Massachusetts Panel Recommends DFS Be Categorized As Gambling

A state commission in Massachusetts has recommend that daily fantasy sports (DFS) contests be classified as gambling, a move that is likely to affect the state’s DFS industry in a big way. The panel was set up to consider the issue of legalizing DFS and included Rep. Joseph Wagner and Sen. Eileen Donoghue.

In its recommendation, the panel asked the state legislature to legalize DFS and set up its oversight under the Massachusetts Gaming Commission. It also stated that the games must be regulated under gambling laws. DFS contests had been made legal in the state for two years via a legislation passed last year.

The commission additionally included an amendment which stated that while it was not recommending that other forms of online gaming be legalized, the legislature could use a similar definition and apply the same to gaming formats like eSports or simulcast horse races.

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One of the top DFS operators DraftKings which is headquartered in Boston has argued that DFS games are based on skill and not luck. Players enter contests where they select athletes based on their real life performance and win prize money based on the accuracy of their estimates.

The panel’s report was approved by the Legislature’s Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports with a vote of 5-3. The Commission said that the distinction between luck and skill was not a deciding factor as any game that gives out money for wins is gambling.

Being labeled as gambling could have significant impact on DFS operators as they are likely to face stronger regulations and higher taxation rates. It could also concern the payment processors working with the company

In a statement, James Chisholm director of public affairs with DraftKings said

The commission’s actions today, as we and our partners in the fantasy sports industry pointed out time and time again, could restrain our company’s ability to thrive and create jobs here in Massachusetts.

Commission member Mark J. Cusack, who voted against the report said that the uncertainty caused by the decision could send a wrong signal to startup companies operating in the state. Eileen M. Donoghue, the panel’s co-chairwoman stated that the commission’s recommendation was fair in its assessment and had clarified the legal status for DraftKings and others in the state.

Assistant Attorney General Dan Krockmalnic abstained from voting which suggested that the Attorney General Maura Healey's office remained concerned regarding the implications of the gambling expansion. The report’s recommendations will now move to the legislature for developing a more permanent legislation.


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