DFS, ducks and the gun lobby.

By Michael Ellen, Partner

“Not so much the issue of whether DFS is legal under existing relevant law, but rather whether DFS should be legal.”

It doesn’t waddle or quack but DFS looks very like a substitute for a sports betting duck to the untutored eye. The title quote comes from a White Paper on DFS (and onwards into eGambling regulation) published this week by the Massachusetts Gaming Commission, and reads like the blast of applied common sense the world has been awaiting on this particular duck-shoot.

Given its enormous and popular following, the current hiatus of, variously, recognition, passive acceptance and prohibition plus sanction across the federation does no credit to the U.S. legislature. 

There is rumour of a Federal investigation into the activity, which if true almost certainly means an indictment is threatening one or both the major DFS players (to be resolved, probably late this year). Current proceedings in California seem very likely to find that the activity falls within existing regulations on pool betting. The rumoured UIGEA carve-out for DFS (allegedly excluding DFS from the “unlawful activity” that UIGEA was aiming to choke off federally) bears no examination at all – its not there; the reference to Fantasy Sports, the annual version, serves only to exclude it (and not the Daily version) from UIGEA; and neither of them from other previous blocking legislation.

If prohibition is threatening, outside Massachusetts, we should recognise that it has never been effective in stopping the average American citizen from sports betting. Prohibition and a regulatory vacuum apparently serve the long-term interests only of vested commercial operations. Conversely licensing and regulating, as already provided to DFS activity in Nevada, provides assurance on probity and fairness; and it raises taxes, a consideration that may to sway California and New Jersey into legitimising sports betting this year, subject to resolution of another pre-existing regulation (the continuing relevance of the 1992 federal legislation known as PASPA, which outlawed the further development of sports betting, is likely to be formally resolved by New Jersey this year).

One interesting side-effect of legitimising and regulating both verticals would (or will) be the sea change it generates in social responsibility and at-risk player protection, not just in sports betting but radiating across the whole sector in USA. It is an existing identified cancer within an otherwise generally healthy body of activity. It will seem, in ten years’ time, to have been the madness of the previous generation not to have faced this issue more directly – very like smoking – but as President Obama is finding out now on gun control, US federal priorities are not always logical; and election year will certainly divert political energy.