DraftKings, FanDuel Offer Nevada Fantasy Sports Legislation Ahead Of Key Meeting

Posted on August 17, 2016 - Last Updated on August 18, 2016

The daily fantasy sports industry may have an avenue for an eventual return to Nevada.

The Nevada Gaming Policy Committee included a link to draft legislation — apparently written by FanDuel and DraftKings — that would regulate DFS in the state. Government officials do not appear to have anything to do with the proposed bill, which has not yet been introduced in the state legislature.

So far, just one operator has applied for and received a license to offer a fantasy-sports style game in the state, under current gaming laws: USFantasy.

Nevada sports betting is already legal and regulated in the state.

Where did the DFS legislation come from?

The legislation was posted on the NGPC website ahead of a meeting on the subject of DFS scheduled for Tuesday.

The bill appears to be a starting point for a conversation on how the DFS industry — or at least its two biggest operators — could make a return to Nevada. Sites pulled out in the summer of 2015 based on an opinion from the state attorney general that DFS falls under gambling regulations in the state.

The draft legislation was presented without comment on the website, so it’s not clear where the committee stands on it.

For those hoping for a quick return of DFS to Nevada, it’s important to note that the legislature isn’t even back in session until February of 2017.

What the policy committee is up to

The NGPC — led by Gov. Brian Sandoval — is meeting on the subject of DFS for the second time this year.

The CEOs of DraftKings and FanDuel — Jason Robins and Nigel Eccles — appeared at the first meeting, in March. The back-and-forth between the CEOs and the board was at times contentious.

Next week, the committee will look at:

  • Legislation and laws passed in other states;
  • Current Nevada law and its application to DFS;
  • The proposed legislation, which will be presented by a lobbyist representing DraftKings and FanDuel
  • The financial ramifications of the draft legislation.

Inside the DFS legislation

The legislation, as written, is based mainly on the laws that have been enacted in eight states so far.

What would the law do?

  • The Nevada Gaming Control Board and the Nevada Gaming Commission are responsible for oversight of DFS operators and can promulgate regulations.
  • DFS is exempted from the definition of “sports pool,” “gambling game” and “lottery” under state law.
  • The law would implement consumer protections such as prevention of play by minors, segregation of player funds from operational funds, restricting play by employees, and implementation of problem gambling protocols (without calling it gambling).
  • A licensing fee would be charged, the lesser of $10,000 or “five percent of the Operator’s gross fantasy game revenues for the preceding 12 months.”

The biggest question mark from the proposed legislation is the licensing fee proposal. Given the high costs of licensure and taxation of gambling revenue in the state, the relatively low bar of $10,000 — with no further taxation on revenue — seems unlikely to pass muster.

The backstory on Nevada and DFS

Nevada was the first state where the legality of DFS truly came into question in the US in 2015.

Last October, the Nevada Gaming Control Board and the state attorney general’s office declared that operating a DFS contest constituted gambling in the state. In the wake of that revelation, DraftKings, FanDuel, and other operators stopped serving customers in the state.

Since then, more than a dozen state AG’s have offered opinions on DFS, most of them negative.

The industry used to regularly host live events in Las Vegas, but that stopped based on the negative environment in the state.

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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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