A Michigan state senator has introduced a bill that would make sure fantasy sports are considered a game of skill under state law.
What we know about the Michigan bill
Over the next few weeks an estimated 1 million citizens, myself included, will be gathering to draft their fantasy football teams, unfortunately Michigan law currently has no legal protection for citizens participating in fantasy sports. That is why, today I have introduced Senate Bill 459, a bill which will amend the Michigan penal code to specify fantasy sports as a game of skill, legalizing fantasy leagues in Michigan.
Hertel sent Legal Sports Report a copy of the bill, which you can view here. It is a very straightforward bill that amends Michigan penal code relating to gambling, by excluding fantasy sports. Here is the text:
Sec. 310C. This chapter does not apply to participation in a fantasy or simulation sports game or educational game or contest as described in and that meets all of the conditions of 31 USC 5362 (1) (E) (IX).
The phrase “31 USC 5362 (1) (E) (IX)” refers to the U.S. code, specifically the definition and carveout for fantasy sports under the Unlawful Internet Gambling Enforcement Act. Long story short: If a fantasy contest is legal under federal law, it would also be legal under Michigan law, if the bill is passed.
The bill does not address DFS, specifically, and is a catch-all for anything that is deemed “fantasy sports.”
Michigan is a state where DFS is generally considered to be legal, and all major operators currently allow players from the state.
“The FSTA welcomes legislation to make it clear fantasy sports are legal in Michigan,” Fantasy Sports Trade Association chairman Peter Schoenke told LSR. “We have hired a lobbyist in Michigan to ensure residents can continue to fully play fantasy sports.”
Legalization, not regulation in Michigan
Despite momentum that has been working against the DFS industry — especially in Nevada — another bill has surfaced that would simply legalize fantasy sports.
Michigan will try to become the second state in this year to pass such a bill, joining Kansas. Like in Kansas, this bill would simply seek to clarify the status of fantasy sports under state law.
Several other states have considered bills that would affect DFS in 2015, although only two others made much progress. In both Louisiana and Iowa, a bill legalizing fantasy sports passed one of the chambers before losing momentum. All the other bills considered earlier this year — other than Kansas — are either dead or dormant.
A Texas bill — which was only introduced — sought to regulate the industry. In Washington and Iowa, legislators called into question whether a closer look needed to be taken at daily fantasy sports.
Are legalization efforts sustainable?
Increasingly, however, an endgame for the DFS industry of straight legalization in all jurisdictions — without some sort of overarching regulation — seems unlikely. Consider:
- The media — especially trusted sources of news — increasingly has a penchant for referring to DFS as gambling, which in some ways can make it more difficult to retain its status as a skill game.
- A “legal analysis” has a chance to impact the DFS industry in Nevada, and possibly beyond.
- DraftKings now has a gaming license in the U.K., which makes it more difficult to sell DFS as a non-gambling activity in the U.S.
- PokerStars — the largest online poker site in the world — recently purchased a DFS platform (Victiv) for operation in the U.S. DFS will be the only unregulated activity in the U.S. that PokerStars offers.
Despite all that recent news around the industry, however, the Michigan bill will attempt to proclaim that all fantasy sports should not be considered a gambling activity.
Season-long vs. DFS
In states like Kansas and Michigan, DFS seems to be riding the popularity of season-long fantasy sports, which is more widespread and played by tens of millions in North America, especially during the NFL season.
Legislation like the Michigan bill is designed to protect the right to play “fantasy sports” — and DFS generally falls under that umbrella. The language Hertel uses –“gathering to draft their fantasy football teams” — points to the idea that season-long fantasy is the focus of the bill, not DFS.
Interestingly, within the past couple of weeks, real-money leagues are now available via two of the largest season-long fantasy sites:
- Yahoo announced “private cash leagues,” which commissioners and players can use to pay out prize money.
- Also recently, DraftKings announced its “League Hub” integration for season-long leagues at ESPN, which also facilitates payouts.