Virginia Daily Fantasy Sports Now Officially Legal

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The state of Virginia took an historic step on Monday when Governor Terry McAuliffe signed a bill legalizing Virginia daily fantasy sports, making the state the first to officially endorse the game. A bill was first passed by the state legislature in early February.

Fantasy Contests Act Details

The new law, which has been dubbed the Fantasy Contests Act and will be overseen by Virginia’s Department of Agruicutlre and Consumer Service, will separate daily fantasy sports contests from gambling and provides a variety of consumer protections for players. Among the items in the bill include the following requirements:

  • To operate in the state, a daily fantasy sports site must pay a $50,000 fee. The fee is seen as steep by some smaller DFS sites but will not be a problem for top DFS sites.
  • Institute positions to require that all players be at least l8 years old to particate
  • Ban employees of daily fantasy sports sites from playing in public contests. Concerns of this practice was at the heart of the data leak scandal last year.
  • Will require audits two times a year and will demand that DFS sites segregate player funds from operation funds, something that has been relevant of late as a couple small DFS sites went out of business.

The new regulations will not only apply to DFS contests but also to season-based leagues, meaning they to will have to pay the steep licensing fees. The FTSA criticized that portion of the regulation, calling it an “onerous” fee. It is believed that at least the top 3 sites will pay the license fee to continue servicing Virginia players while others could do so to legitimize their operations.

All operators currently servicing Virginia daily fantasy sports players can continue to do so until the Department of Agriculture and Consumer Services begins actively taking applications.

Reactions from the Industry

Daily fantasy sports sites were understandably pleased with the news of Virginia being the first state to regulate DFS. In a statement, DraftKings stated, “Today, Virginia became the first state in the nation this year to put in place a thoughtful and appropriate regulatory framework to protect the rights of fantasy players. We thank Governor McAuliffe for his leadership and advocacy and are hopeful that other states across the country will follow Virginia’s lead. We will continue to work actively to replicate this success with dozens of legislatures and are excited to continue these efforts.”

In most states, daily fantasy sports remains in a relatively grey area in many states with 16 of them currently debating a way to regulate the industry. In a handful of states, daily fantasy sports is not lawful, either by specific laws or attorney general opinion. Notably, Texas and New York have been at the forefront of attempting to restrict the games. As a result, FanDuel and others have left the state of Texas, while in New York, sites are allowed to operate during the appeal process.

Indeed, this could be the catalyst the industry needs to expand regulation to other states. Florida sports attorney Darren Heitner said that their could be a major shift in the industry. “I don’t think we should underestimate the value of Virginia passing the bill and having it signed by the governor because this is the start and not the end of what I believe will be a state-by-state enactment of these types of laws.”