September 13, 2019
On August 16, 2019, fantasy sports operator SportsHub Games Network, Inc. (“SportsHub”) and the New Jersey Attorney General entered into a Consent Order in which SportsHub agreed to pay a $30,000 penalty for operating a fantasy sports website in New Jersey without a permit. Pursuant to the terms of the New Jersey fantasy sports Consent Order, SportsHub took steps to obtain the necessary permits to operate in the State and agreed to amend its business practices so that its Website Privacy Policy and Terms and Conditions complied with the State’s consumer protection laws.
What were the terms of the Consent Order?
SportsHub’s Alleged Violations
In August of 2017, New Jersey enacted the Fantasy Sports Act (“FSA”), which regulates the provision of fantasy sports contests in the State and requires fantasy sports operators to obtain permits from the New Jersey Division of Consumer Affairs (the “Division”) in order to operate in New Jersey. Under the FSA, fantasy sports operators already conducting business in the State were required to obtain the necessary permits by February 6, 2018. The Division alleged that SportsHub failed to obtain a permit by the deadline and continued to operate in the State unlawfully before ultimately applying for a New Jersey fantasy sports permit in September of 2018.
SportsHub operates multiple fantasy sports websites, including FanBall, CDM Sports, and LeagueSafe. The Division alleged that SportsHub’s business practices violated New Jersey’s consumer protection laws, including the New Jersey Consumer Fraud Act, by maintaining different versions of its Privacy Policy and Terms and Conditions on its affiliated websites. It was, therefore, unclear which Privacy Policy or Terms and Conditions consumers were agreeing to when accessing a SportsHub website. SportsHub’s Privacy Policy was also ambiguous. For example, SportsHub’s Privacy Policy stated that it “generally” did not sell, rent, or share consumer information with third parties for marketing purposes without consumer consent.
SportsHub’s Privacy Policy also failed to: 1) clearly and conspicuously disclose that it shared certain personal information with third parties for research studies and explain how consumers could opt-out of this practice; and 2) clearly and conspicuously disclose that it collected personal information from customer social media accounts. Similarly, SportsHub’s Terms and Conditions failed to clearly and conspicuously disclose that it did not issue refunds to consumers and limited consumer claims by requiring consumers to bring any claims or causes of action through binding arbitration only.
Complying with New Jersey Fantasy Sports Law
In addition to paying a $30,000 settlement, pursuant to the terms of the Consent Order, SportsHub agreed that it would not conduct its fantasy sports business in New Jersey without obtaining a permit from the Division. It also agreed to maintain separate and distinct Privacy Policies and Terms and Conditions for each of the websites that it operates. These policies must clearly and conspicuously disclose whether SportsHub: 1) collects personal information from consumers’ social media accounts; 2) shares personal information with third parties; and 3) issues refunds to consumers. SportsHub will also need to revise its Terms and Conditions to require consumers to opt-in if they agree to binding arbitration in the event of a dispute. In addition, the company agreed not to sell, rent, or share personal information with third parties for marketing purposes without consumers’ affirmative consent.
SportsHub is the first New Jersey fantasy sports operator to be penalized under the FSA. Because New Jersey is just one of a growing number of states that regulate fantasy sports, it is important for fantasy sports operators to understand the developing laws and regulations in any jurisdiction in which they do business. If you need assistance in complying with New Jersey’s Fantasy Sports Act or other fantasy sports laws, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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