Daily Fantasy Sports Regulation Bill Passes California Assembly Committee Vote


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[toc]California became the first jurisdiction in the United States to pass a daily fantasy sports regulation bill out of a committee hearing, after a vote on Wednesday afternoon.

The bill sponsored by Assemblymember Adam GrayAB 1437 — passed through the Governmental Organization Committee nearly unanimously. Assemblymember Marc Levine, who has been an outspoken critic of the DFS industry, was the only “no” vote.

Important first step for DFS regulation

While DFS bills have been introduced in a variety of states around the country, California was the first one to move a piece of legislation forward.

The bill still faces a number of steps to become law. It still will not be considered by the full Assembly; it must first also pass through the Appropriations Committee.

The tone of the committee members was that they were in favor of moving the bill forward, while acknowledging that it is not a finished product, and needs more work down the road.

Regardless, it was a victory for those who want DFS to continue to be legal in the state moving forward, and regulated in the future.

Fantasy Sports Trade Association Chairman Peter Schoenke appeared briefly in front of the committee, saying the organization was officially “neutral” on the bill.

Gray’s argument for the DFS bill

Gray, the committee chairman, left his chair to advocate for the bill, while assemblymembers would later offer their takes — and largely their support — for the bill.

Gray stressed to the committee that the daily fantasy sports industry — as it stands now — is unregulated, and that not advancing legislation would simply keep the status quo. In that status quo, Californians are playing and will continue to play DFS, whether the legislature acts or not.

Gray said his bill would “ensure consumers are playing on websites that provide comprehensive consumer protections” in his opening comments.

That argument is likely why the bill was moved along, to be worked on at a later date.

He also noted that he was offering amendments on the bill — which can be seen in a bill analysis here — that included provisions for:

What the committee members said

Almost every member wanted the bill to progress to the next step, but nearly all had some sort of concerns they wanted to see addressed at some point:

Only one true voice of DFS dissent

Levine was the only member to speak out against the bill. For several months, Levine has been an opponent of the DFS industry, although he would still like to see the industry regulated as an endgame. He earlier asked Attorney General Kamala Harris to offer a legal opinion.

Levine said he believes that the state constitution must be amended to make it possible to regulate DFS.

From his testimony: “This is gambling.  There is no doubt about it.  Let’s not fool ourselves. An entry fee is a wager. Cash prizes are gambling winnings. DFS companies are bookies. Playing these games is sports betting.”

Levine has not succeeded in swaying any of his fellow committee members to pull back on DFS regulation, so far. The status of his request for the opinion of the AG’s office is unknown.

There are also questions about whether the Professional and Amateur Sports Protection Act could be a potential problem for DFS regulation, an issue that was not addressed.

The Indian tribes are not on board

One possible major stumbling block for the bill could be tribal gaming interests in the state.

On Tuesday, the California Nations Indian Gaming Association made a statement saying it did not want to see the DFS bill move forward before online poker. (Originally, the hearing was set to consider iPoker and sports betting, before it was pared down to DFS only.)

From the CNIGA statement:

“We realize there are two other bills dealing with sports betting (AB 1441) and daily fantasy sports (DFS) (AB 1437) sharing the agenda with the I-Poker bill, AB 167. Introduced by Representative Reginald Jones-Sawyer, AB 167 represents one of the last in a series of I-Poker bills, which, unlike AB 1441 and AB 1437, were thoroughly vetted, debated, altered, massaged, and continually passed over with the hope of a political miracle of consensus in the next year,” stated Chairman Steve Stallings.

“The regulation of fantasy sports is well intended. However, the state needs to prove it can deal with one online game–I-Poker–before it takes on others.”

Online poker legislation has had difficulty gaining traction in part because of tribal concerns in the state; it’s unclear if opposition from the tribes could scuttle DFS regulation in the short term.

Other items of note from the ‘bill analysis’

The analysis of the bill posted on Tuesday, in addition to containing amendments to the legislation, had some other interesting items in it:



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