The Massachusetts Gaming Commission (MGC) has delivered its promised White Paper on the legal and regulatory challenges posed by daily fantasy sports.
The MGC announced plans to compile the White Paper at a public hearing on the issue in October. The report’s release comes one day before state Attorney General Maura Healey holds a public hearing on the DFS consumer protection recommendations she unveiled in November.
The MGC notes that, on its face, DFS appears to be illegal under the state’s pool betting laws, which make no distinction between games of skill or chance. The state’s lottery laws may also hold potential pitfalls for DFS. That said, the MGC suggests that "the balance of Massachusetts law may make that reading illogical."
The MGC also acknowledges that authorizing DFS could contravene the federal PASPA sports betting prohibition but suggests that the state might want to go ahead and take "clear and decisive state action" and "let the others react as they see fit."
The White Paper keenly observes that the state’s existing public policy position is that "gambling is bad/illegal, except when it is not." The dividing line between bad and not bad gambling is regulation and the public has "largely come to accept gambling as a legitimate form of economic activity, entertainment and public or philanthropic revenue generation … under certain regulatory conditions."
The MGC believes "the issue of ‘whether to regulate DFS’ is largely settled … The real issue is not ‘is DFS legal’ but ‘do we want DFS to be legal, and if so, under what conditions?" As such, the challenge facing state legislators is "to define gambling clearly and carefully, and then regulate accordingly."
The MGC suggests that dealing with DFS alone – while ignoring online gambling, social gaming, eSports, prediction markets, sports betting, etc. – would be regulatory tunnel vision. Instead, the MGC believes a strategy "broad enough and flexible enough to adapt to any and all of these proliferating games may be worth serious consideration."
Striking a conspiratorial tone, the MGC suggests that if the state were to pass omnibus internet gaming legislation that "does not specifically mention DFS, it runs less chance of any outright PASPA challenge." The MGC also suggests that the pro sports leagues’ existing business ties to DFS operators would make them less willing to engage in a New Jersey-style PASPA legal fight.
The MGC believes that, by themselves, the consumer protections proposed by AG Healey "may be inadequate to the regulatory need" as "decision-making may lag far behind the activity itself." The MGC suggests either designating regulatory responsibility to an existing body or establishing a "single, nimble Internet gaming regulatory body" rather than parcel out responsibility for some digital products to one body and some to another.