Could New Jersey Pass A Law To Oversee Daily Fantasy Sports?

Written By Dustin Gouker on April 4, 2016

[toc]New Jersey recently introduced a piece of legislation to formally legalize and regulate the daily fantasy sports industry — joining more than two dozen states that have looked at this issue this year.

The bill and the backstory for NJ and DFS

New Jersey actually started looking at DFS last fall, with a proposed bill from state Sen. Jim Whelan that was not formally introduced at the time. Interest in DFS was at an all-time high in New Jersey in November, when the Assembly held an informational hearing.

Not much was settled at that hearing; of interest at the time was the fact that Assemblymembers apparently had little desire to consider DFS while the NJ sports betting case was still active in the federal appeals system. (A verdict in that case — in which New Jersey is attempting to legalize sports betting at its casinos and tracks — is expected in late spring or summer.)

In the wake of that flurry of activity, months passed without any action taken until March. Then, the bill that Whelan ended up introducing looked much like the bill be floated in November, with some tweaks.

Whelan has this to say to NJ.com at the time:

“I can confidently say that we have a good bill that puts important consumer safeguards in place while not impeding people’s ability to play and enjoy daily fantasy sports. As I have said from the beginning, New Jersey can be a model for the rest of the nation of how to effectively and efficiently regulate daily fantasy sports.”

Details of the NJ fantasy sports bill

The bill, introduced March 7, has also passed a vote in the Senate State Government, Wagering, Tourism & Historic Preservation Committee. It’s waited on further action since then.

The bill sets up a regulatory scheme that would oversee DFS, along with licensing and taxing operators. Here are some of the key provisions of the bill, along with notable changes from the original bill in November:

  • The Department of Law and Public Safety is in charge of DFS oversight. (The NJ Department of Gaming Enforcement was originally the overseeing body, when the bill was floated in November.)
  • A “permit fee” will be charged to daily fantasy sports provider in the state The amount of that fee is not set in stone; it merely says the fee should be “an amount sufficient to cover the division’s cost in issuing daily fantasy sports permits and overseeing the conduct of such games.”
  • Operators are subject to an “annual registration and renewal fee in an amount equal to 9.25 percent of daily fantasy sports gross revenue.”
  • At least one of a DFS operator’s servers must “be physically located within the boundaries” of Atlantic City. If a casino is also an operator, all of its servers must be located in AC.
  • The bill takes no position as to whether DFS is a game of skill or gambling. (This is another change from the floated bill, which said DFS “shall be a game of skill and shall not be considered to be a game of chance.”)
  • Licensed casinos may partner with DFS operators.
  • Players must be at least 18 years old (down from 21).
  • The bill institutes consumer protections, such as preventing play by operator employees and segregation of player funds from operational funds.
  • Fines for failure to comply with the bill, if enacted, are established up to $200,000.

What’s next for the NJ bill?

It remains to be seen if the legislature will actually consider passing a DFS bill while the sports betting case is still in play. New Jersey likely wants to do nothing to jeopardize that case, even if its odds of ultimately prevailing are slim.

Unlike some other states, New Jersey’s legislature is not up against a spring deadline for passing bills before the November elections. That means there is plenty of time to get the bill to the finish line.

Of course, the DFS industry is pushing back against the bill because it doesn’t call it a game of skill:

And because of that, the companies oppose the bill, said A.J. Sabath, a representative of the firms and the trade industry.

He said the bill as currently written would “create a significant level of uncertainty about the future of our industry in New Jersey.”

If New Jersey passes a regulatory bill, but most of the major players — like DraftKings and FanDuel — stay out, that pretty much defeats the purpose of passing a bill at all.

The legislation still has to make it through a vote in the Senate, an Assembly committee hearing, and the Assembly. The bill can — and likely will — be amended between now and then.

It’s clear, however, that the ending of the story for daily fantasy sports in New Jersey is far from written.

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner. He has played poker recreationally for his entire adult life and has written about online poker and the online gambling industry since 2008.

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