Maryland Fails To Pass Fantasy Sports Bill, And Why That Could Mean Trouble

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After the Maryland state legislature did not pass legislation dealing with daily fantasy sports before it adjourned on Monday night, the legal status of the industry is still very much up in the air.

After the House failed to act, the president of the state Senate, Mike Miller, called on the state’s attorney general to take legal action against the fantasy sports industry, presumably aimed at its two largest operators — DraftKings and FanDuel.

What (didn’t) happen in Maryland on Monday

After two bills passed in the Senate last month, the full House did not take an up-or-down vote on either of the two pieces of legislation.

A pair of bills (S 976 and S 980) were on the House’s docket. One would have sent the question of whether the state should regulate DFS to a referendum; the other would amount to a ban on DFS if voters didn’t approve the referendum.

Both bills had originally been scheduled to be considered in a hearing last week, but neither was voted on. The referendum bill passed by a 22-0 margin on Monday, but since it never came up for a full vote in the House, that vote meant very little.

The industry presumably views this is as a victory, as it had been actively campaigning against both bills.

The legislature doesn’t meet again until 2017, and seeing as the legislation called for a referendum of the voters, it could be more than a year until anything happens on DFS, legislatively.

What’s the problem in Maryland?

For a long time, the fantasy sports industry believed Maryland was one of the few states where it had established legal clarity, with a 2012 law.

But that idea was turned on its head when Maryland Attorney General Brian Frosh issued an advisory opinion on the subject of daily fantasy sports in January. In issuing that opinion, Frosh’s office wrote that the law “should have been subject to voter referendum because it is an expansion of commercial gaming in Maryland.”

The legislative effort was an attempt to follow Frosh’s prescription, but for now, that won’t happen.

But does that just mean the status quo — of fantasy sports sites operating in Maryland — will continue until the legislature acts?

What the Senate president said on DFS

After the House did nothing on DFS, Senate President Mike Miller (the sponsor of the bill that would have banned DFS) believed the issue isn’t simply dead in the water. From The Washington Post:

Miller said Attorney General Brian E. Frosh (D), who was visiting the chamber, should file a lawsuit to ban the games from operating in the state. “I know he’s capable of handling it,” Miller said.

Miller is also the one that originally asked for the opinion from Frosh’s office, and he has been outspoken — at least compared to his fellow lawmakers in Maryland — on the issue of DFS.

Of course, Miller has no direct power to compel the AG to do anything. Which begs the question: Will Frosh act anyway?

Does Maryland’s AG have an appetite to fight DFS?

From his January opinion, it does not initially appear that Frosh would attempt to shut down DFS operators in the state.

The advisory opinion, in essence, was meant to pass the buck to the legislature. His analysis did not come to a final conclusion about the legality of the 2012 law, or of DFS under that law.

What Frosh did say was the legislature should fix what he viewed as a potential problem vis a vis the state constitution and gaming law.

From a Frosh statement on his opinion, again back in January:

The question triggers a complicated analysis of the nature and scope of gambling exemptions contained in the Maryland Constitution; the differences between Traditional Fantasy Sports and Daily Fantasy Sports and their evolution over time; and definitions of gambling and commercial gaming that are not found in Maryland law or court precedent.

We have ultimately concluded that the 2012 law should have been the subject of a referendum, but acknowledge that there are legitimate counter-arguments and that it is unclear how a court would rule if asked to address the matter.

Reading between the lines on the Frosh opinion

Where might Frosh come down on the issue, now? From his opinion and accompanying statement, it would appear his preference would be to stay on the sidelines.

However, it’s also apparent he believes the 2012 law should not be on the books. There’s also the possibility that the legislature failing to act could change the calculus for him, when he gave a clear path to fixing the law.

Additionally, Frosh was a state lawmaker back in 2012, and actually opposed the bill that the legislature ultimately passed.

The bottom line is that the picture in Maryland is still murky, with Frosh as a potential variable that could upset the apple cart.