A special commission in the state of Massachusetts that has been investigating online gambling and daily fantasy sports (DFS) across the state, voted on the classification of DFS contests. After its Monday vote, the commission recommended that betting on daily fantasy sports should be regarded as a gambling activity.
The recommendation of the Massachusetts commission could turn out to be a serious hurdle for DraftKings Inc., which may be forced to fight against a classification that could hurt its business.
As reported by Casino Guardian yesterday, the members of a Massachusetts’ state commission were set to vote on a major DFS report. On a previous occasion, the commission has explained that such a classification might not be necessary, as daily fantasy sports could be another way for the state to generate money. However, such a categorization could be crucial for DraftKings, the US DFS industry leader. The company has previously shared its concerns that such a decision could increase taxes, seriously threaten the relationship with its business partners, and even start conflicts regarding the legal status of the operator under federal and other states’ laws.
The company, which was established under a law that gave a legal status to the relatively new DFS industry only temporarily, has urged local Legislature to make daily fantasy sports betting legal on a permanent basis. The leading DFS operator in the country as well other competitive companies have put their efforts in avoiding the term of being subjected to gambling rules, calling the local legislature to classify DFS as games of skill, rather than games of luck.
The commission’s report stated that the distinction between skill and luck is not important, and that any game involving betting with real money should be considered as gambling. The report was approved by a vote of 5 to 3 by the Massachusetts’ Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports. The vote was aimed at adopting the final version of the Massachusetts Special Commission’s report in order to bring some clarity on the vague legislative rules on the matter.
DraftKings have released a statement on the Monday’s vote of the Commission, with its Director of Public Affairs James Chrisholm saying that while the report is more of a recommendation, it opposes to the law looking to ensure economic development of the state. The situation for the company is very likely to become serious, as being treated as a gambling operator could result in certain tax liabilities that would have negative effect on the company’s performance.
Until the more serious review of the daily fantasy sports industry in the state, DFS operations have been regulated under a number of customer-protection rules that put some limits on operators and users. These rules were officially unveiled last year by the local Attorney General Maura Healey.
The future of DFS remains unclear for the time being. Still, if the state of Massachusetts makes a final decision to truly classify daily fantasy sports as part of iGaming, this would force the leading DFS operators to fully suspend their operations on the territory of the state. The current state law which allows DFS operations to be carried out in the state of Massachusetts is to expire at the end of July 2018.
- Author
Daniel Williams
