Florida passed a fantasy sports regulatory bill out of a House subcommittee, marking the second positive outcome for the DFS industry in a state legislature in the past week.
A California committee passed a regulatory bill last week.
DFS progress in Florida
The Business & Professions Subcommittee considered HB 707, a bill that explicitly legalizes fantasy sports contests under state law. It also creates consumer protections and oversight for DFS operators, including:
- Fantasy sports operator employees and their relatives would be blocked from playing games for cash prizes.
- Sites must verify that players are 18 years of age or older.
- Funds of players must be segregated from operational funds.
- A civil penalty is created for operators that do not comply with the law.
- Sites must contract with a third party for an annual audit.
The House bill, as written, contained no fees or taxes for DFS operators, unlike a companion bill in the Senate (SB 832). However, the bill was amended in committee to include a $500,000 licensing fee and $100,000 annual renewal fee for operators.
An industry source indicated to Legal Sports Report that the DFS interests will work to amend the bill with a fee option that will work for smaller companies.
The bill was introduced by Reps. Matt Gaetz and Ritch Workman.
“My belief is that if we pass this bill in this format … that we will become a model for the country, and that we will show the country how to appropriately deal with fantasy contests, so that you don’t have disparate treatment across the various states,” Gaetz said during discussion of the bill.
Legislative efforts to regulate DFS still face another vote in the full House Regulatory Affairs Committee, a committee hearing in the Senate, as well as full votes of both the House and the Senate.
The Florida DFS backstory
Florida is one of the key battlegrounds for the DFS industry, even though there has been little actual action, until today.
The draft of legislation was floated in November, but the bills were not taken up until this month. The bill comes in the wake of increased lobbying activity by the Fantasy Sports Trade Association, DraftKings and FanDuel.
At the same time, there is reportedly a federal grand jury in Tampa looking into DFS operators; the scope and targets of the investigation are not known, however.
Debate and discussion on DFS bill
Generally, committee members seemed to be receptive to the bill — it passed by a margin of 10-3, after all.
Some members indicated that they believed the bill needs more work — such as more clarification on some of the regulatory measures, dealing with bad actors, and issues regarding interstate play.
“I think it’s commendable that we are acting responsibly, that we’re doing what we’re challenged to do, vet it through the legislative process,” Rep. Daryl Rouson offered during debate.
“I understand that there are people out there who think this isn’t gambling, I think it is,” Rep. Joseph Geller said. “Having said that, I’m not one of those who’s against gambling in our state. …I think appropriate regulation is the right thing for it.”
Geller did say the regulatory scheme in HB 707 was “inadequate” however, and asked for changes to be made to the bill, echoing sentiments of a few other committee members.
Gaming attorney Marc Dunbar, representing the Stronach Group — which owns the racetrack Gulfstream Park — spoke against passage of the bill. He asked for DFS sites to be treated like other forms of gaming in the state.
The Seminole tribe — which has a gaming compact with the state of Florida — did not testify at the hearing, despite this comment from last week.
Anyone in good conscience cannot say that daily fantasy sports are not gambling. – Jim Allen, Seminole Tribe of FL. #sayfie
— Florida Gaming Watch (@FLGamingWatch) January 7, 2016
Also of note in Florida DFS matters
Information included in the hearing packet including some interesting notes:
- A summary of relevant statutes is included in the bill analysis, although it stops short of saying fantasy sports are explicitly legal or illegal in the state. “Fantasy contests may be subject to Florida’s anti-lottery laws,” according to the analysis.
- Overseeing fantasy sports will cost the state an estimated $100,000 a year, per the analysis.
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