Indiana Legalizes DFS
Looks like we are alternating good news and bad news on the daily fantasy sports (DFS) front. Two weeks ago, Virginia Governor Terry McAuliffe signed a bill into law that regulates (positively) DFS in the state. That’s good! Earlier this week, DFS leaders DraftKings and FanDuel agreed to withdraw from New York as part of a settlement with the state’s Attorney General. That’s bad (though not necessarily unexpected). The latest news swings back to happy territory as the Indy Star has reported that just yesterday, Indiana Governor Mike Pence signed Senate Bill 339, which formally legalized and regulates daily fantasy sports. Two states down, only 48 to go.
According to the regulations set forth in the bill, DFS operators must have mechanisms in place to ensure that all participants are at least 18-years old, to allow players to restrict their own play, and to disclose the maximum number of contests a player is allowed to enter.
The initial application fee for operators is $50,000, with an annual fee of just $5,000. These fees will be directed to the brand new Paid Fantasy Sports Division of the Indiana Gaming Commission. The Division will investigate each operator every three years to make sure they are still in compliance with regulations; the operators are the ones who must foot the bill for this investigation.
DFS contests in Indiana must not be based on the results of “certain horse races,” a clause which the Indy Star says is to protect the interests of the state’s racinos in Anderson and Shelbyville. Essentially, the clause makes it so that people will still have to visit racetracks or off-track betting venues to bet on horses, rather than being able to do it indirectly on a daily fantasy sports site. Those racinos and off-track locations will be permitted to open their own DFS sites, as well.
One interesting regulation is that the DFS operators are required to “make a reasonable effort” to withhold winnings from customers who a behind in their child support payments. The operators can also take an administration fee from those customers in exchange for this responsibility. Obviously, the Department of Child Services will be sharing information with the DFS sites. There are certainly potential issues with this setup, but there are certainly good intentions there.
The regulations also aim to protect minors in other ways; they prohibit DFS operators from advertising “in any publication or medium that is aimed exclusively to juveniles” and forbid operators from hosting DFS events at elementary schools, high schools, or other venues used “exclusively” for student sports (such as, one would think, a little league baseball field).
SB 339 was sent to the governor’s desk on March 17th and signed into law March 24th, the last day he could have done so. Had he done nothing, though, it would have become law by default.
Naturally, the daily fantasy sports companies are thrilled with the developments. On its website, FanDuel posted the following statement:
With Governor Pence signing fantasy sports legislation into law, Indiana has taken a sensible approach by clarifying the legal status of fantasy sports in the state and establishing some tough, but smart consumer protections to ensure games are fair and players know it. We want to thank Governor Pence and the members of the legislature, particularly bill sponsors Representative Morrison and Senator Ford, who listened to the legions of their constituents who love playing fantasy sports. Indiana is the second state to pass positive fantasy sports legislation this year, following Virginia, and more than 20 states are advancing similar legislation. We look forward to working with lawmakers in other states to continue the trend and ensure 50 million fantasy players can continue to play games they know and love.
In a statement, DraftKings director of public affairs Griffan Finan said, “Today, Indiana became yet another state to put in place a thoughtful and appropriate regulatory framework to protect the rights of fantasy players. We thank Governor Pence for his leadership and advocacy and are hopeful that other states across the country will follow Indiana’s lead.”
The law will take effect on July 1st. That does not mean, however, that operators such as DraftKings or FanDuel need to withdraw from Indiana until they receive licenses. Any site that is already operating in Indiana can continue to do so as if nothing has changed. They will, of course, have to apply for a license, including paying the fee, if they want to keep operating in Indiana after the law kicks in. Those who are granted a license can just keep on keepin’ on, while those who are denied would have to exit stage left.