Massachusetts Thinks Daily Fantasy Sports Needs Better Rules

 

Massachusetts would ban anyone under the age of 21 from participating in daily fantasy sports contests on sites like DraftKings and FanDuel under a set of proposed regulations introduced by state Attorney General Maura Healey on Thursday.

 

While New York Attorney General Eric Schneiderman is seeking to shut down the industry in his state, Healey’s proposals represent the broadest effort so far to regulate it. The Massachusetts rules take aim at many of the consumer protection issues that arose during the fast-growing industry’s “insider trading” scandal this fall.

 

“These regulations are a first of their kind for the daily fantasy sports industry,” Healey said in a release. “This is a first step, but an important step, as we continue to evaluate this new industry and make sure our laws keep up with these evolving technologies.”

 

Healey’s proposals would prevent daily fantasy sports companies from operating contests based on college athletics. They would also subject the companies to state false advertising regulations, bar them from including college athletes in their ads, and require that the ads include information to assist people with a gambling problem. Ads that discuss winnings would have to disclose the average amount won by daily fantasy players.

 

The regulations would also prohibit the disclosure of insider information to any eligible game participant and require the creation of beginners’ only games and the identification of “highly experienced” players. Another rule would limit the number of entries allowed in any one daily fantasy contest.

 

Employees of daily fantasy companies would also be prohibited from participating in the games — a move that DraftKings and FanDuel, the two largest companies, have already made on their own since the scandal.

 

In a statement, DraftKings said that Healey had taken “a thoughtful and comprehensive approach” to regulating daily fantasy sports, seemingly drawing a contrast to Schneiderman’s push.

 

“While we do have some concerns with the draft regulations, we intend to work closely with the Attorney General’s office to ensure we are operating in the best interest of our customers,” DraftKings said.

 

Healey’s rules are so far only proposals, and the next step will be a 60-day comment period. But DraftKings said in its statement that it will “immediately begin taking steps to prepare to implement the changes to our product that the Attorney General requires.” 

 

Healey has said in the past that she views daily fantasy sports as legal under Massachusetts law. While the regulations would apply only to the companies’ activities within Massachusetts, they could provide a roadmap to other states — as well as Congress and federal regulators — that have started to take a closer look at the industry.

 

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