By: Julia Gonsalves
As the fall season approaches individuals of all ages gear up to start thinking about their fantasy sport teams. Some people choose to use Yahoo Sports to create fantasy leagues with their friends, but others may choose to use internet platforms such as DraftKings Inc. and FanDuel Inc. These types of organizations allow individuals to place daily bets on professional athletes and team performances in upcoming events. As convenient as these websites may be to earn a little extra cash, many people are not aware of the potential consumer risks.
In 2015, the Massachusetts Attorney General’s office conducted an extensive investigation into the business models and operating practices of DraftKings and FanDuel. Although these fantasy organizations are exempt from complying with the federal statute of the Unlawful Internet Gambling Enforcement Act of 2006, which “prohibits gambling businesses from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the Internet,” it was found that both organizations previously struggled with economic and consumer protection issues. As a result, the Attorney General’s office created the statute of Daily Fantasy Sports Contest Operators in Massachusetts, which strives to regulate Daily Fantasy Sports Operators (“DFSO”) doing business in Massachusetts.
To increase consumer protection of those placing online bets with companies like DraftKings and FanDuel, 940 C.M.R. 34.00 specifies that DFSO’s must comply with applicable state and federal data security laws. The statute further goes on to set age and professional athlete restrictions, and specifies who can enter more challenging online contests. The rationale behind the Massachusetts Law is to protect people from deceptive acts and practices that may arise in the gaming process and to keep personal information more private. Additionally, the statute helps protect families who may be affected by unfair gaming practice.
The Daily Fantasy Sports Contest Operators statute became enforceable on July 1, 2016. Due to the implementation of the new statute and the examination of company business format, DraftKings and FanDuel have reached a settlement with the Massachusetts Attorney General’s office as a result of fixing unfair business practices. It was decided in September 2017 that both companies will pay 1.3 million dollars to resolve a probe of the unfair and deceptive practices affecting consumers that were previously taking place in the organizations.
The key takeaways of 940 C.M.R. 34.00 are that consumers, who are legally allowed to enter in online contests, will be protected to a much greater extent when inputting critical information online. DFSO’s are required to keep monetary bets in a secured account and there will be repercussions for organizations if finances seem out of place. Because of the steps that 940 C.M.R. 34.00 took, many other states are following Massachusetts creating their own regulations of DFSO’s organized in their state.
Bio: Julia Gonsalves is a 2L at Suffolk University Law School. She is currently a staff member of the Journal of High Technology Law. Julia is originally from Newington, CT and received her Bachelor of Science in Biomedical Sciences at Quinnipiac University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
