“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.”
Maryland’s comptroller on DFS
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.
The regulations at a glance
Among the regulations, per the comptroller’s office:
- Users under the age of 18 may not compete in paid-entry contests.
- “Employees, principals, officers, directors or contractors” are banned from taking part in paid contests.
- College sports contests are not allowed to be offered by operators.
- “Experienced players” must be identified by operators.
- Sites must prevent the use of third-party scripts for entering contests.
- Deposit limits for users are initially set at $1,000 and can be increased; credit may not be extended to players.
- Player funds and operational funds must be segregated.
- The books of a fantasy operator must be audited annually by a CPA.
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.
Who does the law apply to?
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.
The backstory of Maryland and DFS
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.