill this year, but it has been waiting for the signature of Gov. Andrew Cuomo for nearly a month and a half. When — or if — Cuomo will sign it remains a mystery.