The legality of daily fantasy sports has been the subject of immense scrutiny across many US states since late last year, but it may get a huge boost before the day is over. Or it may not. It all depends on the decision of Virginia Governor Terry McAuliffe, who has until midnight to either pass or veto legislation that would legalize and regulate ‘Fantasy Contests’ in the state.
Two weeks ago, the House and Senate both passed SB 646, a bill that “Creates the Fantasy Contests Act, which applies to fantasy contests with an entry fee offered in Virginia.”
The bill would create a definition for the term “fantasy contest”, and would require operators of such betting services to pay an annual $50,000 register fee to operate in the state. As per the requirements of registration, operators would have to implement and enforce consumer protections to restrict ineligible participants (underage individuals, self-excluded individuals, actual participants in the athletic contest, etc.)
SB 646 Definition of ‘Fantasy Contest’
In order to be defined as a fantasy contest in Virginia, the service must fall in line with three specific definitions:
“The bill defines ‘fantasy contest’ as any online fantasy or simulated game or contest in which:
(i) the value of all prizes and awards offered to winning participants is established and made known to the participants in advance of the contest;
(ii) all winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sports events; and
(iii) no winning outcome is based on the score, the point spread, or any performance of any single actual team or combination of teams or solely on any single performance of an individual athlete or player in any single actual event.
Although the bill never actually mentions the terms “daily fantasy” or even “fantasy sports”, it’s rather clear that ‘daily fantasy sports’, or DFS betting, is the primary target of regulation.
Should the bill gain the signature of Gov. McAuliffe before the clock strikes midnight tonight, it will be a colossal win for major DFS operators like FanDuel and DraftKings, and could set a huge precedent for other states to follow.
Bill Threatens Season-Long Fantasy Sports
On the opposing end of the spectrum are season-long fantasy sports (SLFS) operators, who believe the DFS bill will put them out of business. They have been operating legally for a decade, thanks to a 2006 federal law that exempts season-long fantasy sports from being defined as illegal gambling.
Being forced to pay an annual $50,000 registration fee while competing with DFS sites “really puts us out of business in your state,” said David Gerczak, co-founder of myffpc.com, a high-stakes SLFS website. He said if Gov. McAuliffe signs the DFS bill, his operation may stop serving Virginians altogether.
Anti-gambling advocates are also in direct opposition to the bill, as they believe it will open the doors to online gambling in Virginia. They agree with season-long fantasy sports operators that the text of SB 646 is too vague, and that the governor must veto the bill in lieu of something more explicitly defined to prohibit all other forms of online gambling, and exempt SLFS operators from registration requirements.