New Jersey’s two-year-old fantasy sports law has claimed its first victim.
On Aug. 22, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced Minneapolis-based SportsHub had agreed to pay a $30,000 penalty for unlawfully operating a fantasy sports site in the state.
SportsHub now has a permit to operate fantasy sports games in NJ. However, it was still accepting customers from NJ for most of 2018 even though it did not and was required to at the time.
In fact, SportsHub did not apply for a permit until more than a year after NJ passed the 2017 Fantasy Sports Act and close to seven months after the Feb. 6, 2018 deadline to either apply for a permit or cease operating in the state.
SportsHub operates various fantasy sports contests under the following brand names:
- CDM Sports
- National Fantasy Football Championships (NFFC)
- Whatif Sports
Other SportsHub violations in New Jersey
An NJ Division of Consumer Affairs investigation actually revealed more than just the fact SportsHub did business in NJ without a permit.
The investigation also showed SportsHub failed to clearly disclose several things to consumers, including:
- That it collects information from consumers’ social networking accounts and shares it with third parties.
- That it limits consumers’ rights to sue the company except through binding arbitration.
- SportsHub has a policy of never issuing refunds.
The investigation also revealed SportsHub violated the Consumer Fraud Act in various ways.
Firstly, by failing to disclose it shares its customers’ personal information for marketing purposes without consent. Secondly, by falsely advertising on its Leaguesafe online payment system website that it is “the only fantasy sports consumer protection agency on earth.”
SportsHub admits all wrongdoing
SportsHub admitted to all wrongdoing, agreed to change its business practices to resolve the issues, and pay a $30,000 penalty. The company also agreed to comply with all NJ laws and regulations going forward.
Acting Director of the Division of Consumer Affairs Paul R. Rodríguez said NJ will continue to keep a close eye on SportsHub and all fantasy sports operators:
“We are pleased that SportsHub has obtained the necessary permits to do business in New Jersey and has agreed to abide by all our laws and regulations going forward. As the fantasy sports industry continues to grow in New Jersey, we will closely monitor the activities to ensure that all operators are playing by rules.”
NJ’s Fantasy Sports Act
SportsHub is the first fantasy sports operator to be penalized under NJ’s Fantasy Sports Act. The 2017 statute essentially legalized and regulated internet fantasy sports in NJ.
Fantasy sports differs from traditional single-game sports betting in New Jersey. Fantasy sports players assemble teams made up of pro athletes and enter the teams in daily or season-long real-money contests using the athletes’ personal statistics to keep score. It, therefore, operates in a different sphere separate from NJ online casinos, too.
Grewal said the Fantasy Sports Act was designed to let consumers play and protect them from unscrupulous operators. He believes it’s working:
“New Jersey’s fantasy sports law offers fans an opportunity to fully immerse themselves in the sports they love, while ensuring a safe and enjoyable experience for all who participate. As the settlement announced today illustrates, New Jersey enforces the laws in place to ensure transparency and protect consumers from hidden threats to their online privacy.”