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Indiana and Vermont became the latest states to introduce legislation aimed at regulating daily fantasy sports.
Both bills appear to be industry-friendly, as written, without onerous licensing fees, taxes and requirements for DFS operators. The legislation is part of a recent wave of interest in legalizing and regulating the industry in states around the country.
The idea that a regulatory bill was coming in Indiana was not a secret, as Rep. Alan Morrison has talked openly about his desire to bring forth a regulatory bill in recent months.
Morrison has been on the fantasy sports issue for a year now. He introduced a bill last year that would have allowed the state’s racinos to offer DFS contests. That bill failed to gain any traction in the legislature in 2015.
In September, Morrison indicated that he wished to revive the bill, but at the time, a regulatory approach was not in the plans:
“We are not looking to regulate them [DFS operators] at all, that’s not what we want to do,” Morrison said.
That comment came just before the increased governmental and media scrutiny of the DFS industry that developed in October.
The Indiana bill — HB 1168 (tracking and text here) — is in many ways like the one introduced in Illinois in October. The bill has been referred to the Committee on Public Policy. An identical Senate version — SB 339 — was authored by Sens. Jon Ford and Ron Alting.
The bill creates a new chapter in Indiana state code: IC 4-31-14. It does does several things:
“At first glance, it looks really positive for the industry, it clarifies that it is legal has basic consumer protections, so we’re pretty positive about the bill,” FSTA Chairman Peter Schoenke told Legal Sports Report. “And we’ll also work with them to improve it, and hopefully get it passed.”
The bill also creates a tax on wagering on “advance deposit wagering” related to horse racing.
The bill defines a “paid fantasy sports game” be appropriating the language from the Unlawful Internet Gambling Enforcement Act. That includes the provision that a fantasy contest is covered if “all winning outcomes reflect the relative knowledge and skill of the game participants. (As we’ve pointed out before, there are possible issues with that practice.)
The new part of the Horse Racing Commission is given several tasks, mostly related to consumer protection as it relates to fantasy contests:
Licensed operators have two choices:
Operators must pay $5,000 annually to be licensed in Indiana. Money will be used by the new division to administer the measures in the bill.
This is a measure that will make it possible for most small operators — i.e. not DraftKings and FanDuel — to serve the state.
Fantasy “entry fees” are exempted from taxes on gaming and wagering in the state code.
The bill provides for the following measures aimed at providing consumer protections:
On Thursday, a new bill also surfaced in Vermont; unlike Indiana, there had been no rumblings of a regulatory effort in that state.
In Vermont, S. 223 has been introduced by Sen. Kevin Mullin and has been referred to committee. It adds a new chapter to Vermont code to define and deal with fantasy sports contests in the state.
At least some operators have stayed out of the state due to legal concerns.
The bill is also similar to other regulatory approaches coming forward in other states; in the summary, it proposes “to regulate fantasy sports contests and establish consumer protections for fantasy sports players.”
There is no licensing fee or taxation in the bill.
Again, UIGEA is the basis of defining what falls under the definition of a “fantasy sports contest,” although the Vermont bill offers its own spin. Part of the definition says a contest exists whenever a “fantasy sports player uses his or her knowledge and skill of sports data, performance, and statistics to create and manage a fantasy sports team.” This is different from definitions put forth in other states.
The bill also exempts fantasy contests from state law pertaining to gambling and lotteries.
Protections put forth mirror those in other states. Sites must:
Sites are subject to fines for violations of the code.