[toc]The daily fantasy sports industry was generally supportive of the concept of the regulations proposed by Massachusetts Attorney General Maura Healey when she drafted them in November of last year.
But it was also clear they didn’t support every last regulation Healey floated, and took issue with many of them. That much was clear the day they came out, when DraftKings said “we do have some concerns with the draft regulations.”
Industry representatives voiced those concerns at a public hearing earlier this month, and then put those concerns into writing — along with concrete changes they want to see — in public comments sent to the AG’s office. (The timeframe for offering public comments came to a close last week.)
What did we learn about the industry’s thoughts regarding the regulations? They have some real problems with a lot of them, and DraftKings and FanDuel would not be terribly happy if they were implemented as-is.
Issues identified by DraftKings, FanDuel, FSTA
A slew of public comments came in at the deadline, including from the Fantasy Sports Trade Association and the DFS duopoly of DraftKings and FanDuel.
- DraftKings’ comments
- FanDuel’s comments
- FSTA’s comments
- ESPN’s comments
- DraftDay’s comments
- Yahoo’s comments
All submitted comments can be seen here. Here’s a sampling of the biggest issues the industry identified:
18, not 21
Right now, DFS contests are limited to players 18 and older. The Massachusetts regulations would make the minimum age for playing 21.
Not shockingly, the fantasy industry would rather not see this regulation go into effect.
DraftKings on the subject:
Massachusetts laws are replete with references that upon reaching the age of 18 one is treated like any other adult in the Commonwealth. … There does not appear to be a rational basis related to protecting against unfair and deceptive trade practices to exclude young adults ages 18-20 from participating in daily fantasy sports contests, particularly when the proposed regulatory framework provides protections for all other adult consumers.
And DraftDay points out comps for DFS where 18-year-olds are allowed to play:
This age is consistent with the minimum age required for customers to engage in lottery, pari-mutuel betting, and charitable games, including Bingo and pull-tabs, in Massachusetts.
Finally the FSTA:
At 18 years old you are old enough to vote in this country and make adult decisions. Furthermore, an age limit of 21 years old appears to be tied to gambling products and casinos where the drinking age is a major factor for participation. Fantasy sports are not necessarily played at a physical location, so a similar age limit tied to drinking laws should not apply.
Massachusetts Gaming Commission chairman Stephen Crosby agrees with the operators on this point.
The regulations propose that DFS operators cannot offer contests based on college games — something that DraftKings, FanDuel and some other operators do offer. This is obviously tied, in part, to the idea that many college players are in the 18-21 range, alluding to the prior regulation.
But it’s also tied to the idea that the contests should only be based on professional athletes, not amateur ones. Pretty much no one in the industry is a fan of this proposal.
Other than the fact that the contests involve collegiate sports, college sports contests are no different than other contests permitted by the proposed regulations. There is no apparent unfair or deceptive trade practice that exists to ban a certain contest that has the same characteristics as contests that are permitted.
Finally, the FSTA also believes that fantasy sports should be allowed for college sports. NCAA football and basketball have been a part of fantasy sports nearly as long as the hobby has been around. … Even with the growing prizes around college fantasy sports games we believe this won’t change since fantasy sports don’t present the same integrity issues as sports gambling.
Interestingly, FanDuel took no issue with this regulation.
Some of the industry thinks that language about scripting in the regulations is overly broad. From the regs, a script is defined as a “list of commands that a DFS-related computer program can execute that are created by DFS players (or by third parties for the use of DFS players) to automate processes on a DFS Contest Platform.” Then the limitations on scripts that would instituted:
No Scripts will be allowed. Existing scripts will be removed. A DFSO will bar any individual or corporation found to be using an unauthorized Script from playing in any DFS contest by terminating such individual or corporate account and by banning that individual or corporation from DFS Contest Platforms.
The language, the FSTA argues, is not specific enough:
There are many research tools and team management programs that help all fantasy sports players and are used in non-DFS contests that could fall under this ban. … The broadly worded “Automate processes” wording in the “Script” definition could end much of this activity, which does not appear to be the intentions of the proposed regulations.
DraftKings does not mention scripting in its letter, despite the fact that the site just rolled out its own scripts for all players.
Many have taken issue with this language, which says merely that DFS operators “will not allow simultaneous log-ins on a single account.”
This sounds good, in practice, but players will often be logged in via both a computer and a mobile device, as DraftKings pointed out:
These consumers often do not log off the DraftKings smart phone application before logging on to the DraftKings website through their laptop. This modern technology is the way people interact with the Internet.
Highly-experienced player definition
Almost everyone seems to have some issue with this. As it stands in the regulations as written, a highly experienced player is defined as:
Any DFS player who has 1) entered more than 1,000 contests offered by a single DFSO; or 2) entered more than 250 contests offered by a single DFSO and has prevailed in more than 65% of the total number of such contests; or 3) has won more than three DFS contest Prizes valued at $1,000 or more. Once a DFS player is classified as a Highly-experienced Player, a player will remain classified as such.
DraftKings wants to see the definition changed to:
Any DFS player who has entered more than 500 contests offered by a single DFSO shall be classified as a Highly-Experienced Player.
FanDuel agreed with the idea of a simplified definition:
These challenges can be significantly mitigated, however, by basing the definition only on the number of contests entered – such as 500 or 1,000 – rather than on other criteria.
The regulations currently create a limit of $1,000 in deposits per month for users, a figure that would likely hinder DFS sites’ ability to generate liquidity.
The $1,000 per month deposit limit is arbitrary and unnecessarily low. Under this proposed regulation, the information consumers must provide to raise the deposit limit, “information, including income or asset information, sufficient to establish that the DFS Consumer can afford losses that might result,” is invasive for consumers and burdensome for covered entities. Instead, DraftKings proposes that the proposed regulation adopt the DraftKings’ standard $6,000 per month deposit limit.
Imposing this limit requires DFSOs to act essentially as credit reporting agencies in order to evaluate whether to permit players to make a deposit exceeding the threshold in a way that no other merchant in Massachusetts is required to do.
What happens next?
The timeframe of what will happen with the regulations is unknown. However, it’s fair to guess the AG will take some time to review the public comments and tweak the regulations, a process that could conceivably take weeks or months.
However, the AG also expressed interest in having the regulations in place as soon as possible, so that consumer protections were in place for DFS users. Whatever happens will likely be expedited.
Will the industry get its way on the issues? Clearly, a lot of their arguments have merit; the restriction on players having to be 21, in particular, seems to have garnered a lot of pushback. And the AG seems committed to codifying common-sense regulations.
Right now, the industry is in a holding pattern awaiting Healey’s next move; of course, they — or at least DraftKings and FanDuel — may be aware of that move, seeing as they have been in close contact with the AG during this process. At the same time, however, clearly DFS operators were a bit surprised at many of Healey’s proposed regulations.
The Massachusetts timeline so far
Massachusetts, along with New York, California and Illinois, has been a hotbed for the DFS industry. The interest in the industry from the government pre-dates the October data leak at DraftKings, as DK asked Healey to review the legality of DFS. Since then?
- Healey declared that DFS is legal under state law.
- The Massachusetts Gaming Commission put together a report in October saying the legality of DFS was in a state of flux.
- Healey’s regulations came out in November.
- The MGC put out its DFS white paper in January.
All the while the state lottery has eyed the DFS industry as a revenue generator, and there has been plenty of chatter from the legislature — but no bill.