Rick Carlton Mar. 30, 2016, 2:14pm


RICHMOND, Va. (Legal Newsline) - Virginia has enacted a new law allowing the operation of daily online fantasy sports ventures in the state, while other states - including Texas, Illinois, Nevada and New York - continue to believe that these enterprises exist as outlets for illegal gambling.

New York continues to allow online sports play while an appeals court works to render a final decision. In that case, at stake is the potential recovery of more than $200 million in wagers placed by players of both FanDuel and DraftKing prior to an injunction delivered by New York Supreme Court Justice Manuel Mendez in November.

Virginia is the first state to fully accept the existence of online sports fantasy and represents precedence that serve as a baseline for other lawmakers. Gov. Terry McAuliffe signed the bill into law at the beginning of March, then handed regulatory responsibilities off to Virginia’s Department of Agriculture and Consumer Service, which will handle regulating these enterprises going forward.

According to James Gatto - who is a partner with Washington D.C.’s Sheppard Mullin Richter & Hampton LLP - the new law appears to suggest a positive first step toward the final validation of commercial and regulatory views associated with the online fantasy sports segment as an emerging market.

“(The Virginia law) is generally a positive event, and I think that the legislative process is working to address issues (effectively),” he commented.

Asked if the implications of a law being enacted so close to the nation’s capital suggests holistic national lobbying on behalf of FanDuel and DraftKing, Gatto said he isn't sure. 

"But my guess is (that the companies) are lobbying everywhere," he said.

DraftKings, after the Virginia law was passed said it would "continue to work actively to replicate this success with dozens of legislatures, and (is) excited to continue these efforts."

“(There are) about 30 states (that) are considering, or proposing legislation,” Gatto said. “Many states seem to be going in the direction of legalizing by regulating and taxing (online fantasy game sites).”

In the latter case, particularly, the Virginia law calls for an upfront fee of $50,000 per enterprise to operate freely in the state. And as previously mentioned, all online activities will be strictly monitored once active play is up and running.

Regardless, there are still a number of commercial and legislative doubters waiting in the wings. This, of course, includes New York’s pending appeal, and should the Appellate Court find for the State, the result will could sow additional confusion and friction between those who see online fantasy play as a potential revenue boon to states involved and others that will continue to cleave to more originalist positions against the business premise.

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