Virginia Passes First-in-Nation Daily Fantasy Sports Rules

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By Joseph Wright

Feb. 24 — Virginia's legislature passed Feb. 24 a first-in-the-nation standalone regulatory scheme for online daily fantasy sports contests.

Under the bill, S.B. 646, operators must register with the state, prevent minors and corporate insiders from participating in contests, segregate player funds from operating funds, and allow players to self-restrict their participation. The bill declares that such regulated contests aren't gambling under state law.

The legislation is a victory for leading daily fantasy sports companies DraftKings Inc. and FanDuel Inc., who are fighting a New York state attorney general enforcement action that argues the sites' contests are illegal gambling in that state. They are also involved in multi-district civil litigation involving at least 80 separate lawsuits .

Federal gambling law contains a carve-out for fantasy sports contests, but only to the extent they are legal under state law. The fantasy sports industry has fought back against the New York attorney general with state-by-state lobbying efforts seeking to establish that online fantasy sports sites don't fall under state gambling laws..

Fantasy Sports Trade Association chairman Peter Schoenke told Bloomberg BNA Feb. 24 his trade group hopes similar bills in several other states will be passing soon.

“Our goal is to clarify that it's legal, put in some basic consumer protections and then work with state legislatures on any other concerns,” Schoenke said. “It's the first of what we hope are several bills that will pass with these goals in mind.”

Virginia's Senate, which had previously passed a different version of the bill, accepted the state House's version today in a 31-9 vote. The House had approved the bill Feb. 22 by an 80-20 margin.

The bill now goes to Gov. Terry McAuliffe (D). McAuliffe's press office didn't respond to a request for comment by press time.

To contact the reporter on this story: Joseph Wright in Washington at jwright@bna.com

To contact the editor responsible for this story: Alexis Kramer at akramer@bna.com

For More Information

The text of the bill can be found at: http://src.bna.com/cQW.