First State To Regulate Daily Fantasy Sports Starts Issuing Temporary Licenses

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Virginia DFS

The first of the seven states that have passed laws to legalize and regulate paid-entry fantasy sports has started handing out temporary permits.

Virginia is now allowing several companies to offer daily fantasy sports in the state, according to ESPN’s David Purdum:

In March, Virginia became the first state where a legislature passed a regulatory bill that was also signed by the governor.

A small list for DFS in Virginia

Only four companies have been granted temporary permits so far, a number that is largely in line with expectations. (The full list can be seen here.)

Those permits are good for 60 days while full licenses are considered by the state.

Why so few? The law in Virginia requires operators to pay an initial licensing fee of $50,000. That is a figure too high for a number of smaller DFS  — and any paid-entry season-long — operators to afford.

The big two in DFS

We knew that two operators — DraftKings and FanDuel — would definitely be applying to serve users in the state.

They have the capital to afford the fee, and were actively in favor of the law when it was enacted.

Two more in DFS

FantasyDraft, one of the operators in the tier behind the “big two,” also is applying. The DFS operator indicated to Legal Sports Report that it was also looking into the process in the other six states with regulations.

The surprise is Eagle Strike, a startup that is not currently offering contests. According to its website, it will be offering “touch screen fantasy sports terminals” at private establishments like sports bars.

The Eagle Strike idea is a model that has been floated prior to this year by at least one other company, but has not come to fruition.

Who else in DFS?

The above operators appear not to be an exhaustive list of fantasy sports operators that will or have applied to operate in Virginia, however.

It would seem likely that Yahoo, if it has designs on being a major player in DFS moving forward, would have to be in all accessible markets. Yahoo did not yet indicate to Legal Sports Report its intention to apply for a Virginia license, however, when contacted.

Implementing the VA DFS law

Elaine Lidholm, director of communications for VDACS, filled LSR in on some of the machinations as it was in the process of beginning regulation in the state last month.

As regulating the DFS industry is generally a new endeavor — and there isn’t really a comp in Virginia — the state is in some ways inventing the wheel.

The forms that operators have to fill out to apply in Virginia can be seen here.

The state is still sorting through the licensing process, Lidholm said, and it isn’t known how long it will take to get to a final license. The law mandates that a license be issued or denied within 60 days, but it could take less time than that, as well.

“Every application is different, so the specific techniques used to review an application are dependent on the circumstances,” Lidholm said.

For sites not wanting to serve Virginia?

“If they chose not to offer such contests in Virginia, then they must take appropriate action to ensure their site reflects that decision,” Lidholm said.

Unlike laws in other states, Lidholm noted that the Fantasy Contest Act “does not specifically mandate or give the Department authority to promulgate regulations governing fantasy contests.”

New York, not far behind?

New York appears to be close on Virginia’s heels on issuing temporary permits.

Gov. Andrew Cuomo signed a fantasy sports bill into law last week. And the New York State Gaming Commission has already begun to receive requests for temporary permits.

Those permits could be issued as soon as this week, but the exact timeframe is not known.