Capitol Alert

Video: Daily fantasy sports bill passes Assembly in blowout

Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at the company’s offices in Boston. Several states are targeting fantasy sports operations as illegal gambling. In California, the Assembly passed a bill to regulate the activity.
Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at the company’s offices in Boston. Several states are targeting fantasy sports operations as illegal gambling. In California, the Assembly passed a bill to regulate the activity. The Associated Press

The daily fantasy sports industry moved closer to official recognition in California on Wednesday as the state Assembly passed a bill regulating the popular contests, with lawmakers declining to await word from the state’s attorney general on whether the games are an illegal form of gambling.

Officials estimate that millions of people play fantasy sports, which allow contestants to assemble teams of athletes and then wager on their daily performances. Regulators and state attorneys general, though, have taken notice as the industry’s adherents and profits have boomed, bankrolling TV advertisements that tout substantial cash prizes.

In some states, such as Texas, officials have deemed the practice illegal gambling and moved to shut it down. California Attorney General Kamala Harris has so far not followed suit. She has not publicly said whether or not the practice constitutes gambling.

“We can’t comment on ongoing or potential investigations,” Harris spokesman Rachele Huennekens said in an email.

62-1 Assembly vote Wednesday to approve bill that would regulate fantasy sports websites in California.

Lawmakers have gotten involved in the meantime. Wednesday, the Assembly voted 62-1 for legislation that would authorize daily fantasy operations that obtain licenses from Harris’ state Department of Justice. Assemblyman Adam Gray, D-Merced, called his bill, AB 1437, a consumer protection measure that “does not make a determination on the current legality of the games.”

“That is a question that has been posed to our attorney general, and I trust she is thoroughly studying that question,” Gray said, and in the meantime, “it is our responsibility as legislators to make sure (constituents) are playing in a safe and regulated game.”

As it battles threats to its existence in multiple states, the daily fantasy sports industry has intensified its engagement with Sacramento.

Only one ‘no’ vote was cast against AB 1437 as the Assembly passed the measure on January 27, 2016. The bill ultimately died, but lawmakers in 2018 pushed ahead to legalize sports betting in California.

An industry group called the Fantasy Sports Trade Association, whose members include major fantasy sports companies DraftKings and FanDuel, went on the offensive with ads denouncing Assemblyman Marc Levine, D-San Rafael, who has called the games a form of gambling and was the only vote against Gray’s bill. Last week, DraftKings contributed $5,000 to a ballot measure committee controlled by Gray.

Levine, who is criticized by name in the radio spots playing in the Bay Area, said he plays and enjoys fantasy football. But he reiterated his position Wednesday that “this game is gambling – there is no doubt about it.”

“In the mad rush to authorize this billion-dollar industry affecting millions of Californians, it is important that we get this right,” Levine said, arguing that voters need to approve the activity before lawmakers can act.

“By passing special-interest bills like this, we are encouraging this kind of bullying in the future,” Levine said in reference to the radio spots.

Fantasy Sports Trade Association chair Peter Schoenke called the ad buy targeting Levine, which includes radio spots sending listeners to a website with a form for contacting their elected officials, a way to “activate our fantasy sports players in California.”

The Fantasy Sports Trade Association has maintained a neutral position on AB 1437 as the organization studies what kinds of fees and requirements would be attached to the licenses. But Schoenke called the bill a move in the right direction.

“We want to be supportive of the legislative effort in California,” he said.

Jeremy B. White: 916-326-5543, @CapitolAlert

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