Maryland officials are reviewing online fantasy-sports operations to determine how the state should regulate the leagues and whether some may be illegal under a 2012 law restricting such activities to non-commercial purposes.
State Comptroller Peter Franchot (D), Attorney General Brian E. Frosh (D), aides to Gov. Larry Hogan (R), and officials from the state lottery and gaming commission met behind closed doors in Annapolis on Thursday to discuss the issues.
Franchot, who is in charge of developing regulations for implementing the 2012 law, is working to answer basic questions about fantasy sports, including whether the companies are operating legally and protecting consumers and whether the state should tax some of their transactions. It is unclear how long the review will last, according to his staff.
Frosh, who as a state lawmaker opposed the 2012 statute, is taking a separate look at whether existing fantasy-sports operations are in compliance with it. He was asked to do so by state Senate president Thomas V. Mike Miller (D-Calvert), a frequent Franchot critic. The attorney general told The Washington Post that he may have answers by Friday.
The General Assembly’s Joint Committee on Gaming Oversight postponed a fantasy-sports hearing earlier this week in order to give the officials time to complete their work. The panel has not set a new date for the discussion.
“We appreciate the strong interest and concerns regarding this issue and hope to have a full hearing with all pertinent information in the near future,” the committee’s co-chairman, Del. Eric G. Luedtke (D-Montgomery), said in a statement.
Fantasy sports, which allow users to draft professional players into imaginary teams and compete against other teams based on the number of points those athletes earn for their actual game performances, have become wildly popular in recent years. The number of annual participants in the United States and Canada has grown from about 15 million in 2003 to nearly 57 million this year, according to estimates from the Fantasy Sports Trade Association.
The leagues exist largely online, with entry fees ranging from 25 cents to thousands of dollars. Two of the most popular sites are DraftKings and FanDuel. The sites claim to offer contests of skill, but critics say the activities are more akin to games of chance, especially when they involve daily rather than seasonal payouts.
In November, New York Attorney General Eric T. Schneiderman (D) issued cease-and-desist orders to DraftKings and FanDuel, saying their operations violate state gambling laws. A New York court this month ordered the operations to remain closed in the state while legal proceedings continue, but a federal judge stayed the order hours later.
Several other states, including Arizona, Iowa, Louisiana, Montana, Nevada and Washington, have banned fantasy sports, and the head of Michigan’s gaming commission said in September that daily versions are illegal under that state’s laws.
Maryland’s 2012 legislation legalized fantasy-sports games that are tailored to small social groups and reflect the knowledge of participants rather than chance. Frosh, who was chairman of the Senate’s Judicial Proceedings Committee when the 2012 law was passed, was the only senator to vote against the measure, which he said would amount to an expansion of legalized gambling.
Maryland Lottery and Gaming Director Gordon Medenica expressed doubts about the legality of fantasy sports during a state Board of Public Works meeting in October, describing the issue as a “powder keg” and a major concern within the gaming industry.
In Virginia, no bills about fantasy sports have been filed so far for the state’s upcoming legislative session. But DraftKings and FanDuel have hired lobbyists from a well-known firm, indicating that legislation could be on the horizon.
Jenna Portnoy in Richmond contributed to this report.