Mass. finalizes new rules for fantasy sports games – The Boston Globe

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Daily fantasy sports companies that want to operate in Massachusetts will have to drop college sports contests and ban players under 21 under new consumer protection regulations finalized Friday by Attorney General Maura Healey.

The industry also will have to alter its advertising practices and offer games that keep beginners away from highly-experienced players, who tend to take home most of the prize money in fantasy sports.


Companies are expected to begin complying with the rules as soon as possible, but no later than July. Boston-based DraftKings Inc., one of the country’s largest daily fantasy sports providers, said it would adjust its offerings to comply with the new rules.

“The regulations put forth today by Attorney General Healey are tough, but we will comply. We will continue to work with policymakers across the country to ensure that fantasy contests are fun and fair for the tens of millions of sports fans who enjoy playing them,” chief financial officer Tim Dent said.

DraftKings’ top competitor, New York-based FanDuel Inc., said it had some concerns with the new rules but would “work diligently to ensure we are in full compliance, and hope to see the regulations evolve over time to continue to allow further innovation.”

Healey’s regulations are part of a national push by state officials to regulate daily fantasy sports contests played for cash prizes, including new state laws recently enacted in Indiana and Virginia.

The drive for regulation follows months of legal pressure from some state regulators, principally New York Attorney General Eric Schneiderman, who contend that the companies are violating state gambling laws.

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DraftKings and FanDuel, which make up nearly all of the US market for daily fantasy sports, recently settled a lawsuit with Schneiderman while they pursue legislation legalizing the industry in New York.

Many of Healey’s regulations, first proposed in November, were designed to protect less experienced players, who win a minuscule share of the big prizes handed out by daily fantasy sports companies.

Players who have entered more than 1,000 contests or have won at least three prizes of more than $1,000 will be identified as “highly experienced” on fantasy sites, and will be not be allowed to play in some games designated for beginners.

The regulations also restrict how fantasy sports companies can advertise, including a ban on targeting players under 21 and required disclosures about how to deal with gambling problems. Players who are under 21 but technically residents of other states — such as students attending college in Massachusetts — would still not be allowed to play daily fantasy sports.

Healey’s regulations also block players from adding more than $1,000 per month to their fantasy sports accounts unless the companies running the contests have verified that the player can afford to lose that much money.

The rules apply specifically to daily fantasy sports contests, which allow players to assemble rosters of real-life athletes in a competition that lasts for just one day or one week. Season-long fantasy games are not affected.

David O. Klein, a lawyer who represents daily fantasy companies, said Healey’s regulations were the most thorough in the nation so far. “It allows the companies to continue and hopefully thrive while protecting minors and those with problem gambling issues,” he said.

Klein also praised the fact that Healey’s regulations don’t require fantasy companies to pay a stiff registration or licensing fee, which he said could freeze out smaller companies. Fantasy sports laws passed in Indiana and Virginia require a $50,000 fee, while a proposed law in New York would require a payment of $500,000.

Eilers & Krejcik Gaming, an industry research firm, estimates that Massachusetts players spent more than $133 million on daily fantasy sports contests last year. That made it the ninth-largest state for fantasy contest spending, which Eilers & Krejcik estimates exceeded $3.1 billion nationwide in 2015.

Daily fantasy companies typically keep about 10 percent of player entry fees as their revenue. DraftKings and FanDuel are not yet profitable, and have raised large amounts of private investment to bankroll their expansion.

Healey’s regulations do not address any special taxes for fantasy sports companies — that issue would have to be decided by the state Legislature. Her consumer protection rules do not require approval by state lawmakers before taking effect.

Fantasy companies have previously argued against some elements of Healey’s rules, including the ban on college contests. But they also began implementing some of the suggested rules before they were final, including the identification of experienced players and a ban on third-party software that allows players to quickly enter hundreds of lineups into fantasy contests.

But other states have followed suit: Indiana, home of the NCAA, included a ban on college sports in its new fantasy contest regulations. New York’s proposed fantasy regulations bill also would ban college sports.

Curt Woodward can be reached at Follow him on Twitter @curtwoodward.

Mass. finalizes new rules for fantasy sports games – The Boston Globe

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