Daily fantasy sports plays defense -- and offense
While the daily sports industry is fighting numerous legal actions against it, it's also mounting a full-court press to influence new laws and state regulations in ways that will allow the daily fantasy sports companies to continue growing and keep gaining in popularity without the stigma now threatening them.
The Fantasy Sports Trade Association (FSTA) has hired lobbyists in about two dozen states as it tries to help craft a regulatory framework for the games popularized by DraftKings and FanDuel and head off any potential legal challenges.
The FTSA has come a long way since the time before questions were raised about the industry's business practices by The New York Times last year. Previous to that, the trade group had trouble attracting interest in its cause from either state legislators or attorneys general, according to Jeremy Kudon, an FTSA outside counsel.
"Unlike other industries, I think these guys were ahead of the game," said Kudon in an interview last month. "We started hiring lobbyists for the states last February before anyone had ever heard of DraftKings or FanDuel. By May we already had lobbyists in 10 states."
According to Kudon, many states are showing little interest in taxing daily fantasy games, noting "that's not so popular with an election coming up." The industry also is willing to accept paying fees to cover the costs of regulation and is prepared to adapt more stringent procedures when it comes to age verification and other consumer protections.
"We may not love the consumer protection statutes ... but we recognize they are important, and they are necessary," he said.
Challenges abound for the daily fantasy sports industry in state capitols.
Eric Schneiderman, the New York attorney general, and his counterpart in Illinois, Lisa Madigan, have called for the games to be shuttered in their respective states. New York, the largest market for the daily fantasy sites, last week upped the ante in its battle and amended its original lawsuit to seek restitution from the companies. Madigan has made her views known in an advisory opinion.
The companies have filed legal challenges in both states.
Daily fantasy sports have plenty of fans in state capitols. Bills to legalize the games have been introduced in New York and Illinois along with California, Iowa and Kansas in recent months. The California bill, introduced by Assemblyman Adam Gray, is scheduled for a committee vote in Sacramento today. If it fails to pass the Assembly by the end of the month, it will start the need to start the process again.
Lawmakers in Indiana who are planning to introduce legalization legislation even invited New York-based FanDuel to relocate to the Hoosier State, where they said it will find a more "business-friendly" climate.
Legal reviews of daily fantasy sports are also underway in Maryland, Pennsylvania, Michigan and Georgia. California State Assemblyman Marc Levine has asked Attorney General Kamala Harris to order DraftKings and FanDuel to quit operating in the Golden State. A Harris spokesperson and Levine couldn't immediately be reached for this story. However, Harris' office has repeatedly said it doesn't comment on pending matters.
Officials in Maryland, Pennsylvania and Georgia also were unavailable. Mary Kay Bean, a spokeswoman for the Michigan Gaming Control Board, said she didn't have a timetable for the completion of her state's review.
Questions about the legality of daily fantasy sports have also emerged in Florida. A 1991 opinion by that state's attorney general's offices argued that fantasy sports games that charge entry fees and award cash prizes violate the state's gaming laws. State Senate President Andy Gardiner and House Speaker Steve Crisafulli have asked their attorneys to see if the current games also are illegal.
"The review is still ongoing," according to Michael Williams, a spokesman for Crisafulli. Williams didn't have a time table for its completion.
When asked whether the attorney general's office still held its earlier view, a spokesman for current Florida Attorney General Pam Bondi provided a statement saying in part that such opinions are "are advisory only and are not binding in a court of law."
Two bills have been introduced in Florida to legalize the games. However, according to Florida Times-Union columnist Tia Mitchell, they face "a tough road ahead with a conservative Legislature that includes many members who have vowed to oppose any legislation perceived to expand gambling."
Editor's Note: CBS has an investment in FanDuel of less than 1 percent of that company's value.