Fantasy Sports Regulation Advances In NC House

A repeat effort to regulate popular fantasy sports games in North Carolina advanced through a House panel on Wednesday, two years after a similar effort was derailed.

The House Commerce Committee voted for the measure, which would require companies that operate fantasy sports to pay registration fees to the state and abide by some rules. Failing to comply could result in fines of up to $10,000 or registration revocation.

A 2017 bill directing registration by the Secretary of State's Office didn't get enough support, in part because social conservatives complained it would further legitimize gambling in the state.

This year's measure also contains the creation of a new state Gaming Commission that would consolidate state oversight of the state lottery, bingo, raffles and boxing from several agencies, in addition to the fantasy games. Some House Republicans had sought this kind of consolidation in 2017. These activities are currently regulated by separate lottery and boxing commissions and state law enforcement agencies.

The fantasy contests usually entail creating lineups of players from professional sports leagues. The fantasy participants, with daily, weekly and season-long games, score points and win cash prizes on individual statistical performances.

Rep. Harry Warren, a Rowan County Republican and chief bill co-sponsor, said games operated by outfits such as FanDuel and DraftKings are "going on, and with or without this bill it'll continue to go on. This bill would create a commission that would actually regulate it."

This year's measure, which passed with but a few "no" votes, also likely benefited from seat turnover after the 2018 elections, and a U.S. Supreme Court decision last year that opens the door to legalized sports gambling in the states. The bill would direct the new commission to study the feasibility of direct betting on sporting events, permitting online lottery games and regulating steeplechase races.

While fantasy sports contests are operating in most states, not all of them have formally legalized the industry.

"Fantasy sports is happening all over the country," said Sean Ostrow, a lawyer representing DraftKings, FanDuel, the NFL, the PGA Tour and the Major League Baseball commissioner's office. He said he anticipates the commission would limit play to adults and bar fantasy sports company workers from playing: "It makes sense to have some consumer protections and guardrails around it."

Still, the measure makes plain that fantasy sports contests don't meet the state's legal definition of gambling or any illegal activity.

John Rustin, executive director of the North Carolina Family Policy Council, told the committee the contests are clearly gambling based on the number of variables in the sporting events that are beyond the control of participants.

"The elements of chance predominate over the elements of skill," Rustin said in urging the committee to oppose the fantasy sports portions on the measure. Rustin also said the monetary penalties were too low and worried that language in the legislation exempted these firms from criminal laws.

Sen. Deb Butler, a New Hanover County Democrat, said she would support the measure if it included taxing a portion of fantasy sports revenues and setting aside more money to address problem gambling. Warren responded that would be considered.

The bill must clear three more committees before reaching the House floor. If approved, it would have to pass the Senate.