New Jersey Assembly Passes DFS Bill
New Jersey, a state which is fighting to be able to offer legal sports betting, has taken a step towards another form of legalized sports betting (though some would argue that characterization), as the New Jersey state Assembly passed a bill this week which would legalize and regulated daily fantasy sports (DFS). A3532, sponsored by Assemblymen Vincent Mazzeo, Ralph Caputo, Paul Moriarty, and John J. Burzichelli, passed the final Assembly vote easily, 56 to 16 with six members not voting and two abstaining.
As I mentioned and half-joked in my parenthetical comment above, some people (like me!) would argue that daily fantasy sports is sports betting/gambling, just in a different form. The authors of the bill certainly do not share this opinion:
(1) Under the New Jersey Constitution, gambling activities may not be authorized without voter approval;
(2) New Jersey courts define gambling as contests in which the elements of chance are considered to play a predominant role or affect a material impact upon the results of the contest;
(3) Participation in fantasy sports activities cannot be considered gambling under New Jersey laws because fantasy sports activities are contests in which the relative skill of the participants predominates to a degree that chance plays no material role in determining the outcome of the activities;
(4) Further, there is a longstanding and still growing national consensus that fantasy sports activities do not constitute gambling, as shown by the enactment of federal statutes; state laws in New York, Massachusetts, Kansas, Tennessee, and several other states; and current New Jersey regulations adopted by the Division of Gaming Enforcement finding that fantasy sports activities do not constitute gambling; and
(5) Therefore, it is within the New Jersey Legislature’s constitutional authority to authorize and regulate fantasy sports contests.
So it is the skill argument we’re going with here. Now, I would argue that chance does play a “material role in determining the outcome of the activities,” but I am in favor of both daily fantasy sports and traditional sports betting getting legalized, and since I have no real problem with the skill game argument at the end of the day, I am more than happy to roll with this.
Beyond the skill argument, the bill’s sponsors believe DFS should be legalized and regulated in New Jersey because more and more people are participating in the contests and should be properly protected by reasonable regulations. DFS operators, too, deserve a “positive business environment.”
As far as the rules the bill sets forth, there is not much new here when compared to other states. Customers must be at least 18-years old (compared to 21-years old for online casinos and poker rooms), operators must offer self-restriction options, operators must ensure that “the sharing of statistical information with third parties that could affect a fantasy sports activity until that information is publicly available” does not happen, and contests are not based on high school games.
Daily fantasy sports operators who are granted a license will be taxed at 10.5 percent on gross revenue each quarter.
As mentioned early in this article, New Jersey is fighting the federal government to be able to legalize traditional sports betting. Sports betting is illegal in all but four states – Oregon, Delaware, Montana, and Nevada – because of the Professional and Amateur Sports Protection Act of 1992 (PASPA). Those four states petitioned to be grandfathered into sports betting, though Nevada is the only one that actual offers real wagering on sporting events; the others have odd sports lottery-type games. New Jersey had the chance to be grandfathered in, but opted not to a quarter of a century ago.
Now, the state is battling to bring sports betting back, arguing that PASPA is illegal, as it does not allow New Jersey and other states to decide for themselves how they want to regulate gambling. In one filing, New Jersey laid into PASPA, saying:
A congressional mandate that existing state-law prohibitions be maintained in spite of the wishes of the local electorate undermines our system of representative democracy by foisting the blame for an increasingly unpopular federal policy on state officials that must carry out the federally petrified state-law prohibitions. And the matter is made worse by the fact that, while the Third Circuit insists that PASPA affords the States room to respond to the demands of their citizens, the range of permissible policy options remains unknown—purposefully obscured in the decision below and by the ever-shifting positions of respondents and the United States.
In the meantime, Resorts Casino in Atlantic City is preparing to push the sports betting envelope. Earlier this month, ESPN’s David Purdum wrote a piece highlighting, among other things, the construction of an iGaming lounge at the casino. In this lounge, which has its own cashier’s cage, visitors can place prop bets on the fantasy sports results of individual athletes.
“Take Aaron Rodgers to score more fantasy points than Matt Ryan, Julio Jones to top Antonio Brown and Ezekiel Elliott to best DeMarco Murray, and you’ve got a three-leg parlay that pays up to $60,000,” Purdum wrote.
“Feeling a little riskier?” he added. “Plop down $200 on a 500-1, 10-leg parlay across multiple sports, if you want, and go for the $100,000 jackpot.”
What we’re seeing here is fantasy sports wagering with the feel of traditional sports betting. The only difference between the two is that the above example focuses the bets on the performance of players using fantasy sports scoring, rather than the outcome of real sporting events. Resorts is toeing the line between fantasy sports and sports betting, trying to get as close to the latter while not running afoul of the law.