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In-house Access Insight & Commentary for In-House Counsel Worldwide

What In-house Counsel Can Learn From the Fantasy Sports Industry

Posted in ACC Docket, Miscellaneous

(Originally appeared on ACCDocket.com)

Fantasy sports might be a fan favorite, but they’ve faced tough opponents in the legal world. In ACC Docket’s upcoming September issue, Joy R. Butler and Ellen M. Zavian discuss the legal odds stacked against the fantasy sports businesses, from company promotions to rightful uses of players’ images. Much has occurred within the fantasy sports industry in just the 75 days since they submitted their article, so the authors sent us a few updates on what has transpired:

•    As of August 5, Colorado, New York, and Missouri have joined Indiana, Mississippi, Tennessee, and Virginia to make seven states that adopted laws legalizing fantasy sports in 2016. A Massachusetts’ bill awaits the governor’s signature.

•    In mid-June, the New York legislature passed a bill legalizing fantasy sports, a potentially huge victory for the industry. Governor Andrew Cuomo requested the bill on August 2 giving him until August 13 to sign it into law or veto it. It only took him until August 3 to sign the bill, making fantasy sports legal in New York.

Screen Shot 2016-08-22 at 2.45.57 PM•    While New York fantasy sports legalization is a huge victory for the industry, it will not halt Attorney General Eric Schneiderman’s pursuit of fraudulent conduct and false advertising claims against DraftKings and FanDuel.

•    Legislation stalled in at least twenty states. In one of the more dramatic failures, Illinois legislators rescinded their support of DFS legislation amidst allegations that fantasy sports lobbyists tried to buy Illinois legislator votes.

•    State attorneys general remain active. Without directly addressing the legality of games offered by any specific operator, the West Virginia Attorney General, applying the dominant factor doctrine, opined that fantasy sports games, of the sort described in the (now dead) West Virginia Senate Bill 529, are legal. In contrast, Delaware ordered DraftKings, FanDuel, and Yahoo to cease offering money-based games in the state.

•    For the moment, DFS play continues in at least ¾ of the states — albeit perhaps, more conservatively. After spending a combined $150 million on marketing in 2015, FanDuel and DraftKings are reportedly reducing their 2016 ad spending by 50 percent and 75 percent, respectively. FanDuel has issued a user Bill of Rights that incorporates many of the new regulatory requirements with its focus on transparency and a level playing field.

For more news on fantasy sports, Joy has blogged about the New York law and mentioned the forthcoming ACC Docket article in Eight Facts about New York’s Legalization of Fantasy Sports.