NFFC Exempting Virginia From Registration Page

[Greg Ambrosius]

It's a shame that on Independence Weekend we have to announce that an entire state of harmless fantasy football players are now being told they can't play for cash prizes. It seems contrary to the type of Independence our Forefathers faught against an overbearing government.

But that's what we're doing today. As of today, July 1st, the NFFC has been forced to exempt all Virginia state residents from playing in any of our contests. Any Virginia resident who signed up before July 1st is still eligible to compete and play for prizes, so no problem if you are already set for 2016. But we are exempting Virginia starting today.

On March 8th, Virginia became the first state to legalize Daily Fantasy Sports, declaring it a legal game of skill. The Fantasy Contests Act was signed that day by Governor Terry McAuliffe and it included a $50,000 licensing fee for any pay-to-play fantasy sports company. Season-long game operators were included in this DFS bill and the state made no attempts to differentiate between the two formats. For more on the history of this bill, see the ESPN.com story below:

http://espn.go.com/chalk/story/_/id/149 ... tasy-games

This bill was a huge win for Fanduel and DraftKings as it set the precedent that a state recognized DFS as a legal hobby. The catch was that someone pushed for all fantasy games to be included in the bill and legislators obviously didn't take the time to figure out how inclusive this new club would be. They may have thought they were punishing DFS companies with such a high licensing fee, but in fact all they've done is enable the biggest companies to have a duopoly on Virginia state fantasy players. For $50,000, Fanduel and DraftKings now control the entire Virginia fantasy sports market because no other company in the industry can afford to pay this huge fee. It's a bit of extortion on a government level and only the biggest can play in this game.

The reason for the short notice is because most of us in the industry thought we had time to apply for a license in Virginia and to work with the regulator there. Unfortunately, both the SBFSTA and the FSTA heard back from the regulator this week and there is absolutely no wiggle room there. The regulator at the Virginia Agriculture and Consumer Services Department (I kid you not) stated that the $50,000 licensing fee had to be in hand by July 1st and licenses could then be applied for after that. There was no grace period in Virginia as they were asking for payment first. As a result, I'm sure that every single season-long game operator will be exiting the state and I'd be surprised if more than 2 DFS companies remain there.

We remain hopeful that the other states that have included season-long into their DFS bills will be a little more flexible when we ask to work with them. After all, in the state of Virginia season-long pay-to-play fantasy games have been around for 30+ years and never once has the state interceded or forced companies to leave the state. While they are touting consumer protections, it sure looks like more of a money grab to me. And shame on everyone involved in passing this bill that they agreed to these outlandish terms that anyone could see would eliminate small businesses in the state. This is a law written for big business by big business lawmakers who don't even understand this business. Criminal.

We will honor what the Virginia lawmakers have passed, but we ask all Virginia residents to continue to talk to their legislators about this bill. At the very least, the regulator has a right to meet with small businesses and to carve out a way to continue working in Virginia, similar to what New York and other states are doing. We are all for consumer protections in our space -- don't get me wrong there, we support that -- but to create a law that basically pushes every small business out of the state for good makes no sense. Let's continue to put pressure on Virginia lawmakers and show them what an outlier they are on this subject with the hope that something gets changed for 2017. It probably won't happen, but let's see what we can do as an industry together.

Sorry about this Virginia residents, but there's nothing we can do. Virginia joins 5 other states that are exempt from the NFFC, but this is the first exempt state as part of DFS legislation. Not good for Virginia. Not good for our industry.

If you have any questions on this please contact me at [email protected]. Thanks all and good luck.

[KenGill]

Bad news Greg, and as you said..... CRIMINAL is the word.
This kind of stuff should not be happening.

[Sabretooth]

Just curious what are the other 4 states other than VA?

[Greg Ambrosius]

Just curious what are the other 4 states other than VA?

Unfortunately there are five states that strongly oppose fantasy sports contests with ANY cash prizes and they are: Arizona, Iowa, Louisiana, Montana and Washington. All have wording in their state laws that oppose cash prizes even for skill-based games, so most pay-to-play fantasy contest operators exempt them completely. We have for years.

In many cases, this isn't to protect consumers but to protect their lotteries and tribal agreements. And despite a push to change some of those laws in recent years, none of those states have been able to push fantasy sports through new legislation. We could be adding 3-4 more states in the next year, if not more.

Indiana is the next state we are dealing with. We must apply for a license by Aug. 1st to continue operating our games this year as we have been. But unless Indiana works with season-long game operators, that could be the next state to force fantasy sports away because their licensing fees are similar to Virginia.

[Sabretooth]

Well being an Indiana resident I hope they do work with us. I'm sure you will keep us informed.