Pennsylvania Budget Stalemate Cripples 2017 Online Gambling Hopes

DFS Legalization Bills Introduced in Pennsylvania, Ohio

Online gambling legislation tends to be cyclical. For a while, lawmakers make a push and when positive results fail to materialize (which they often do), everyone takes a rest to regroup before trying again. At the same time, we often see online poker and daily fantasy sports legislation on the state level run in counter cycles to each other. When online poker forces are active, DFS is put on the back burner and vice versa. That’s not always the case – often the two are joined at the hip – but recently that cycle has seemed (at least to this writer) to be the case. In the second half or so of last year, DFS legalization was all the rage. Lately, online poker has been seeing a surge (nothing has passed, but multiple states have had activity). And then, just last week, two states – Ohio and Pennsylvania – saw DFS bills introduced once again.

Pennsylvania

Let’s start with Pennsylvania, where House Bill 865 was introduced on March 16th and referred to the Gaming Oversight Committee. The bill’s sponsors are George Dunbar (R – District 56), Alexander Charlton (R – District 165), Susan Helm (R – District 104), Kurt Masser (R – District 107), Eric Nelson (R – District 57), Jason Ortitay (R – District 46), Tommy Sankey (R – District 73), and Jeff Wheeland (R – District 83).

Not that it necessarily means anything, but as one can see, all of the sponsors are Republican, the party that typical has been against online gambling. Though, to be fair, that has seemed to be the case more for poker than for fantasy sports. Four of the sponsors are on the House Gaming Oversight Committee.

The licensing fee for DFS operators under this bill would be $50,000 or 7.5 percent of the previous year’s adjusted revenues, whichever figure is lower. Renewals would only cost $5,000.

HB 865 requires operators to have a number of procedures in place, all of which we have seen before:

•    Verify that the customer is at least 18-years old
•    Publish the rules and prizes before customers plunk down their entry fees
•    Ensure athletes who are actually in the games the fantasy contests are based on can’t participate in said fantasy contests
•    Allow self-exclusion
•    Allow customers to put restrictions on deposits
•    Have problem gambling information obvious and readily available on the site
•    Segregate player funds from operating funds
•    Block script use
•    Prohibit employees of the DFS site from participating

Ohio

Ohio’s daily fantasy sports bill was also introduced in the state’s House on March 16th. House Bill 132 is sponsored by Jonathan Dever (R – District 28) and Robert McColley (R – District 81).

In a press release, Rep. Dever said, “Each day countless Ohioans participate in daily fantasy sports. House Bill 132 assures that these participants are protected under the law, while increasing the accountability of fantasy sports operators.”

With the bill, DFS would be defined as a game of skill, therefore making it legal in the state of Ohio. The press release also listed a number of consumer protections the bill would implement, most of which are the same as we saw with Pennsylvania (quoting the press release here because hey, why comb through the bill when the work was done for me? Right?):

• Ensuring players are 18 or older
• Requiring all fantasy game operators to be licensed by the state
• Offering introductory on-boarding for new players
• Prohibiting any contest based on a collegiate or high school sport or athletic event
• Restricting employees of fantasy sports contest companies from playing
• Requiring “highly experienced players” to be clearly identified for all users to see
• Disclosing the number of entries a player may submit to each contest and the number of total entries allowed for each contest
• Taking measures to protect the privacy and online security of players and their accounts
• Keeping player funds separate from operating funds, ensuring player money is accessible at all times

We have seen DFS sites like DraftKings and FanDuel put in place such “on-boarding for new players” in the past year. Under pressure from the fantasy sports-playing public and regulators alike, most sites now have contests that are only open to beginners in order to help them avoid the experienced pros for a while and therefore have a better chance to win a few bucks. The definition of “beginner” is up to the sites. It’s not a perfect system, as someone who is a bit shark-ish on one site could open a new account on another site and be considered a beginner, but having the policy in place is better than not.

The initial licensing fee in Ohio would be $30,000.

There was some activity on the DFS in Ohio last year, as two contrasting bills were introduced. Senate Bill 375 would have legalized and regulated DFS, as HB 132 now wants to do, while SB 356 would have done the complete opposite. SB 356 would have defined fantasy sports contests as “schemes of chance,” and therefore made them illegal.

A big part of the bills’ definition of a “fantasy sports contest” would have been that they are “contest(s) conducted in which an entry fee is charged.”

Senator Bill Coley (R – District 4), the bill’s sponsor, said, “When you’re taking a rake off the top, you’re breaking the law and you need to stop doing that in the state of Ohio.”

He also said he wasn’t trying to ban all fantasy sports, but considering the way DFS sites profit is to take a rake, that makes no sense at all.

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