Healey Proposes Regulations on Daily Fantasy Sports

While New York, Nevada, and Illinois officials are moving to ban daily fantasy sports jackpot sites as illegal gambling, Massachusetts Attorney General Maura Healey is moving to keep them going as carefully regulated business.

Tuesday, Healey aides took testimony on her regulatory plan from representatives of Boston-based DraftKings, critics of daily fantasy sports and foes of gambling outright. Healey wants to ban team, league, and fantasy-site employees from taking advantage of inside information, require sites like DraftKings and FanDuel to run separate games for amateur players and big-dollar experts, and provide more disclosures and protections for consumers. After considering additional testimony between now and Jan. 22., Healey plans to issue final regulations sometime this winter, aides said.

But for all the explosive popularity of daily fantasy sports jackpot sites, it's still easy to find sports fans who steer clear because they doubt they're fair contests for amateur gamblers – especially after reports that the top 2 percent of players have accounted for 90 percent of winnings in many contests, often through designing complicated computer algorithms to pick teams of players.

“I worry that they aren’t’’ fair, said Boston Bruins fan Jacob Vezina of Hartland, Vt., visiting the TD Garden Tuesday. “I don’t have that much confidence in them.’’

Brian Conley of Winchester, Mass., said he doesn’t favor outlawing the sites, but “I wouldn’t say they're fair to the average person. If you’re an expert, you probably have a much better chance of winning.’’

Keith Bull of Wilmington, Mass., said: “If they can figure out a way to regulate it, they should.’’

Peter Schoenke, chairman of the Fantasy Sports Trade Association, said his group generally backs Healey’s plans, with some reservations. “We like the approach they're taking. You know, they need some improvements from our standpoint, but I think we'll get there,’’ Schoenke said.

In general terms, Schoenke said, the group supports separate wagering for high-dollar players and beginners or novices. But he rejected claims the games are inherently unfair and tilted towards the so-called sharks placing huge volumes of bets.

“There's always one or two people that are better than everyone else, and it's because they do their homework,’’ Schoenke said. “It’s a contest of skill, and so therefore, there's going to be people who won more than others … It’s a skill-based game. There's going to be a small number of winners. That's inherent in the game, in any skill-based game. It's just like in a golf tournament.’’

But Mark Gottlieb, executive director of the Public Health Advocacy Institute at the Northeastern University School of Law, said if Healey succeeds in actually enforcing the ban on big-dollar big-volume bettors playing in the same games as people playing $10 or $20 games, the industry’s business model collapses.

“It’s necessary to attract large numbers of inexperienced players, sometimes known as ‘fish,’ to feed those sharks and ensure that there's big money contests with profitable rakes for the operators,’’ Gottlieb said. “If pros cannot effectively ‘bum-hunt’ or use tools to find inexperienced players to challenge, they won’t play, and the model falls apart.’’

DraftKings offered general praise for Healey’s proposal, but general counsel Griffin Finan said: “There are tough regulations that will have a significant effect on the industry and will be costly and complicated to implement.’’ The company specifically opposes Healey’s call to raise the minimum age for playing in the games from 18 to 21, and to impose a default cap of $1,000 a month on how much players can play unless they fill out forms demonstrating they can afford bigger risks.

“Consumers are in the best position to set their own limits due to their financial position,’’ Finan said, adding that DraftKings now has 50 people working full-time on setting up systems to comply with all the regulations that Healey is proposing. “Some of these regulations go too far and will limit the consumer enjoyment without offering additional protections,’’ Finan added.

Also at the hearing, gambling foes including Les Bernal of Stop Predatory Gambling made the argument that fantasy sports wagering should not be regulated, but banned.

“By entering the world of daily fantasy sports, we are essentially in Massachusetts doing the biggest expansion of gambling in state history,’’ Bernal said. “We are now opening internet gambling into every living room, every bedroom, every smartphone in the state of Massachusetts.’’

Bernal said he believes getting states to sign on to accepting and regulating daily fantasy sports is a step towards a master plan to open the floodgates to online gambling.

“Where the money is in the endgame,’’ Bernal said, “in creating Internet gambling to market more extreme forms of online gambling to citizens in this state and ultimately around the country.’’

Healey, in a statement after the hearing, said: “We will review the comments that were presented today and throughout this public process. Our focus is on finalizing these strong regulations that will bring needed transparency to this industry and protect consumers, minors, and their families.” Healey said her office will continue to accept comments through the close of business on Jan. 22 through this link online or by sending emails to DFSRegs@state.ma.us.