Gov. Jay Nixon had called for daily fantasy sports legislation back in January.
Missouri Governor Jay Nixon (D) signed a daily fantasy sports bill into law this week. House Bill 1941, known as the Missouri Fantasy Sports Consumer Protection Act (MFSCPA), is a bill to comprehensively regulate fantasy sports in Missouri.
Under provisions of HB 1941, the Missouri Gaming Commission has authority over the daily fantasy sports industsry. The Gaming Commission’s authority include the vetting and licensing of operators, as well as investigations into wrongdoing. The commission also has the ability to fine businesses which violate Missouri DFS regulations.
Licensing fees are included in the bill. Online daily fantasy sports websites must pay a $10,000 yearly fee or 10% of its revenues from the previous year (whichever is less) to receive a license. The license holders must pay an $11,500 annual operation fee, or 11.5% of the revenues in Missouri. Revenues from fees and fines are expected to pay for the licensing and investigation activities.
HB 1941 Consumer Protections
The Missouri Fantasy Sports Consumer Protection Act sets down a number of consumer protections. Daily fantasy sports contests cannot involve college, high school, or youth sports.
Also, websites must keep people under the age of 18 from registering on their site and participating in the gaming. Websites must have age verification software which complies with Missouri regulations. This includes “complaint procedures” to help parents initiate a process when their children engage in real money gaming, or are suspected to have done so.
HB 1941 also requires annual independent financial audits, to assure DFS sites comply with the laws above. Third-party audits must assure that contests are safe and secure from identity thieves, while fairness is maintained in how contests are arranged.
Jay Nixon and Scott Fitzpatrick
In his January 2016 State of the State Address, Gov. Jay Nixon called on Missouri lawmakers to pass a daily fantasy sports bill which would regulate the DFS in Missouri. Rep. Scott Fitzpatrick (R) sponsored the DFS bill in the Missouri House of Representatives.
HB 1941 passed in the House of Representatives by a vote of 130-13, with 19 abstentions. One set is vacant. A version of the bill passed the Missouri Senate on May 11 by a margin of 20-10.
Daily Fantasy Sports in America
When the UIGEA was passed into law in the United States in 2006, federal lawmakers made an exception for fantasy sports. In 2009, FanDuel was one of several “daily fantasy sports” websites which launched. Instead of people playing fantasy sports yearly or seasonally, contestants could fill out a roster of individual players for a one-day contest. Daily fantasy sports allowed owners to play for real money 365 days a year — and enter multiple contests in one day.
With the UIGEA on their side, FanDuel grew into a multi-million dollar business. By 2011, a group of Boston entrepreneurs launched DraftKings, a DFS website which would become FanDuel’s major competitor. From 2012 to 2015, the two companies grew into billion-dollar businesses. They collected investments from media entities like Comcast, NBC Sports, and Fox Sports. Wall Street hedge funds invested, while sports owners like Jerry Jones, Robert Kraft, and Mark Cuban invested in the products.
Where the American sports leagues tried to squelch sports betting, they embraced daily fantasy sports. The NBA, Major Leauge Baseball, and NHL each signed sponsorship deals with either FanDuel or DraftKings. Dozens of franchises in the NFL, NBA, MLB, and NHL signed similar sponsorships. With their newfound cash, DraftKings and FanDuel launched aggressive marketing campaigns to become the number one daily fantasy sports company.
In retrospect, the huge advertising dollars spent by the two big DFS companies were counter-productive. Instead of winning the battle for supremacy, the pervasive ads alienated a section of the sports fandom. Some of those fans happened to be high-ranking officials, judges, and politicians.
