Violations of the many fantasy sports laws passed in the United States are few and far between.
But the state of New Jersey caught one recently, saying that the company SportsHub Games Network Inc. was doing business in the state “unlawfully.”
Interestingly, the civil action comes against a company that is linked to the president of the Fantasy Sports Gaming Association (FSGA), a trade group that once hoped to be the self-regulatory body for the fantasy sports industry.
It’s a decent example of “do as we say, not as we do.”
What happened in NJ fantasy sports
The state’s attorney general announced recently that SportsHub “agreed to pay a $30,000 civil penalty for unlawfully operating an online fantasy sports site in New Jersey without a permit.”
More from the release:
The Minneapolis-based games provider also agreed to change its business practices to resolve allegations that its conduct violated the state’s consumer protection laws by, among other things, failing to clearly and conspicuously disclose that SportsHub collects personal information from consumers’ social media accounts and that it shares certain personal information with third parties.
A number of fantasy sports brands fall under the SportsHub umbrella, including Fanball, CDM Sports and LeagueSafe.
New Jersey passed a fantasy sports law in 2017 to regulate the part of the industry taking paid entries in 2017. SportsHub did not apply for a permit to operate in the state until more than six months after a 2018 deadline. Beyond that, NJ also said it found several violations of both the fantasy law and the Consumer Fraud Act.
“New Jersey’s fantasy sports law offers fans an opportunity to fully immerse themselves in the sports they love while ensuring a safe and enjoyable experience for all who participate,” said Attorney General Gurbir Grewal. “As the settlement announced today illustrates, New Jersey enforces the laws in place to ensure transparency and protect consumers from hidden threats to their online privacy.”
Few violations of fantasy sports laws around the US have happened, despite the fact that there are many of them.
A quick fantasy sports history lesson
LeagueSafe is a part of SportsHub, acquired in 2016. Paul Charchian was the founder of LeagueSafe and also helped to found Fanball.
Here are some of the faults found with LeagueSafe, in particular, by the NJ AG:
- Advertising on its website that “LeagueSafe,” a SportsHub online payment system that collects fantasy sports entry fees and pays out winners, is “the only fantasy sports consumer protection agency on Earth.”
The interesting part is that Charchian is the head of the FSGA, which was formerly the Fantasy Sports Trade Association (FSTA). As the president of that group, Charchian tried to position it as a quasi-regulatory body for paid-entry fantasy sports companies.
At first, that was through the FSTA charter, which the group simply changed or ignored when it served its purposes. Then, an effort to create an independent “agency” surfaced before it was quickly shelved.
The FSGA is also tasked with handling government affairs on behalf of fantasy companies, so the fact that SportsHub was woefully behind in applying for licensure is comical.
Anyway, there’s a fair amount of irony in the fact that the first and only violations of the New Jersey fantasy sports law involve this company, given Charchian’s important role in the fantasy sports ecosystem.