March 8, 2016
This week Virginia Governor Terry McAuliffe signed into law the Fantasy Contests Act. The law represents first of its kind state regulation of fantasy sports contests and operators. Intended to put in place consumer protections and functional guidelines for operators, the law will exempt licensed fantasy sports contests from the State gambling laws.
What are some key provisions of the new Virginia fantasy sports regulatory scheme?
In order to benefit from the gambling law exemption, fantasy sports operators must:
- Pay $50,000.00 to register with the State’s Department of Agriculture and Consumer Services;
- Prevent employees and their family members, as well as athletes, from participating in contests;
- Verify that participants in fantasy sports contests are at least 18 years old;
- Segregate participant-deposits from operating funds and maintenance of reserve accounts in an amount sufficient to ensure payment of all prizes and/or awards to contest winners;
- Disclose to participants the number of entries that each participant may submit to a single contest and ensure that reasonable steps are taken to prevent such players from submitting more than the allowable number;
- Submit to annual independent audits to verify compliance with the statutory scheme; and
- Pay civil penalties of up to $1000.00 per violation of the statute.
The Continued Push to Regulate the Fantasy Sports Industry
Following several news cycles that have seen various state attorneys general threatening the survival of the industry for accusations that fantasy sports allegedly violates their state’s respective anti-gambling laws, the news out of Virginia should be seen as nothing short of a resounding win for the fantasy sports industry. While Virginia marks the first state to enact formal legislation aimed at regulatory the fantasy sports industry, similar legislative initiatives have been undertaken in statehouses across the country including, among others, Wisconsin, Missouri, California, Florida and Indiana. As fantasy sports contests, and the laws and regulations that govern them, continue to grow and evolve, it is essential that fantasy sports enterprises keep abreast of the developing legal landscape. Operators should regularly review their respective contest platforms, entry fee and prize structures with knowledgeable counsel in order to effectively navigate this rapidly changing regulatory framework.
If you are interested in learning more about this topic or pursuing a fantasy sports venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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Related Blog Posts:
New State-Level Fantasy Sports Regulatory Developments
Florida and Washington Poised to Join the Rush to Regulate Fantasy Sports?
