BOSTON – The legal status of online fantasy sports is “in flux,” and state regulators would need new powers if they’re to tackle the burgeoning industry, according to a memo written for the Massachusetts Gaming Commission by a staff attorney.
The Gaming Commission was created through a 2011 law allowing up to three casinos in Massachusetts and one slot parlor. But as the law is currently drafted, the commission has “no ability to regulate” fantasy sports without the state Legislature increasing its oversight powers, staff attorney Justin Stempeck wrote in a memo.
State lawmakers are eyeing ways to potentially regulate and tax companies like DraftKings and FanDuel.
Massachusetts Attorney General Maura Healey has said fantasy sports is not illegal under state and federal gaming law, but she’s interested in potential consumer protection regulations.
In Nevada, regulators have cited a state statute and issued a cease and desist order to daily fantasy sports sites, telling them they can return when they obtain a gaming license in the state.
“There is no corollary to this statute in Massachusetts and our Gaming Act does not criminalize offering a percentage game,” Stempeck wrote in his memo to commissioners.
Stempeck noted that DraftKings and FanDuel point to the Unlawful Internet Gambling Enforcement Act and say they’re legal under that federal law.
But “this conclusion is not entirely clear” since daily fantasy sports sites did not exist when the law was passed in 2006, and the law was passed because the online poker was “exploding” at the time, Stempeck said.
“Such a conclusion is an over-simplification of the statute, which has a far narrower scope,” he added.
The law “on its own does not legalize [daily fantasy sports] or fantasy sports of any kind,” Stempeck wrote.
The Massachusetts Gaming Commission is expected to discuss the memo at its meeting today at the Hynes Convention Center.
The memo is available in the commissioners’ packet here.
A live stream of the meeting is below.