California May Legalize Fantasy Sports Betting

AP Photo
The Associated Press

A bill allowing daily fantasy sports betting websites to operate in California cleared the State Assembly on Wednesday, bucking a national trend.

AB 1437, or the Internet Fantasy Sports Game Protection Act, passed the Assembly by a vote of 68-1, reports the Los Angeles Times.

The bill would legalize popular fantasy sports websites like DraftKings and FanDuel, which allow sports fans to compete against one another by betting on athletes’ in-game performances, provided the companies obtain a license from the California Department of Justice.

The bill also requires fantasy sports operators to pay an annual regulatory fee that will be deposited into a newly-created Fantasy Sports Fund, for use in the oversight and regulation of the industry.

New York and Illinois have moved to outlaw fantasy sports betting, but California–surprisingly, given the state’s harsh regulatory climate–may be taking a different approach.

“California is setting the tone for the rest of the nation on what a regulatory framework should look like,” the bill’s author, Assemblyman Adam Gray (D-Merced), said in a statement. “While there is still a lot of work to be done, I believe California will be the first to pass and implement legislation that allows its citizens to continue to play a game they love in a safe and fair environment.”

Online gambling advocates and opponents have debated the legality of daily fantasy sports leagues ever since the games exploded in popularity several years ago. States including Texas, New York, Washington and Illinois have outright banned the games after finding them to be a form of illegal gambling. California attorney general Kamala Harris has not yet issued a decision on whether the online gaming sites constitute gambling, according to the Sacramento Bee.

Professional sports teams and marketing companies strongly support the bill. In addition to keeping fans focused on the minutiae of in-game statistics, many sports teams have marketing agreements with fantasy sports operators.

“Fantasy sports helps create more sports fans and more deeply engaged fans,” Fantasy Sports Trade Association chairman Peter Schoenke told the Times. “The fans’ engagement allows them to root for teams and athletes in new ways and increases viewership across multiple platforms, which drives revenue for teams and leagues.”

Opposing the bill are groups like the California Coalition Against Gambling Expansion, which claims that allowing the sites to operate in California could harm compulsive gamblers in the state.

Assemblyman Marc Levine (D-San Rafael) cast the only vote against the bill, and has reportedly been targeted by pro-gambling groups in radio advertisements for his opposition. Levine called the groups’ advertisements a “public bullying” campaign meant to send a message to other state lawmakers.

“State after state, the game is being found to be illegal,” Levine told the Times. “In the mad rush to authorize this billion-dollar industry affecting millions of Californians, it is important that we get this right.”

AB 1437 will be taken up next by the Senate Governmental Organization Committee.