RI Lottery says daily fantasy sports a form of gambling, cannot be lawfully regulated
By Patrick Anderson
Journal Staff Writer
By Patrick Anderson
Journal Staff Writer
PROVIDENCE — The Rhode Island Lottery has thrust itself into a legal debate over daily fantasy sports, arguing that the popular games are forms of gambling and proposals before the General Assembly to regulate them would violate the state constitution.
In a letter submitted Wednesday to the House Finance Committee, Division of Lotteries lawyer Marilyn Shannon McConaghy wrote that "regardless of whether Daily Fantasy Sports games are considered games of skill or games of chance ... they are 'gambling' under Rhode Island law." As a result, passage of any regulation bill would violate the state constitution's requirement for local and statewide referendums to expand of gambling, the letter said.
"Rhode Island law defines 'gambling' as as any 'game' played for the purpose of 'disposing of money,'" McConaghy wrote, "and also prohibits bets, wagers or pools sold 'upon the result of any trial or contest of skill, speed or power of endurance of man or beast.'"
Lottery officials have previously mentioned that, if daily fantasy sports were declared gambling, the state agency would explore the possibility of entering that market.
The lottery's legal argument appears to conflict with an opinion issued by state Attorney General Peter F. Kilmartin in February that concluded that, because daily fantasy sports involve more skill than chance, they are legal.
The lottery's constitutional questions caused Governor Raimondo's administration to back off working on or supporting any daily fantasy sports regulation bills.
"We had looked at drafting [legislation] and had outstanding legal questions," said Raimondo spokeswoman Marie Aberger about daily fantasy sports bills.
The country's two largest daily fantasy sports websites, Boston-based DraftKings and New York-based FanDuel, had been very interested in whether the administration would propose legislation this year.
Leonard Lopes, who is lobbying for both companies this year, emailed Raimondo's deputy chief of staff Kevin Gallagher and legislative director David Cruise on Feb. 1 asking them "to forward a copy of your draft legislation for me to review," according to a copy of correspondence provided by the governor's office.
Not included in the email chain was Raimondo chief of staff Stephen Neuman, whom Lopes emailed twice in January. Aberger said Neuman had asked in "early February" to be taken out of any daily fantasy sports discussions when his wife applied for a job at DraftKings. She was hired as DraftKings vice president of regulatory affairs on Feb. 22, and on March 8 Neuman wrote to the State Ethics Commission asking for guidance.
Although Raimondo's staff did not send any draft bills to the fantasy sports sites, Lopes sent a model bill back to the governor's office nearly identical to the one introduced by Rep. Jean Philippe Barros, D-Pawtucket, that would require daily fantasy sports sites to pay the state a $10,000 fee and abide by a series of consumer protections, including barring from employees from competing.
Page 2 of 2 - On Wednesday Christopher Grimm, also lobbying on behalf of DraftKings and FanDuel, testified in support of Barros' bill at the House Finance Committee.
Grimm said 170,000 Rhode Islanders, which would be roughly 17 percent of the population, play some form of fantasy sports, although not all of them are playing daily fantasy sports, the growing commercial style compared to gambling.
Responding to a question from House Finance Chairman Marvin Abney, D-Newport, Grimm said neither FanDuel nor DraftKings pays taxes in Rhode Island.
Grimm said the lottery's position that daily fantasy sports are gambling was a result of a "misperception" of the games.
http://www.providencejournal.com/article/20160512/NEWS/160519739
http://www.providencejournal.com/article/20160512/NEWS/160519739
