Recent Negative Rulings Force Daily Fantasy Sports Companies to Massively Increase Lobbying Efforts

Casino Watch Focus has reported on the ongoing criticism and identification of Daily Fantasy Sports (DFS) as the newest wave of sports gambling. Various states have been investigating DraftKings and FanDuel to determine if they are offering online gambling. Even the FBI and US Attorney General have been investigating. The DFS has tried to take a proactive approach. Recentlythe DFS industry called for government regulations and offered problem gambling safeguards. The industry believes if they can get it regulated, then that will prevent an outright ban, given online sports betting is illegal in almost all jurisdictions outside of Las Vegas. Unfortunately for DFS, more and more states are ruling that they are illegal. Now, they are aggressively changing their strategy and attempting to lobby for each state to exempt DFS from gambling laws so they can stay in business. USA Today reports:

Fighting for its life from coast to coast, the daily fantasy sports industry has dramatically changed its survival strategy since last year.

The industry now has about 75 lobbyists in more than 30 states, up from two lobbyists in two states last February, said Jeremy Kudon, an attorney for the industry. The goal is simple: If existing state laws indicate that your business might be illegal, then hire some professionals to help change those laws.

“This is a battle that’s going to be won in 50 states,” said Paul Charchian, president of the Fantasy Sports Trade Association, which advocates for the industry. “It’s going to be 50 small battles, not one big battle.” 

Its unclear how successful this strategy will be for DFS. They have started lobbying at the Federal level as well, but that could still leave individual states with the ability to clarify that the activity is illegal gambling. In their efforts at both levels, they believe they can prove that their games are games of skill not chance, but the skill level diminishes severely when new teams are drafted each day and not carried out through an entire sports season. Typically however, when a company puts forth enough lobbyist and lobbying dollars, change happens in those companies favor. But as the USA Today article explains, they have lobbied various states in the past to no avail:

The argument over daily fantasy’s legality hinges upon whether it’s considered a game of skill or a game of chance. Generally speaking, games that involve chance are usually considered gambling. But states hold different standards for how much chance is needed for a game to be illegal gambling.

While the industry started lobbying the federal government this year, it can exert more policy influence at the state level, said Marc Edelman, an associate professor of law at Baruch College, who consults in fantasy sports law. If federal lawmakers explicitly decriminalized daily fantasy, state governments could still impose stricter rules, he said.

Attorneys general in New York, Illinois and most recently Texas have argued that paid daily fantasy contests are illegal gambling under state law. Disclosures show the industry lobbied last year not only in those states but also others that could become legal battlegrounds.

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