Virginia passes legislation that allows legal playing of DFS

Virginia became the first state this year to pass legislation clarifying the legality of fantasy sports, both the daily and season-long versions, when Governor Terry McAuliffe signed SB646, the Fantasy Contests Act, into law Monday afternoon.

The bill requires operators to register with the Department of Agriculture and Consumer Services and pay a $50,000 licensing fee. Among other regulations, participants must be 18 or older, and employees of the sites and their family members are prohibited from playing.

"This bill, which was passed by super majorities of both chambers, will empower Virginia to regulate this emerging industry and keep consumers safe from abuses," Brian Coy, spokesman for the governor's office, said in an emailed statement.

Leading daily fantasy sports operators DraftKings and FanDuel praised Virginia's approach.

"Governor McAuliffe and members of the Virginia legislature took a thoughtful, deliberative approach to establishing a law that safeguards fantasy sports while installing consumer protections," Cory Fox, counsel for FanDuel, said. "Virginia showed real leadership in being the first state to pass smart regulations this year, and we hope to see more states follow Virginia's lead in the months ahead."

Approximately two dozen states are considering fantasy sports legislation, and a bill has reached the desk of Indiana Governor Mike Pence. Other states have found that daily fantasy sports violate state gambling laws.

Last week, Texas Attorney General Ken Paxton reached a settlement with FanDuel that will result in the site's ceasing to offer paid games in the Lone Star State in May. DraftKings filed suit against Paxton and has asked for a declaratory judgment to clarify its legality. DraftKings and FanDuel are also in legal battles with attorneys general in New York and Illinois. Attorneys general in Hawaii, Mississippi and Georgia have released opinions that daily fantasy violates their states' gambling laws.

DraftKings said it is "hopeful that other states across the country will follow Virginia's lead."

Not all fantasy companies were as pleased with the Virginia bill as DraftKings and FanDuel. The Fantasy Sports Trade Association, in an email to members, acknowledged it also had concerns about the bills in Virginia and Indiana, specifically the $50,000 licensing fee.

"Both states have an onerous mandatory regulation fee that makes both states untenable for the majority of the FSTA's members," the FSTA wrote. "We are deeply concerned that these states have made it impossible for so many of our member companies to do business. The FSTA will work toward improving those bills as quickly as possible."

Seth Young, vice president and COO of Stars Fantasy Leagues tweeted that he believes the bill didn't represent the interests of the industry, only FanDuel and DraftKing.

"It will be interesting to see how many DFS operators step up to register. We certainly will," said Joe Brennan, CEO of FastFantasy, a new daily fantasy site. "One thing to keep in mind, regulatory laws rarely stay static. I expect that you'll see this law, along with legislation in other states, evolve to consider innovation and especially taxation."