Daily fantasy sports claimed a victory yesterday, as the “Fantasy Contest Act” was signed in Virginia, which outlines how DFS sites can legally operate in the state. With the move, Virginia becomes the first state to legalize DFS.
The new bill was approved back in February, and was a much-needed victory for the daily fantasy industry. The industry has seen a number of challenges to its operations, and seemed to suffer blow after blow in recent months, such as ESPN ending their exclusive relationship with DraftKings and payment processors backing out of deals due to the ongoing question of legality regarding the fantasy sports games.
According to The Verge, under the new bill, daily fantasy sports sites must undergo independent audits every year, pay a $50,000 fee to operate, ensure that players are 18 or older, and ban employees from participating in public contests, among other regulations.
Of course, some daily fantasy operators aren’t keen on the $50,000 fee, as noted by the Virginia Pilot.
“It really puts us out of business in your state,” said David Gerczak, co-founder of the high-stakes, seasonlong fantasy football site myffpc.comwith Alex Kaganovsky. Gerczak said if operations like his are required to pay a $50,000 initial fee to do business, he may stop offering contests to Virginians.
Legal Sports Report’s Dustin Gouker scoffed at the idea that the application fee was unreasonable.
1/2 To think that states are going to only ask for $5,000/company to any type of oversight was always a pipe dream. https://t.co/zrp8kg4tAY
— Dustin Gouker (@DustinGouker) March 8, 2016
2/2 Having a fee paid as an offset against a tax is more realistic. Ideas floated by @OPReport regarding fees: https://t.co/WBpJUIGrq2 #DFS
— Dustin Gouker (@DustinGouker) March 8, 2016
Virginia will recognize the games as skill and not illegal gambling.
DraftKings released a statement saying they are hopeful other states will follow Virginia’s lead.
“Today, Virginia became the first state in the nation this year to put in place a thoughtful and appropriate regulatory framework to protect the rights of fantasy players,” the company said in a statement. “We thank Governor McAuliffe for his leadership and advocacy and are hopeful that other states across the country will follow Virginia’s lead. We will continue to work actively to replicate this success with dozens of legislatures and are excited to continue these efforts.”
“Governor McAuliffe and members of the Virginia legislature took a thoughtful, deliberative approach to establishing a law that safeguards fantasy sports while installing consumer protections,” said Cory Fox, a lawyer for FanDuel, in a statement. “Virginia showed real leadership in being the first state to pass smart regulations this year and we hope to see more states follow Virginia’s lead in the months ahead.”
There’s still plenty to be sorted out, but the bill is a huge breakthrough and a monumental day for the DFS industry. Will other states follow in suit? or is Virginia an anomaly and the demise of DFS is still imminent? Time will tell.=
About Liam McGuire
Social +Staff writer for The Comeback & Awful Announcing. Liammcguirejournalism@gmail.com