Massachusetts Commission Split Over Best Path Forward For Online Gambling, Daily Fantasy Sports

Hours of expert testimony and months of digging into the issues were apparently not enough for some members of the Massachusetts Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports to find common ground. The commission only narrowly approved the findings and recommendations it was tasked with crafting.

The full report can be found here.

The votes

The final vote on Monday afternoon was 5-3, with one of the nine-member commission abstaining.

The yes votes were:

• Massachusetts Gaming Commission Chairman Stephen Crosby – appointed by the gaming commission
• Sen. Jennifer Flanagan – appointed by Senate President Stanley Rosenberg
• Hirak Shah – legal counsel to and appointed by Senate Minority Leader Bruce Tarr
• Rep. Joseph Wagner – co-chair of the special commission
• Sen. Eileen Donoghue – co-chair of the special commission

The no votes were:

• Rep. Mark Cusack – appointed by House Speaker Robert DeLeo
• Rep. James Kelcourse – appointed by House Minority Leader Brad Jones
• Fantasy Sports Trade Association Chairman Peter Schoenke – appointed by Gov. Charlie Baker

Abstaining was:

• Assistant Attorney General Dan Krockmalnic – appointed by Attorney General Maura Healey

Findings and recommendations

You can find a complete breakdown of the recommendations here, but the top line recommendations are:

• Daily fantasy sports should remain legal but be classified as gaming and overseen by the Massachusetts Gaming Commission.
• Other forms of online gambling are inevitable and policymakers should consider them down the road on a case-by-case basis.

“There is and will be a proliferation of these kinds of things,” said Commission co-chair Joseph Wagner at the hearing, according to Statehouse News Service (paywall).

“I believe that the report recommends a path forward for online gaming that will bring both efficiency and, in a cautious way, an omnibus approach with a careful case-by-case analysis,” said Commission co-chair Elaine Donoghue, according to Statehouse News Service. Donoghue said that if adopted, the recommendations would bring Massachusetts gaming laws into the 21st century.

Donoghue is of the opinion the state legislature will craft legislation based on the commission’s recommendations this session, which will most likely be next year, something Senate President Stan Rosenberg said several months back.

AG not sold on online gambling

Online gambling requires similar oversight to daily fantasy sports. But Attorney General Maura Healey is not on board with the idea of legalizing online gambling. Her appointee on the committee abstained from voting.

As Statehouse News reported, Assistant Attorney General Dan Krockmalnic indicated the attorney general’s office agrees with some of the report’s findings. However, the AG is concerned about the possible expansion into online gambling. Healey’s office strongly disagrees with the commission’s opinions of its inevitability.

Lawmakers still have a hard time squaring the gambling-skill circle

There was also an attempt to completely separate DFS from gaming.

Rep. Cusack cast aspersions when it came to the role the Massachusetts Gaming Commission was trying to play.

“I didn’t hear a good justification why [the Massachusetts Gaming Commission] were well suited to oversee [DFS], and I hope it wasn’t just recommended to justify their existence once these casinos are built,” Cusack said.

Cusack also shared the concerns of several others, wondering if reclassifying DFS was necessary and what unintended consequences it might have.

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The DFS industry isn’t happy

FSTA Chairman Peter Schoenke echoed Cusack’s concerns. In a statement, DraftKings Director of Public Affairs James Chisholm said the following:

“While this commission report is merely a recommendation, it runs directly counter to the economic development law that overwhelmingly passed last year designed to promote the state’s Innovation Economy. The commission’s actions today, as we and our partners in the fantasy sports industry pointed out time and time again, could restrain our company’s ability to thrive and create jobs here in Massachusetts.

These recommendations, if ever adopted, would put us behind every other state in the country on this issue, and send a troubling message to other startups. We urge Governor Baker, Speaker DeLeo, Senate President Rosenberg, and rest of the Legislature to reaffirm their commitment to Massachusetts startups and reject these ill advised recommendations in whatever legislation is finalized.”

Schoenke and DraftKings have a lot of skin in the game, but there is the very real possibility that, if adopted, the new designation could lead to court battles. DFS as a game of skill ran into legal problems in New York. Classifying it as gaming could mean it’s in violation of PASPA and/or the Wire Act.