The debate on whether it’s a form of gambling or not may never go away. No, we aren’t talking about poker this time. A Massachusetts state commission voted on Monday to recommend classifying DFS games as a form of gambling instead of a game of skill.
The vote is a setback for DraftKings, the DFS industry leader, a company headquartered in Boston, Massachusetts.
DraftKings will now have to fight in its home state to keep its status as a non-gambling company. A report conducted by the state legislature’s Special Commission on Online Gaming, Fantasy Sports Gaming, and Daily Fantasy Sports claims that the distinction between luck and skill doesn’t matter when money is on the line.
A vote of 5-3 from the commission approved the findings of the report. The distinction wasn’t agreed upon unanimously. Some panel members argued that daily fantasy sports are games of skill and should be considered as such legally, even though money is involved.
Why it Matters
How the state classifies DFS matters, at least to DraftKings and its competitors, such as FanDuel. As it stands, daily fantasy sports operators aren’t subject to the same standards of regulatory oversight as casinos.
But should the legal classification change, DraftKings will have to adjust its business model. The company will face additional tax liabilities and it could become difficult to find suitable payment processors. It’s illegal for payment processors in the Massachusetts to accept transactions from online gambling sites.
“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,” DraftKings Director of Public Affairs James Chisholm told the Boston Globe.
Rep. Mark Cusack, a Democrat from Norfolk, voted against accepting the report’s findings. He agreed with Chisholm’s argument and reiterated to the Boston Globe why it’s a bad idea to scare away major local businesses.
“If we’re willing to do this to one of our home-grown companies, why would anyone want to come here?” he said.
Cusack was joined by Rep. James Kelcourse and Fantasy Sports Trade Association Chairman Peter Schoenke in voting “no.” Massachusetts Gaming Commission Chairman Stephen Crosby was among the five “yes” votes.
The committee didn’t recommend banning daily fantasy sports. The purpose of the report was, instead, to determine if the popular game should be classified as a form of gambling and fall under the Gaming Commission’s umbrella.
Poker players in Massachusetts who don’t participate in DFS games may be upset online poker doesn’t receive the same kind of treatment from state lawmakers. As it stands, internet poker is illegal in Massachusetts, and no proposals to change online poker’s legal standing appear to be on the verge of passing.