Michigan Considers DFS Regulation

Michigan is one of the latest states to consider regulating the daily fantasy sports industry. A DFS bill cleared a State Senate committee. The bill classifies DFS as a game of skill and would require operators such as DraftKings and FanDuel to acquire a state license.

Michigan could be the next state to pass daily fantasy sports regulations under a bill that has cleared a State senate committee.

The bipartisan bill classifies daily fantasy sports as a game of skill, not gambling. DFS companies such as DraftKings and FanDuel would require licensing in the state.

DFS legislation has been progressing slowly on a state-to-state basis and the issue is being studied by the Michigan Gaming Control Board, according to the Associated Press. But the board and the state attorney general’s office has not weighed in on the issue.

Sen. Curtis Hertel Jr., a sponsor of the legislation, told the AP that the bill “gets rid of the gray” for Michigan’s 1.6 million DFS players and includes consumer protections. The commercial license would cost $5,000 initially and $1,000 each year after.

Games would be restricted to players over 18 and sites could not offer games based on college, high school or youth sporting events. The companies would also be required to let people restrict themselves from playing and to link to information about compulsive behavior.

“Really this is free-market legislation that protects citizens but lets the business of fantasy sports keep going here in Michigan,” said Hertel said. “We shouldn’t be penalizing people for basic entertainment. Really this is just another way to enjoy sports and the way we watch.”

The bill hits two key points backed by Boston-based DraftKings and New York-based FanDuel. First, it sets the age limit for the games at 18, not 21, and it declares DFS is a game of skill. The two companies have lobbied extensively for legislation that does not classify DFS as gambling.

The bill is opposed by the MGM Grand and Greektown casinos in Detroit. MGM lobbyist Tyrone Sanders told the wire service that it supports the concept of fantasy sports but is concerned that the proposed consumer protections and penalty provisions are insufficient and that the industry would be overseen by the Department of Licensing and Regulatory Affairs rather than the state’s Gaming Control Board.

“If fantasy sports under the bills … are not subject to taxation by the state as casino gaming is, we believe that some consideration should be given at a minimum to requiring fantasy sports companies to pay for the cost of their licensing and regulation,” Sanders said.

In another DFS move, Connecticut Governor Dannel Malloy—in an effort to end a budget impasse—has introduced a stripped-down state budget that does not include revenue from proposed regulations on DFS.

Malloy called the proposed budget a “lean, no-frills, no-nonsense budget,” and that apparently left no room for settling issues on the state regulating DFS.

Proposed regulations for DFS in the state have been complicated as the state’s attorney general ruled that any legislation authorizing daily fantasy sports contests must be viewed against the backdrop of the existing agreement between the State and the Tribes.” The Tribes are the Mashantucket Pequot and the Mohegan, who operate the only legal casinos in the state.