Massachusetts Proposes New Rules for Daily Fantasy Sports

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Massachusetts has broadly proposed changes to the daily fantasy sports industry that would put limits on DFS companies who cater to players the state. Massachusetts is not moving to ban the popular past time, but instead put limits on the industry, a move what many in the industry are embracing.

The changes are in contrast to New York, which recently declared that daily fantasy sports were “illegal gambling.”

Massachusetts Attorney General is calling the changes “an important step, as we continue to evaluate this new industry and make sure our laws keep up with these evolving technologies.”

Among the proposals made by the state of Massachusetts include restricting play of those under 21 and limits on depositing of $1,000 per month, among other changes.

DFS Sites Cautiously Positive to Regulation Proposals

DraftKings, which is based in Boston, stated that rules proposed by the state are a “thoughtful and comprehensive approach” to addressing changes that many inside and outside the industry are calling for. They did note, however, there were some concerns with the initial proposals. “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.”

FanDuel also gave initial approval to the changes. “Attorney general Healey’s approach towards regulating fantasy sports makes a tremendous amount of sense. FanDuel believes that regulations which increase transparency and ensure contests are fair will benefit the entire fantasy industry.”

What’s in Massachusetts Daily Fantasy Sports Proposals

The full text of the proposed regulations by the state of Massachuetts can be seen here. The state describes the purpose of the regulations to protect residents of the state from “unfair acts and practices that may arise in the gaming process” and “protect the families of persons who play daily fantasy sports to the extent that they may be affected by unfair and deceptive practices that lead to unaffordable losses.”

It’s worth a read, but here is a condensed summary of the proposed regulations:

Game Play
–Restriction of Minors – the proposals state that anybody under the age of 21 will not be permitted to play daily fantasy sports. Any minor that deposits on a daily fantasy sports site would be required to withdraw with their deposit refunded.
–Restrictions on Student Sporting Events – daily fantasy sports sites would no longer be allowed to offer contests for high school, college or other student sporting events.

Protection of Consumer Data and Funds
–Data Security – Daily fantasy sports sites must comply with state and federal requirements for data security.
–Player Funds Protected – Funds of daily fantasy sports customers must be held in a trust with protections.
–Ability to Close Accounts – Daily fantasy sports players would have the right to permanently close an account and be able to withdraw on a closed account as well as receiving prizes on a closed account.
–Closed Accounts from Inactivity – DFS sites would be required to close a daily fantasy sports account from any customer who is inactive for two years with any outstanding funds refunded to the player.

Account Limitations
–Restrictions on Number of DFS Accounts – A daily fantasy sports player would only be allowed 1 username or one account. DFS sites must verify DFS player’s true identities and will terminate players that have more than one account.
–Use of Proxy Servers – Daily fantasy sports sites would restrict customers from using proxy servers to enter a contest.

Truthful Advertising
–Restrictions on Advertising – DFS sites must comply with truthful advertising regulations and limits. These regulations would include prohibiting depictions and endorsement of minors and require efforts to assist problem gamblers as well as demand that DFS sites do not mislead players on winnings. There also be restrictions placed on advertising to minors, schools and college sporting events.

Promotions
–Promotional Offers Limited – DFS sites must fully disclose promotional offers.

Problem Gamblers
–Problem Gambling Protections – DFS sites must honor self-exclusion and self-limitation requests from players. In addition, these players may not be marketed to and the DFS site must display ways for problem gamblers to get assistance.
–Deposit Limits – Deposits must be limited to $1,000 in a calendar month. There may be procedures in place to temporary or permanently increase the $1,000 per month limit.
–Credit to Players – DFS sites must not issue credit to players

DFS Contest Fairness
–Fair Games – Employees, those affiliated with a DFS site, athletes and other “connected” parties will not be allowed to play DFS contests, be allowed to disclose proprietary information or share non-public information.
–Beginner Games Established – Beginner games must be established.
–Highly Experienced Players – Certain contests must be established that exclude highly-experienced players. New players must be given direction on how to play DFS and how to identify highly-experienced players. These players will be identifiable by a symbol by DFS sites so that other players will be able to identify these players.
–Scripts – Scripts will not be allowed on daily fantasy sports sites by players, and those caught using them will be terminated from the DFS site.
–Contest Rules – Once a contest starts, players will not be able to enter a DFS contest or edit a lineup.
–Contest Restrictions – DFS players will not be allowed to submit more than 1 entry on a contest involving 12 entries or less, 2 entries involving 13-36, 3 entries involving 37-100 and no more than 3% of all entries of any contest with over 100 entries.

Tax, Data Retention and Customer Complaints
–Tax Laws – DFS sites must comply with all tax laws and notify new players upon sign-up and when winning more than any prize that exceeds $600.
–Customer Data Retention – DFS sites must keep player deposit and withdrawal information for at least 10 years from the date of deposit or withdrawal. They must also keep data on each DFS contest and the prize amounts awarded to winners. Advertising data and content must be retained for at least four years.
–Customer Complaints – DFS sites must publish procedures that players can file complaints through internet chat or writing. DFS sites will be required to respond to complaints within 7 days. Complaints must be kept at least four years and must be made available to the Attorney General’s Office.

Next Steps for Massachusetts Daily Fantasy Sports Regulations

Although Healey wants to make the changes without legislation, the proposed regulations would not go into effect immediately. There will be a comment period of 2 months as well as a hearing before the regulations will become official in the state.

It is the hope of Healey that the regulations would be adopted soon to “level the playing field for fans.” The regulations would only apply to the state of Massachusetts; however, as a matter of practicality, it is believed many of the regulations, if adopted, would end up being applied universally.