A Third Daily Fantasy Sports Regulation Law Appears To Be On The Way

Written By Dustin Gouker on April 19, 2016 - Last Updated on April 28, 2016
Tennesse daily fantasy sports

[toc]Tennessee became the third state to send a bill that would regulate and legalize daily fantasy sports to a governor when the state Senate passed legislation on Tuesday.

The latest on the Tennessee DFS bill

The Senate concurred with a House version of the DFS bill, 27-2. Tuesday’s vote in the Senate means the bill will head to the desk of Gov. Bill Haslam. The House passed the bill late on Monday night by a vote of 67-17.

Tennessee joins Indiana and Virginia as the only three states that have sent bills to their respective governors on the subject of regulating the DFS industry. Both states’ governors signed the bills into law.

If the bill is signed, it would render moot a negative opinion on the legality of DFS from the office of AG Herbert Slatery earlier this month.

What the Tennessee DFS bill does

Here is a look at what the Tennessee regulation of DFS looks like, in the bill as passed:

  • Allows the Secretary of State to conduct investigations regarding possible violations of the law and to “establish appropriate fees for application and license renewal, and other applicable fees” among other duties.
  • Establishes a process for licensure of DFS operators and makes it a misdemeanor to operate without a license.
  • Operators will be charged a 6% tax on revenue generated by Tennessee residents (entry fees – prizes awarded).
  • Limits player deposits with an operator to $2,500 per month, with the possibility of players being able to raise their deposit limits; and sets limits on number of entries in contests.
  • Attempts to make sure operators segregate operating funds from player funds.
  • Establishes other consumer protections such as ones dealing with security of data, employee play, problem gambling, truthful advertising.
  • Forces licensed operators to contract with a third party for an annual audit.
  • Says operators may not offer contests based on amateur sporting events.
  • Establishes a minimum age of 18 for players.

What’s next for the DFS bill?

The governor will have 10 business days to act on the bill, once it formally lands on his desk. The bill could become law as soon as later this month, or early in May.

Like its predecessors in Indiana and Virginia, the bill passed by overwhelming majorities, so it is hard to believe that Haslam would veto it. Vetos can be overrriden by a simple majority in the state. Haslam does have the ability to line item veto fiscal portions of legislation.

Barring unforeseen circumstances, it appears that Tennessee will become the third state with DFS regulation and the fourth (joining Kansas, as well) where the legislature has made DFS expressly legal.

Statements from DraftKings and FanDuel

Griffin Finan, director of public affairs for DraftKings:

Today, the Tennessee legislature took an important step to ensure that more than one million Tennesseans can continue to enjoy skill-based fantasy contests with thoughtful consumer protections in place. We thank Senator Jack Johnson and Representative Pat Marsh for their leadership on this important issue.”

Statement from FanDuel:

“The legislature has passed strong, but smart regulations ensuring the more than one million fantasy players in Tennessee benefit from important consumer protections and can continue to play fantasy sports. We want to thank the bill sponsors Senator Jack Johnson and Representative Pat Marsh, and the members of the legislature for taking a detailed and careful approach to this issue, which delivered a reasonable solution for the state.”

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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