ICE: DFS – a level playing field?

ICE: DFS – a level playing field?

Tuesday, February 2, 2016 Totally Gaming
Panelists suggested that DFS could be restricted by Federal law

Daily fantasy sports (DFS) operators are likely to face a series of legal showdowns in the US that could feature their investors and partners, Alan Milstein, chairman of litigation department at Sherman Silverstein, said today (Tuesday) at ICE Totally Gaming.

Speaking on a panel entitled ‘Understanding the regulatory landscape for DFS and sport betting in the US’, Milstein said that sports franchises and leagues, as well as payment providers, could be liable if DFS loses its legal battles.

In November a class action lawsuit was reportedly filed in Florida against 50 companies that do business with DraftKings and Fanduel.

“The DFS operators were clever in saying they weren’t gambling for years,” Milstein. “There’s no question in anyone’s minds at this point that it is gambling.

“Many states that outlaw gambling also include the possibility of finding liable anyone that facilitates payments, including investors, and these entities can be sued too.

“Many people are losing lots of money on DFS, with 1.5% of players on these sites taking 90% of the money. That is an argument for it being an unregulated, unfair gambling operation at the moment.

“People are losing money and maxing out their credit cards and I think we’re going to see change pretty soon.”
Daniel Wallach, shareholder, Becker & Poliakoff, said that the DFS sector has fought against being characterised as gambling.

“I think this could be heading for a Federal approach for DFS as well as sports betting,” he predicted. “I don’t think we’ll have 50-state clarity on this for at least a year – maybe never.”

Susan Hensel, Bureau of Licensing, Pennsylvania Gaming Control Board, said that she would have numerous checks regarding DFS if it becomes regulated and licensed.

“The suitability of the operators would be one issue, and we would also be concerned about the customer, in terms of their age, identity and location verification,” Hensel said.

“We would want to look at player protections and also fairness in the games so players know the rules. We want to make sure protections are in place with respect to technical security.

“We’d also be concerned with game integrity, and it would be very important to ensure enforcement provisions. If we have all those protections in place, then DFS players would be in a good place.”

Wallach also said that the pending appeal case over sports betting in New Jersey against a series of professional leagues could lead to a huge change across the country.

“New Jersey has an excellent chance of winning, but I would say the leagues are favourite at this juncture,” Wallach said. “This is about far more than New Jersey, and what’s good for New Jersey will be good for every other state.

“If New Jersey wins, we’ll have full-on sports betting in every state within three years.”

The NBA basketball league has called for Federal regulation of sports betting, but is opposing the state of New Jersey in the case.

“We think the wrong way to start sports betting is in violation of Federal law,” Dan Spillane, senior vice-president and assistant general counsel, NBA, said.

“We’re supportive of sports betting, but only if it is happening in the right way.”

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