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“Daily online fantasy sports games have a significant presence in Maryland,” Franchot said on Tuesday. “It is entirely appropriate that we enforce basic rules to ensure the games are fair, anti-competitive abuses are declared out of bounds, and appropriate taxes are paid.”
The regulations generally fall in line with consumer protections that have been instituted in a variety of other states in the past year. Maryland had enacted a law in 2012 that intended to make fantasy sports contests with entry fees legal in the state. That law gave the comptroller’s office oversight of the industry.
Among the regulations, per the comptroller’s office:
No registration, licensing fee or direct tax is required for operators in the state. However, the regulations note that fantasy sports operators “shall comply with all applicable tax laws and regulations.”
The full regulations can be seen here. Those regulations are dated from July, but the comptroller’s office confirmed to Legal Sports Report that the regulations had not changed at all from when they were initially issued this past summer.
The comptroller’s office noted the regulations do not apply to “traditional, season-long fantasy leagues run by companies like Yahoo and ESPN that attract office coworkers, softball teammates or church groups.” However, the wording of the full regulations would appear to apply to any fantasy sports operator that deals with real-money entries directly and takes a cut of those entries:
(5) “Fantasy sports competition” is a fantasy competition in which:
(a) A prize is awarded;
(b) One or more players are subject to and must pay an entry fee; and
(c) The fantasy sports operator offering the competition receives compensation in connection with the competition regardless of the outcome.
Despite becoming the first state to attempt to legalize fantasy sports explicitly several years ago, that did not solve the legal clarity for the DFS industry.
About a year ago, the state’s attorney general questioned whether daily fantasy sports could be legalized without a change to the constitution:
We have ultimately concluded that the 2012 law should have been the subject of a referendum, but acknowledge that there are legitimate counter-arguments and that it is unclear how a court would rule if asked to address the matter. As such, we believe that the General Assembly should take up this issue to make legislative intentions known and to clear up ambiguity.”
Despite that recommendation, the state legislature failed to pass a bill that would have put a referendum on the November ballot. It’s not yet known if the state legislature will take up the issue this year.