Fantasy sports to N.J. legislature: Regulate us lightly

TRENTON - Fantasy-sports industry representatives told a New Jersey Assembly committee Monday that they hoped light regulation - not strict casino-style rules - would address any crisis of confidence in the business among politicians and the 55 million people who are in its leagues.

But that outcome seemed uncertain at best during Monday's discussion with the committee that handles the heavily regulated gambling industry, a big but ailing part of New Jersey's economy that is feeling threatened by fantasy sports.

"We believe in common-sense regulation," said Jeremy N. Kudon, an attorney representing the Fantasy Sports Trade Association. He said fantasy sports is "a game of skill, not a game of chance" - a key point in the debate, because gambling is legally defined as the latter.

Kudon estimated that 1.5 million New Jersey residents play fantasy games.

Assemblyman Ralph R. Caputo (D., Essex), chairman of the Tourism, Gaming and Arts Committee, agreed with Kudon, a second attorney representing the company FanDuel, and a lobbyist for the industry - all of whom sat together at the witness table - that the details matter in determining one's view of regulations. But it was clear that Caputo's view was different.

"It's going to be regulated, one way or the other, and it might not be the way you want," Caputo told the three.

Caputo noted that he scheduled the hearing before Gov. Christie tried to dismiss the need for government regulation of fantasy sports when the question came up at the last Republican presidential debate. And Caputo said that despite Christie's comment, the need does exist.

Federal prosecutors are reportedly looking into whether employees of FanDuel and DraftKings, the two biggest companies in the industry, had inside information, which they used to play on the other company's site. That could give an unfair advantage over regular customers, who might question if the contest was rigged.

A committee of the Republican-controlled Pennsylvania House has a hearing scheduled for Tuesday to discuss fantasy sports and gambling.

In a fantasy sports league, participants choose real athletes to make up an imaginary team, with real game statistics counting as points. The leagues started as competition among a few friends over a season.

But in the last few years, online daily fantasy sports has flourished, with FanDuel and DraftKings offering millions of dollars in prizes and spending millions on advertising on TV and other platforms. Some players use complex data crunching to play hundreds of games a day.

Assemblyman Ronald S. Dancer (R., Ocean) was the first of several members who said they planned no legislation until after the U.S. Court of Appeals for the Third Circuit in Philadelphia rules on a case pitting New Jersey and its horse tracks against the National Collegiate Athletic Association and the major pro sports leagues.

New Jersey wants to allow sports betting at its casinos and tracks. The leagues object, citing a 1992 federal law that restricts sports betting to four states and in a meaningful way only to Nevada.

New Jersey lost a 2-1 decision in the Third Circuit, but enough judges accepted the state's appeal for a full hearing. A decision may not come until spring.

A 2006 federal law, meant to curtail offshore online gambling, had a carveout for fantasy sports. The law also labeled gambling as a game of chance and fantasy as a game of skill.

That difference - openly derided by many, especially those advocating for legalized sports betting - allows daily fantasy companies to openly sell their services, buy advertising, and seek investors who otherwise can't touch sports betting in the United States.

That difference, said Assemblyman Troy Singleton (D., Burlington), a fantasy football player, is the "crux of the debate."

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