North Carolina Backs Off Daily Fantasy Sports Regulations: Would Foster Gambling

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Published on:
May/18/2017

RALEIGH – (Associated Press) - Some North Carolina legislators turned back efforts Wednesday to regulate the fast-growing yet uncertain fantasy sports industry, following arguments by social conservatives that it would further legitimize gambling in the state.

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A House committee rejected recommending a bill to subject fantasy sports contest outfits to registering with the Secretary of State’s Office and meeting minimal operating standards. State Alcohol Law Enforcement agents would have been tasked to ensure the requirements were met, with possible fines for violating companies.

Nearly a dozen states have regulations. Bill sponsor Rep. Jason Saine told colleagues North Carolina should join them to prevent potential future industry abuses in a state where he says 1.6 million people already are participating in the online contests.

Fantasy sports games usually entail creating lineups of players from sports leagues — like the NFL and Major League Baseball. The fantasy participants, with daily, weekly and season-long games, score points and win cash prizes on individual statistical performances. Top fantasy sites include FanDuel and DraftKings.

“The bill contains commonsense consumer protections that we’d like to embrace,” said Stephen Krombolz, CEO of FantasyDraft.com, based in Cornelius. He told the committee the company serves thousands of customers in the state.

But North Carolina Family Policy Council lobbyist John Rustin said the bill would represent a “massive expansion of legalized gambling” in a state where it’s essentially currently limited to the state-run lottery and the casino run by the Eastern Band of Cherokee Indians. Rustin said the bill also was weak in ensuring that children under 18 couldn’t go online and play and in levying fines as little as $1,000 for violating proposed rules.

Saine, a Lincoln County Republican who said he plays in fantasy sports contests, said he believes they don’t meet the state’s definition of gambling, which is defined by anyone operating or betting on “any game of chance” with money, property or anything of value. The bill would have exempted fantasy sports from illegal gambling provisions.

He argued fantasy sports contests are games of skill whose outcomes “are determined by accumulated statistical results and the performance of individuals. This definition clearly separates fantasy sports from gambling activity.”

But Rustin said there are many variables in the contests that are out of the control of participants.

“The elements of chance far outweigh the elements of skill,” Rustin said before the committee voted 7-4 against recommending the bill to another panel.

The action means it’s unlikely the idea would be considered again until 2019. But playing the games won’t fade in North Carolina, since games are played online and lawmakers said the law remains ambiguous about whether fantasy meets the state’s definition of gambling.

While the industry has soared in recent years as sports fans embrace statistics and chances for big cash prizes, it’s also seen a great deal of contraction. In April, more than two-thirds of companies that existed at the same time last year have shuttered, changed focus or joined with competitors, according to the Fantasy Sports Trade Association.

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