California Assemblymember Adam Gray — the sponsor of a bill that seeks to regulate the daily fantasy sports industry — says he wants the state’s regulatory plans to be “well thought out.”
What Gray had to say about DFS
Gray, who is also the chairman of the Assembly’s Governmental Organization Committee, spoke at length with the Orange County Register in an interview about DFS. Gray introduced a bill in September, nearly a month before government and media scrutiny of the industry started ramping up.
Some of the key takeaways:
- Gray said he sensed DFS might be an issue that required attention as the industry was gearing up for the NFL season; he said he saw it promoted heavily as he was signing up for his seasonlong league at Yahoo. That’s why he introduced the bill even before the events of October.
- Consumer protections appear to be his biggest concern, from his comments, talking about the possible problems of “underage kids playing” and having “up-to-date protections” in place, as well as making sure a level playing field exists for DFS players.
- His plan, as was evidenced by his bill, is to give the state’s gaming commission power to regulate the industry as it deems necessary.
- He seemed pretty committed to the idea of regulation being necessary: “The horse racing industry has had Internet wagering for some years now. They haven’t had a single scandal break on the New York Times front page. That’s because they’re regulated.”
- Unlike some states, Gray seems to be in no rush for the state to take a stance on DFS or to pass legislation. He intimated that it might be a year until a bill is passed, starting with an informational hearing in December before considering his actual legislation in January.
- He also noted that what the federal government does with DFS is likely to impact his state’s approach.
A glance at the California bill
Gray made his plans to look at the DFS industry public on the final day of the legislative session in September. That bill — AB 1437 — puts together a basic regulatory scheme:
- All DFS operators would come under the purview of the bill.
- The definition of DFS loosely follows the language in the fantasy sports carveout in the Unlawful Internet Gambling Enforcement Act.
- The California Department of Justice will handle licensing.
- Actual regulations would be put in place after the bill is passed.
- Licensing fees and the tax rate on revenue are to be determined.
Several other states have considered DFS legislation this year, but California is one of the few to actually put forth a regulatory plan so far. Pennsylvania, Illinois, Massachusetts and Florida are other states that may see regulatory frameworks pop up in the coming weeks and months.
Online poker efforts in California
California has tried — with no success — to pass online poker legislation in recent years, with the most progress ever made occurring this year.
However, the situation for online poker and DFS in the state is very different. The former is illegal in most jurisdictions — including California — with the exception of offshore poker sites that are out of the reach of U.S. law enforcement. DFS sites, meanwhile, generally operate in most U.S. jurisdictions — DraftKings and FanDuel operate in 44 states, including California.
Getting the various shareholders — Indian tribes, horse tracks and card rooms, to name a few — on the same page has made passing online poker regulation an onerous task, although there is still hope for next year.
So while California has not been able to come together to regulate online poker, DFS legislation is likely to be far less contentious. Regulating something that already occurs in California with no oversight (DFS) is far less problematic than creating regulation that would create an entirely new industry (online poker).
An interesting wrinkle in possible DFS legislation negotiation could be how Amaya is handled. One of the central points of contention in online poker legislation has been a “bad-actor” provision that seeks to keep PokerStars out of the state. (That dates back to the online poker site operating in the U.S. after passage of the UIGEA in 2006 until online poker’s Black Friday in 2011; PokerStars was purchased by Amaya last year). Amaya now owns a DFS site — StarsDraft — that recently pulled out of California and all but four states.
