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Controversial Topic Of Daily Fantasy Sports Has Maryland Revisiting Stance On Subject

January 15, 2016

In checking out which sports stories represented the highlight moments of 2015, two feel-good triumphs were consistently mentioned, the United States women's soccer team winning the World Cup and American Pharoah racing to the Triple Crown.

I don't think anyone could argue with either of those two wonderful events being at the top of any such list.

However, if the measure of "top story" is its personal impact on fans, another sports development that made a top-10 list here and there was the sudden emergence of daily fantasy sports, along with the almost immediate challenges it attracted.

The short-duration fantasy contests for cash prizes industry went from phenomena to target in about the time it takes to put together one of those DFS lineups. Most prominently beginning with New York State Attorney General Eric Schneiderman's attempt to halt DFS in his state, scrutiny of and official action regarding daily fantasy has gone viral.

Now, Maryland has gotten into the act. Maryland State Attorney General Brian Frosh has been asked by State Senate president Thomas V. Mike Miller (D-Calvert) to issue an advisory letter on the topic.

Just a few of the states where attorney generals or regulators have opened inquiries or taken some degree of action include Nevada, Massachusetts, Illinois, Florida, as well as the above mentioned New York, and there are others.

For a while, it seemed Maryland was the safest of havens for daily fantasy because of a law passed and approved in 2012 that specifically legalized fantasy sports for prizes and appeared to remove all types of fantasy sports from the reach of gambling laws in the state.

The law was championed by former Delegate John Olszewski Jr., a Democrat from Dundalk, and it passed easily in a Maryland General Assembly session that was otherwise marked by contentious debate over the proposal to expand casino gambling to include table games and a sixth Maryland casino in Prince George's County. The expansion question went to a statewide referendum which voters gave their approval.

But as far as the fantasy sports law was concerned, that was handled like most other bills, and there was hardly a nay vote to be cast. Back then, Maryland legislators were apparently mostly ignorant of the "daily" version of fantasy sports despite the fact that one of the industry leaders, FanDuel, had already been doing business for at least two years. The state's delegates and senators had the season-long version of fantasy sports in mind, where the prizes were thought to be small stakes (another misconception, by the way).

Interestingly, before Maryland passed the fantasy sports-for-prizes law in 2012, Maryland had been a state from which DFS websites refused to take customers because of the state's stringent anti-gambling laws.

Now, with daily fantasy a red-hot topic of conversation in sports and legal circles, Maryland is revisiting the subject.

One of the first public officials to wade in was Comptroller Peter Franchot, whose office has responsibility for promulgating regulations for an activity such as daily fantasy if there's a need. In November, Franchot said daily fantasy should be reviewed. In 2012, when the fantasy law was passed, the daily version of fantasy sports was brought to the attention of Franchot's office, but in published reports, it wasn't clear back then whether the Comptroller's office saw a need to take any action.

Franchot's recent pivot caused FanDuel, one of the DFS industry leaders, to try to rally popular support among its customers by urging them in an email to contact the Maryland Comptroller's office "to tell him that fantasy sports should be regulated and protected in Maryland, not banned."

Meanwhile, Frosh's advisory letter, which is expected to be issued sometime in January, is likely to affect some action.

When the 2012 fantasy sports law was sailing through the General Assembly, Frosh was the only senator to vote against it. Frosh is known for a consistent position opposing the authorization of any type of gambling.

However, as the state attorney general, he must weigh the state law passed in 2012 against the notion of whether daily fantasy represents an expansion of gambling and, as such, whether it needs to go to referendum.

The key in all this is timing.

There are legislators, such as Del. Eric Luedtke (D-Montgomery), who seem inclined to take the position that daily fantasy sports is the type of activity folks should be able to enjoy if they choose with the proper safeguards in place. Luedtke is a co-chairman of the Joint Committee on Gaming Oversight that has responsibility for implementing new gaming-related laws.

If Frosh offers an opinion that more action should be taken in order for daily fantasy companies to continue operating in Maryland, it will come at a point when legislators will have just started the 2016 General Assembly session (Jan. 13-April 11) and they'll be able to do something about it if they choose.

As is the case with many of the challenges faced by the daily fantasy sports industry, there's no sure thing here. But if one is a daily fantasy advocate and enjoys playing the contests, there is some reason for optimism that there are legislative remedies available to deal with the legal problems DFS may be running into in Maryland and elsewhere.

And make no mistake; the battles in other states are equally important for daily fantasy players here, because to be able to enjoy DFS to the fullest, there needs to be participants from all over the country. Eliminating larger states, such as New York or Illinois or even California, would hobble the industry and make the contests far less appealing, because a smaller pool of players would result in shrinking the range of contests, meaning types and price points.

Yes, there were far more uplifting sports stories in 2015 -- the triumphant U.S. women's soccer team and the bay colt that made thoroughbred racing history -- but those are already consigned to the scrapbooks of our memories. The story of daily fantasy has many chapters yet to be written.

Bill Ordine is the author of a recently released book on daily fantasy, "Fantasy Sports, Real Money."

Issue 217: January 2016