Massachusetts moves to classify DFS as online gambling

July 27, 2017 4:57 pm.by Michael Maguire

DraftKings daily fantasy sports
THE murky status of daily fantasy sports (DFS) is set to become a whole lot clearer in the state of Massachusetts.

Earlier this week, the Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports released a report urging the State Legislature to fully legalise DFS products.

It also suggested that fantasy gaming should be classified as a form of online gambling and placed under the jurisdiction of the Massachusetts Gaming Commission (MGC).

“At this time, the Special Commission recommends legalising DFS as a subset of online gaming and enacting legislation that would put into law the proposed regulatory, governance, and taxation system described,” read the report, which came to an altogether different verdict on the immediate future of online poker, casino games and sports betting.

“However, the Special Commission recommends not legalising 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 all parties are satisfied with the Special Commission’s recommendations.

The report’s most prominent opponent is DraftKings, which recently scrapped a long-discussed merger deal with rival DFS firm FanDuel amid strong opposition from state and federal regulators.

“We fundamentally disagree with some of the recommendations in the commission’s draft report, particularly its proposal to define fantasy sports as ‘online gaming,’” said James Chisholm, the Boston-based company’s director of public affairs.

“No other state in the country has characterised fantasy sports this way.”

He went on to imply that DraftKings could be forced to relocate if the Massachusetts government acts on the commission’s recommendations.

“DraftKings is proud to call Boston and Massachusetts home,” Chisholm said.

“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.”

Commissioners at odds over DFS findings

Chisholm and DraftKings are not alone in rejecting the notion that DFS constitutes online gaming.

“It’s never been gambling,” said Peter Schoenke, a member of the very same commission that claims otherwise.

“If you do more research, if you try harder, if you have an innate ability to spot player trends and patterns, you win more often, and that’s a game of skill.”

That argument holds no water according to MGC chairman Stephen Crosby, who is also a member of the Special Commission.

“To try to argue that it’s not gaming is to swim upstream,” he said.

Crosby has long championed a broader approach to gaming regulation that dispenses with distinctions between skill and chance, as highlighted in an interview with industry publication GGB Magazine in October last year.

“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,” Crosby said.

“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 skilful and one is pure chance? Should they be regulated any different?

“I just don’t get that.”

A Massachusetts State Legislature vote on the Special Commission’s report is scheduled for Monday, July 31.

What this means for online gambling in the United States

Industry commentators have taken conflicting findings out of this news.

Some say the lack of progress for online poker and casino sites is the real centrepiece of the Special Commission’s report.

However, a move to regulate fantasy sports could forge a clear path towards legalisation for other branches of internet gaming.

If Massachusetts does classify DFS as a form of gambling, it will legitimise the very concept of legal, regulated online betting in the United States.

Most of the country is floating in a legislative grey zone on this issue, but a firm ruling out of Boston could set the scene for similar reforms nationwide.

We should also pay special attention to Mr Crosby’s comments.

The MGC boss believes gambling activity should come under a single regulatory umbrella, regardless of whether or not a game or market requires any skill.

If that is the case, does it not follow that most forms of gaming and wagering should hold the same legal status?

If fantasy sports competitions are licensed and regulated, why aren’t online casinos and sports betting sites?

The fact that so many in the business class DFS as a skill-based game should be cause for optimism in the online poker realm.

DFS operators might not like it, due mainly to the extra expense and oversight that comes with proper regulation, but they could be the key to creating a unified push for gambling reform in the USA.