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Connecticut Considering Regulating Online Fantasy Sports

AP Photo/Mark Lennihan

Connecticut moved closer Thursday toward becoming the latest state to regulate the fast-growing online fantasy sports industry.

A legislative committee forwarded a bill that would require the state's Department of Consumer Protection commissioner to adopt regulations to protect consumers who play daily fantasy sports contests such as DraftKings and FanDuel.

"Right now, the alternative is, it's happening but there's no regulation," said Rep. David Baram, D-Bloomfield, co-chairman of the General Assembly's General Law Committee. "So, it's better that we regulate it."

The action comes days after Virginia Gov. Terry McAuliffe signed a bill that formally legalizes and regulates such websites. That new law, which takes effect July 1, also requires the sites to pay a $50,000 initial registration fee and submit to regular outside audits. Other states are considering similar bills.

Like Virginia, Connecticut lawmakers agree that fantasy sports contests are games of skill and not games of chance. Sen. Carlo Leone, D-Stamford, the committee's other co-chairman, said the panel asked a lot of questions to determine whether the activity is actually gambling. Attorneys general in New York, Illinois and Texas have issued opinions that fantasy sports are illegal games of chance.

"A lot of the information we were able to retrieve fell on the side of game of skill," Leone said.

Baram said the industry approached lawmakers this session and asked for legislation. In written testimony submitted to the General Law committee, Chris Grimm, who represented DraftKings, FanDuel and the Fantasy Sports Trade Association, said there is no systemic chance in fantasy sports.

"It is not enough to know the most popular teams and their most recognizable stars," he said. "Fantasy players need to understand scoring systems, the particular strengths of different players, the type of offensive scheme that they plan in, and the quality of their matchups," he said.

On Thursday, lawmakers honored a request by the industry to lower in the bill the legal age to play online fantasy sports from 21 to 18, the same age in the Virginia law. Rep. Dan Carter, R-Bethel, said 18 makes sense considering that's the legal minimum age that someone is allow to buy a lottery ticket. People need to be 21 to play at casinos, but he noted that's because liquor is being served at those establishments.

Besides adopting regulations that protect players, Connecticut's bill also requires the Department of Consumer Protection Commissioner to look at possible registration fees the state could charge for online fantasy sports companies and the possibility of taxing the profits the companies could earn in the state.

"Right now it's happening without any enforcement, without any regulation. It's an opportunity for the state to perhaps tax some of this revenue," Baram said. "Everything we've read, nationwide, it's a billion-dollar industry."

The bill now awaits action in the legislature's Finance Revenue and Bonding Committee.