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The daily fantasy sports industry: Regulate us

As DraftKings and FanDuel, the leading daily fantasy sports sites, battle New York Attorney General Eric Schneiderman's and others' efforts to shut them down, they're also working with legislators around the country to craft a regulatory framework for their nascent industry.

According to the National Conference of State Legislatures, bills seeking to oversee the industry have been introduced in a dozen or so states over the past few months. Separate reviews are underway in Maryland and Pennsylvania, where officials have misgivings about the industry.

Massachusetts Attorney General Maura Healey recently proposed sweeping regulations for daily fantasy sports sites, including broad consumer protections and greater transparency. DraftKings and FanDuel reiterated their support for Healey's approach at a recent hearing before the Massachusetts Gaming Commissions.

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The industry continues to insist that daily fantasy sports are games of skill and not chance and, therefore, aren't gambling. However, Peter Schoenke, chairman of the Fantasy Sports Trade Association, said the industry is willing to back reasonable regulations and was even open to a recently proposed regulation in Massachusetts that would prohibit expert players from participating in tournaments geared for beginners.

"Despite the court case (in New York), we're optimistic about a lot of the other developments we have seen at the state level," Schoenke told CBS MoneyWatch. "We have seen positive (proposed) regulations issued by the Massachusetts attorney general. We have seen some bills that have been proposed in Florida and Illinois that clarify that fantasy sports is legal."

The situation in New York is fluid. Hours after a state judge on Friday ordered DraftKings and FanDuel to remain closed in the state, the companies convinced an appellate judge to stay the order. Meanwhile, bills are pending in the state legislature that would legalize the games.

A public meeting will be held tomorrow in Sacramento, where Assemblyman Adam Gray (D), who chairs the committee that regulates gaming issues in California, has introduced a bill to license daily fantasy sports operators.

"In California, all gaming activities are regulated down to church bingo," Gray said in an interview, adding that he has played fantasy sports for years and noticed the surging popularity of the daily games. "It struck me with the big push and the incredible growth in the industry that it's going to be in need quickly of some regulatory oversight."

However, California Assemblyman Marc Levine (D) has asked Attorney General Harris to shut down FanDuel and DraftKings, arguing that they're operating illegally under California law. In response, DraftKings urged its players to voice their objections via email, an effort that has failed to sway Levine.

"I wrote the letter to the attorney general a week before Schneiderman's decision in New York," Levine said in an interview. "I know that her office is doing their due diligence."

Levine didn't have a timetable for when Harris would make a decision, and a spokeswoman for the attorney general declined to comment on a pending matter. Levine's bill is backed by Stand Up for California, a nonprofit watchdog of the gaming industry.

Said Cheryl Schmitt, the organization's executive director: "It would take a constitutional amendment to legalize daily fantasy sports in California."

Editor's note: CBS has an investment in FanDuel of less than 1 percent of that company's value

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