On Thursday, December 10, 2015, the Massachusetts Gaming Commission (MGC) held a daylong forum to educate the MGC commissioners, staff and the public on Daily Fantasy Sports (DFS) and to inform the policy paper the MGC is drafting for the Legislature and the Governor.

Industry experts provided an overview of DFS.  Customer engagement and satisfaction drive the industry.  DFS is unique and it does not lend itself to easy comparisons to other forms of gaming or entertainment.  Regulation of DFS rather than legalization is the right approach to avoid running afoul of PASPA.  Industry experts believe that DFS regulation should be proportional to the risk and should not be too onerous to avoid crippling the industry.

Representatives from the leading DFS operators, DraftKings and FanDuel, provided their perspectives on DFS operations.  Each company stressed the need for transparency and consumer protection safeguards to guarantee a positive player experience.  Both companies expressed support for the MA AG’s regulations and didn’t necessarily feel that additional regulation was necessary at this time.  Both companies already use technology to ensure there is no underage play, no play outside authorized jurisdictions, and no multi-accounting.  Both companies provide beginner-only contests, allow for various forms of self-exclusion, and track and store customer activity.

Industry experts identified emerging public policy issues, including the use of bots and scripts, disclosure of customers’ skill levels, player funds protection, licensure of operators and vendors, responsible gaming, and customer complaints and recourse.  All issues were discussed with an eye toward enhancing the customer’s experience.

Representatives from the MA AG’s Office, the American Gaming Association (AGA) and a former regulator discussed the MA AG’s regulations and the applicability of existing regulatory frameworks to DFS.  Through its regulations, the MA AG is seeking to establish an enforcement mechanism and to allow input from various stakeholders.  Due to its unique nature, DFS requires a unique regulatory model that is different from brick and mortar casinos and other forms of gaming.  DFS regulation requires more than just self-regulation, but probably doesn’t require a dedicated regulator to police the industry.  DFS operators are seeking predictability, consistency and commercial viability in any new regulations.

Industry experts discussed forward-looking approaches to regulating DFS and other emerging games.  Former MGC Commissioner Jim McHugh outlined 5 regulatory interests to guide any new regulations: preventing criminal conduct, consumer protection, revenue generation, economic development, and mitigating adverse consequences.  McHugh suggested that the Legislature provide a statutory scheme that would allow a governmental body to evaluate individual games.

Takeaways:

• Uncertainty has stunted the growth of the industry.
• The industry is already doing great things on the consumer protection front.
• The industry welcomes regulations that are commercially viable and technologically feasible and would appreciate uniformity- the MGC thinks that is a perfectly reasonable starting point.
• DFS, like many other rapidly evolving industries, requires nimble regulators.
• DFS may be one of the only games that is looking to require the disclosure of skilled players.
• To avoid running afoul of PASPA, focus on regulation and exemption rather than authorization and licensure.
• MA regulations will likely serve as a model for other states.