MASSACHUSETTS SPECIAL COMMISSION RECOMMENDS REGULATING DFS AS ONLINE GAMBLING
Steve Ruddock
7/25/17

On Tuesday, the Massachusetts Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports released a draft of the report it will submit to the legislature next week.
The draft appears fairly complete. But the Commission will hold off on a final vote until Monday, July 31, in order to give members a chance to fully review the document.

According to Statehouse News Service (paywall), the Commission is recommending the legislature permanently legalize daily fantasy sports. In doing so, it advised placing DFS under the umbrella of “online gaming.”

The Commission also recommended holding off on legalizing other forms of online gambling… for now.

“At this time, the Special Commission recommends legalizing DFS as a subset of online gaming and enacting legislation that would put into law the proposed regulatory, governance, and taxation system described above,” the report says.

“However, the Special Commission recommends not legalizing more expansive online gaming at present, particularly in consideration of the fact that two resort casinos are not yet open, but urges re-evaluation in the near future and legislative oversight to continue to evaluate online gaming and activity at state and federal levels.”

NOT THE BEST NEWS FOR ONLINE GAMBLING SUPPORTERS

The Commission’s recommendation to hold off on legalizing online poker and online casino games is a bit disheartening.

However, if the legislature follows the Commission’s advice and develops a broad category of online gaming, including DFS, the legalization of other forms of online gambling becomes a matter of when, not if.

Furthermore, depending on the structure, and what authority lawmakers grant the Massachusetts Gaming Commission, legislation may not be a requirement of legalization.

Lotteries in several states have the authority to take their games online without legislative approval. If Massachusetts grants this same type of authority to the MGC, we might see a similar thing happen with online gambling.

A BROAD DEFINITION OF GAMING IS A WIN FOR THE MGC

The recommendation to include DFS as a subsection of online gaming isn’t surprising.

MGC Chairman Stephen Crosby, one of the members of the Special Commission, has long advocated for a nimble approach to regulations.

Crosby feels this approach bypasses the skill versus luck arguments. It also allows regulators to quickly adjust to an ever-evolving industry.

In an October 2016 interview, Crosby explained his rationale for wanting a broad definition of gambling along the lines of “purchasing an opportunity to win an award on a future event”:

“There have been millions of dollars spent litigating whether DFS is a game of skill or a game of chance, and if it’s some skill is it enough skill to make it avoid the regulations of games of chance. That just makes no sense to me.

“What difference does it make as a matter of public policy whether you gamble on the throw of dice or the throw of a dart? Does it make any difference that one is skillful and one is pure chance? Should they be regulated any different? I just don’t get that.”

DFS INDUSTRY TAKES UMBRAGE WITH RECOMMENDATION

DraftKings isn’t a fan of placing DFS in the online gaming category.

“We fundamentally disagree with some of the recommendations in the Commission’s draft report, particularly its proposal to define fantasy sports as ‘online gaming.’” James Chisholm, director of public affairs for DraftKings, said in a statement to Statehouse News. “No other state in the country has characterized fantasy sports this way.”

No other state has tried to classify DFS as online gaming, but several states have categorized DFS as gambling. This includes Nevada, where DFS operators must have a gaming license in order to operate.

Chisholm went on to say:

“DraftKings is proud to call Boston and Massachusetts home. We have more than 300 employees from 79 cities and towns across the state, and while we are committed to growing and innovating here, this provision, if adopted, could impact our ability to do that.”