States Investigate Online Fantasy Sports Sites
Fantasy Sports Web Sites Face Tougher Legal Scrutiny
Maryland recently started investigating fantasy online sports gaming operations in a first legal move likely to hit Virginia and the District of Columbia soon.
Maryland Attorney General Brian E. Frosh (D) is checking whether the sites, such as FanDuel and DraftKings, have violated state gambling laws, according to a report by The Legal Forum (www.legal-forum.net).
He has met with officials from the state lottery and gaming commission to discuss possible prosecution of the fantasy sports game operators.
Even if they are not prosecuted, state officials are considering measures for regulating them.
No legislation has been proposed yet on regulating the sites in Virginia or Washington but lawmakers have discussed several proposals behind closed doors.
Online fantasy sports invite users to draft professional players into imaginary teams, which compete against other teams in sports leagues. Entry fees range from 25 cents to thousands of dollars. The winners can get daily payouts.
The growth of the industry and the upsurge of state legislation nationwide to restrict the gaming sites indicate law firms will be kept busy for years defending or prosecuting the operators.
FanDuel, for example, quadrupled its annual revenue last year. The site reported $57.3 million in revenue in 2014 compared with $14.3 million a year earlier.
Fantasy sites can legally pay their players because the federal government has not defined the games as gambling. The game site operators say their fantasy sports are games of skill and not chance.
However, many state legislatures and attorneys general disagree.
Last month, New York Attorney General Eric T. Schneiderman issued cease-and-desist orders to DraftKings and FanDuel. A New York court then ordered the game sites to stop operating in the state until the legal proceedings are completed. A federal judge responded by overturning the state court order hours.
In Maryland, lawmakers such as Delegate Eric G. Luedtke (D-Montgomery), who chairs the General Assembly’s Joint Committee on Gaming Oversight, is pledging a hearing on the gaming sites.