Illinois Might Regulate Fantasy Sports

Illinois is to introduce a bill to regulate daily fantasy sports. The legislation is aimed at protecting consumers in Illinois from 'draining' their bank accounts on fantasy sports sites. This includes FanDuel and DraftKings, and also to give consumers a fair and legitimate chance of winning.

The daily fantasy companies, such as FanDuel, face more rigid scrutiny on the legality of their business model.

Rep. Mike Zalewski (D, Ill.) has described the bill as the 'first of its kind in the nation', and that it would create standards for the auditing of daily fantasy companies wanting to do business in the state. It would also prohibit DFS employees from playing on contests on other DFS sites. These are some of the restrictions proposed. He continued that what is needed are clearly established rules so that operators of these sites are able to follow them and are not subjected to scrutiny independent of their internal controls.

This move comes because of fantasy companies being questioned over the legality of their businesses. Gaming regulators in Nevada have ordered the two major companies FanDuel and DraftKings to cease operations in the state.

The Attorney General in New York has asked for a raft of internal data as well as their policies for prevention of fraud. The Attorney General of Massachusetts is in talks with both of the companies with regards to putting in place proper protection controls for consumers.

Five states - Iowa, Arizona, Louisiana, Washington and Montana - have made the practice illegal. However, Kansas earlier this year has enacted to officially legalize fantasy sports.

Both of the companies continue to deny any wrongdoing and have stated that they would be tightening up their standards.

FanDuel has always focused on the maintenance of the integrity of their games as well as the trust of their players, said FanDuel's Chief Executive, Nigel Eccles. They welcome the opportunity to be working with Rep. Zalewski and the lawmakers in Illinois and introduce the best practices that the whole fantasy industry will be able to adhere to, ensuring that sports fans all over Illinois will be able to continue to play fantasy sports.

A DraftKings representative has called Rep. Zalewski's legislation a reasonable and measured step toward the oversight of fantasy sports. The representative added that the company was committed to working with all relevant authorities to ensure that the industry operates in a transparent manner and fair for all.

Mr. Zalewski said that this new and emerging technology has enjoyed a significant amount of popularity in a very short space of time.

He had previously planned to introduce a bill that was similar back in April, but it was never completed. He said it was a shell bill, and that they did not have the time to file an amendment. That's why they are going to file a new bill.

He also added that he was motivated to taking up the initiative again after he learned that a DraftKings employee had admitted to prematurely releasing sensitive data on the site's biggest contest on a fantasy sport message board. In the same week this employee won $350,000 on FanDuel's site, and both companies acknowledged this. DraftKings stated that the leak was an accident, and both companies have said that the employee didn't benefit from having access to the data.

Mr. Zalewski said that the incident had highlighted the fact that daily fantasy sports is a new form of online entertainment and that there was a lack of clarity on whether it is gambling or a game of skill. From what he can tell it is a new technology.