January 14, 2016
Florida has cleared a key procedural hurdle in the State’s quest to legalize and regulate fantasy sports contests and their operators. Earlier this week, a Florida House subcommittee, the Business & Professions Subcommittee, passed a bill that would explicitly legalize fantasy sports contests under Florida state law, containing a regulatory framework that would provide critical consumer protections. The bill must head to the House Regulatory Affairs Committee before it can be voted on by the full House.
What are some of the key components of Florida’s proposed regulations?
- Upfront licensing fees of $500,000 for fantasy sports operators and annual renewal fees of $100,000;
- Prohibitions against participation in contests by operator employees and their respective family members;
- Restrictions on the number of contests that a single individual may enter;
- Segregation of participants’ entry fee funds from operational funds;
- Operators must verify that participants are at least 18 years of age or older;
- Operators must contract with third parties to conduct annual audits;
- Civil penalties of up to $1,000 per violation.
Meanwhile, a bill has recently been introduced before the Washington State Legislature which seeks to classify fantasy sports contests as games of skill rather than chance. The proposal is designed to sanction contests that may otherwise violate the State’s prohibition against online gambling, and contemplates a regulatory scheme for licensed fantasy sports operators. The details of a regulatory regime, however, have not been yet been disclosed.
The Continued Widespread Push to Regulate the Fantasy Sports Industry
The news out of Florida and Washington comes on the heels of similar regulatory efforts undertaken by the respective legislatures of California, Wisconsin and Indiana, as well as the recent endorsement of regulation by the Massachusetts Governor and the Commissioner of the NBA. 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.
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