DENVER – State lawmakers are debating whether to regulate so-called “fantasy contests,” a sports craze that has moved past friendly competitions between friends into a form of gambling.
The underlying question is whether the contest is truly a game of skill, or chance.
Fantasy contests allow participants to choose a team of players in a sport, and then compete against other such fantasy teams. As those players compete in real live sporting matches, points are earned and calculated.
At the end of the day, week or season for the professional sport, fantasy winners are determined based on how well real players competed.
The legislation would not regulate informal contests between friends, family and co-workers. Instead, it would regulate outlets such as DraftKings and FanDuel, which provide daily cash winnings for fantasy sports.
The House Finance Committee on Wednesday advanced the bill, 9-2. It heads to the House Appropriations Committee. Earlier, it made it through the House Business Affairs and Labor Committee, 9-4.
The skill versus chance question is important, as games of skill are permissible and not considered illegal online gambling in Colorado.
Those committed to success in a fantasy group spend time researching statistics and trends of players. This is why it’s considered a game of skill. But, in the end, participants take a gamble on the success of players, as things happen beyond a fantasy “manager’s” control, such as injuries during a game.
The Denver Broncos sent a letter in support of the new regulation. It also has the backing of DraftKings, a Boston-based company founded in 2012, with about 300 employees. DraftKings and FanDuel, the two large fantasy jackpot companies, make up about 90 percent of the market.
“Ideally, you’re doing it not just based on hope, you’re doing it based on the research you’ve done and how those players perform,” said Derek Hein, DraftKings’ manager of government affairs.
The legislation would create a new Office of Fantasy Sports in the Department of Regulatory Agencies. It would be funded by a to-be-determined fee assessed on fantasy operators with at least 7,500 contest players in the state using the service.
The bill was amended Wednesday to create a licensing process for larger operators and a registration process for smaller ones. Smaller operators would not be subject to licensing fees.
The value of all prizes would be made known to participants ahead of the contest, and company audits would be required. University, college, high school and youth sporting events would be excluded from fantasy contests. The bill also would limit participation to adults older than 18, and exclude employees of the operator and their relatives living in the same household.
The effort in Colorado marks a trend across the nation, as states grapple to regulate the burgeoning industry.
Gov. John Hickenlooper, a Democrat, said he isn’t sold on the need for a state measure at the current time.
“I come on the side that there ought to be some regulatory effort at some point, whether that’s at the state level or the federal level, that’s what we’re trying to work through right now,” Hickenlooper said.
“There’s a huge amount of chance involved in it,” the governor added, pointing out that his son “cleans my clock every time.”
“But there are certain people who seem to do better at it than others. ... It’s a doorway into what a lot of us think is the beauty of sports.”
pmarcus@durangoherald.com
