Ohio's Proposed DFS Bill

A bill to legalize daily fantasy sports (DFS) in the state of Ohio has moved to the Senate after easily clearing the House of Representatives.

House Bill 132, sponsored by Reps. Jonathan Dever and Rob McColley, is now being considered by the state’s Senate Finance Committee, from which it will need to emerge with enough momentum to be voted into law before the end of the legislative session in November. Dever is reportedly optimistic, going on the record to say he thinks his bill will be enacted in the first quarter of 2018. The DFS industry’s army of lobbyists have been fighting hard to get Ohio to pass a bill legalizing the popular pastime before the end of the year, and if the Buckeye State’s lawmakers can make it happen theirs will be the second large state after New York to enact DFS legislation.

The details of the bill are fairly straightforward and highly favorable for DFS operators generally. For instance, the bill calls for a proposed $10,000 cap on annual licensing fees, considerably less than, say, Virginia’s $50,000 licensing fee. Ohio’s thinking is that high fees artificially put the brakes on what good be a booming industry, now dominated by just two major players – DraftKings and FanDuel. But there’s more: the proposed Ohio bill levies no operational tax against DFS operators, unlike Delaware and New York, which assess tax penalties of 15 percent, indicating the Ohio lawmakers’ intent not to make the DFS industry into a major source of additional state revenues.

Consumer protections called for in the bill include the usual provisions like age verification (to ensure all players are 18 years old and up), self-exclusion and segregation of funds, as well as provisions aimed at operational integrity and above-board bookkeeping. Finally, the bill places a prohibition on kiosk-based contests in retail locations, which could be a mixed bag for DFS operators looking to extend into previously untapped or underserved segments of the market. Leading industry analysts looking into the bill’s chances of getting passed don’t hold out much hope that this latter prohibition will end up sticking all the way through to the bill’s passage, if indeed it does get passed.

All the relative pros and cons of Ohio’s proposed DFS bill further illustrate the point that there is no unified or universally viable formula for crafting the perfect law to legalize and regulate daily fantasy contests. The lobbyists at DraftKings and FanDuel have had their say and will continue to do so, but often the various states that have passed legislation to legalize DFS have done so in a way that addresses their own particular set of circumstances, which is a tenant at the core of the equal sovereignty doctrine. The concept that each state ought to be free to decide laws that work for its people and work within the strictures thereof is a foundational principal of the United States’ division of powers and, further, that certain powers are reserved solely for the states.

This has been borne out at length by the fact that 15 states have joined Virginia, which became the first state to pass a law officially legalizing DFS games, since last year. Pennsylvania and Michigan, states close at hand to Ohio, are among them. Though some of these states have DFS regulations on the books now that reflect a general support for the industry, others are primarily about definitively answering the “game of chance vs. game of skill” debate in no uncertain legal terms.

Whatever the individual laws proposed and passed by states may be, it remains true that clear and common sense rules and regulations benefit the entire DFS industry and all of its players, not just the biggest names in the room. DraftKings and FanDuel, the innovators in the field, rightly deserve their place at the head of the table, but everyone else, from the smallest niche operators to DFS providers offering a more regional flair, deserve the chance to succeed and innovate too. The concept that Ohio’s bill seems to be working on is that a lower bar of entry into the legal DFS market is the way to grow local businesses in what is a booming sector of the market vying for the attention of America’s sports fans for sports betting in Ohio, and that makes the Buckeye state’s proposal a real win-win for all affected parties.

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