A bill in the Massachusetts legislature would authorize the state lottery to offer online daily fantasy sports games, setting up a new possible model for the industry.
What’s in the bill
The bill (S. 191) was introduced by State Sen. Michael Rush in April and is currently in the Joint Committee on Consumer Protection and Professional Licensure. You can read and track the full text of the bill here.
The bill is most interesting as a possible model for state lotteries, as they decide whether to take their operations online, and the possibilities of DFS done through a lottery website or app. There has been no movement on the legislation — not even a scheduled committee hearing. The prospects of lottery-run DFS in Massachusetts, if it is tied to online gaming and poker, seem to be dim in the short term.
Here is the passage relevant to fantasy sports:
Section 27B. (a) The lottery commission is hereby authorized and directed to implement online games of skill, including, but not limited to, fantasy sports, so-called, poker, so-called, and other games of skill, subject to the provisions of, and preempted and superseded by, any applicable federal law.
The bill, therefore, allows the state lottery to offer daily fantasy sports games; it does not appear to be aimed at regulating the industry.
DFS vendors in a lottery model
The bill also sets up a structure for vendors to provide an online platform for fantasy sports. Presumably, a site with a DFS platform could offer its services.
More from the bill:
The commission shall develop a request for proposals (“RFP”) that solicits competitive bids from private vendors to develop any such online platform and such platform shall maximum flexibility to allow for changes in technology and changes in consumer behavior. Such provider shall work within the framework of the lottery’s existing system and fully coordinate all functions so that the lottery maintains its requisite level of control.
How easy it is to take existing DFS platforms and put them into a lottery site remains to be seen. It’s also unclear how much desire DFS sites might have in getting involved with state governments and having them looking over their shoulders, in the current unregulated environment in the U.S.
At the same time, lotteries are pretty good at acquiring and retaining customers; Americans spent $70 billion on lottery games across all jurisdictions last year. Is a bit of state oversight, and the fact that the government would be taking a slice of the pie, worth access to the potential customer base for someone? (It’s also worth considering that down the line, state regulation might not be inevitable, but it certainly is possible.)
How would DFS and the lottery look?
That’s a good question. Traditional salary cap contests, offered by sites like FanDuel and DraftKings, have the possibility for generating big prize pools. A lot of state lotteries’ business stems from these massive games.
However, the prize pools, in games like Powerball and MegaMillions, are based of an interstate network of lotteries. Since there is no such network of DFS via lottery, it is not a no-brainer that the traditional model would be employed. Just four states currently have online lotteries — Michigan, Illinois, Georgia and Minnesota.
Alternative forms of DFS, which are much simpler to play and require a lot less time for users, would seem to make a lot of sense for state lotteries. Games where you pick just a few fantasy players, without the constraints of a salary cap, are much more akin to the games that lotteries already offer.
Montana’s lottery actually offers fantasy sports — for NFL and NASCAR — but it acts as a pari-mutuel game. DFS sites do not currently operate in Montana.
Based on the vague language of the Massachusetts bill, and the fact that the idea of merging DFS and lotteries is not well-established, we would imagine just about everything would be on the table for states.
Interesting… on legislation and DFS
A couple of other side notes about and pertaining to the Massachusetts bill:
- DFS is presented as a “game of skill” in the bill and not lumped in with games of chance, bucking the recent trend of linking DFS to gambling. Getting another state law on the books calling fantasy sports a skill game would be good for the industry, in that respect.
- The Professional and Amateur Sports Protection Act of 1992 — which prevents sports betting in most jurisdictions in the U.S. — has never been applied to fantasy sports. But that doesn’t it mean a legal challenge couldn’t come:
— Daniel Wallach (@WALLACHLEGAL) July 8, 2015
- The Senate version of the Restoration of America’s Wire Act, a federal bill that would outlaw some forms of online gambling, was recently introduced, and it includes a carveout for online lotteries. Of course, for now, RAWA does not target DFS.
- DraftKings is headquartered in Boston. Linking the DFS giant to the Massachusetts lottery appears to be a stretch, however.