Chance or skill? Daily fantasy sports debate reignited in Alabama

Daily fantasy sports

Joe Godfrey, executive director with the Alabama Citizens Action Program, speaks before the Alabama House State Government Committee on Wednesday, April 17, 2019, in support of legislation that would legalize daily fantasy sports in Alabama. Standing behind him is state Rep. Kyle South, R-Fayette, who is sponsoring the latest legislation that would allow FanDuel and DraftKings to conducted daily fantasy events within the state. (John Sharp/jsharp@al.com).

A daily fantasy sports dispute in the Alabama Legislature is becoming almost as common as someone making an ill-informed decision during their annual fantasy football draft.

But this year, the latest sponsor of legislation legalizing the daily fantasy sports, is confident that a majority of his colleagues are willing to bring the issue “across the finish line.”

On Wednesday, state Rep. Kyle South, R-Fayette, got off to a good start after the Alabama House State Government committee endorsed HB361, the so-called “Fantasy Contest Act.”

It’s an almost identical proposal that has surfaced in the Legislature in recent years, only to be tripped up within the Alabama Legislature over worries that the daily fantasy sports should be regulated like sports gambling.

South, like other proponents before, disputes that claim.

“I think there are some challenges out there for actual forms of gambling, and there are hurdles out there,” said South. “But I’m making the distinction that this isn’t gambling. It’s a game of skill.”

Game of skill

Unlike previous versions of the legislation, South wanted to hammer home that point by including an amendment to his bill that actually defines a “fantasy contest” as a simulated game of skill in which the following occurs:

-Winning outcomes are determined predominately by accumulated statistical results of individual athletes in actual sporting events

-Winning outcomes are unlike sports gambling in that the are not based on point spreads, scores, or a performance by a sports team or multiple teams or solely on a singular performance of an athlete during a single sporting event.

Daily fantasy sports, which have soared in popularity in recent years, are online sites that allow fantasy gamers to create fictional teams of real players from real sports leagues. Winners are determined by the statistical results on the field.

“I think the amendment narrows the scope and clearly defines what fantasy sports are and that is that it’s a game of skill rather than a game of chance,” said South.

Traditionally, fantasy sports are mostly small-time fun that can consist of co-workers or friends forming leagues and taking to websites such as CBS Sportsline or ESPN to draft professional players to their fictional teams.

But about eight years ago, DraftKings and FanDuel emerged as the two biggest players in a growing industry. The companies began offering high-tech, fast-paced fantasy gaming online. Players could form teams, conduct drafts, change lineups, trade players, and compete in leagues. And the players could put their own dollars on the line, perhaps scooping up large cash payouts if their teams did well.

DraftKings is out of Boston, and FanDuel is based in New York. Together, they boast around a combined 15 million active users.

None are from Alabama. At present, the state is among eight that block daily fantasy sports gaming, whether it’s by DraftKings, FanDuel or any other entity. Almost every state in the South has adopted legislation in recent years legalizing the activity.

The two companies had been operating in Alabama, but were forced to stop the activity was declared illegal by then-Attorney General Luther Strange in 2016. Current Attorney General Steve Marshall has been on record in support of Strange’s stance.

South said Alabama could see a hefty revenue bump if the two companies were allowed to return.

And for the first time since daily fantasy sports legislation materialized in Alabama, a financial picture is forming: Approximately $1.6 million, but up to over $4 million in new revenues could be generated to the state’s General Fund with the approval of the legislation.

The figures are based on fees that are wrapped into the legislation highlighted by a 6 percent tax on a fantasy operator’s gross fantasy contest revenues from the preceding 12 months.

In addition, the major fantasy gaming operators – those with annual gross revenues over $10 million – would pay annual registration fees of $85,000 to the state. The fee for the smaller operators would be $1,000.

A spokesman representing FanDuel and DraftKings remains hopeful that Alabama – home to a rabid base of college football fans – will open its doors to them.

“We are extremely hopeful we can bring fantasy sports back to one of the best sports states in the country and it’s millions of fans,” said Marc La Vorgna, spokesman for both FanDuel and DraftKings. “The law we are seeking has been proven to work in other states, including neighboring Tennessee and Mississippi by protecting fans and allowing them to enjoy and share fantasy sports contests they love with friends, family and more.”

Gambling debate

To Joe Godfrey, fantasy sports is nothing more than gambling. He’s the executive director of the Alabama Citizen’s Action Program, an interdenominational ministry that is a well-known voice in the state’s political arena and an opponent of any forms of gambling.

“As far as I’m concerned, it’s opening the door for full-fledged gambling,” Godfrey said.

He was the only person to speak in opposition of South’s legislation during Tuesday’s committee meeting.

“The states that have legalized daily fantasy sports have put the governance of that under their state gaming and gambling commissions,” Godfrey said. “New York refused to legalize it until it was placed under the gaming commission of New York.”

New York legalized daily fantasy sports in 2016, despite protests from opponents who viewed it as a form of gambling, which is a prohibited without an amendment to the state constitution. The matter is facing legal scrutiny before a New York state appellate court, which will consider whether the state’s Legislature acted legally in allowing the activity.

Godfrey predicts the same would be true in Alabama.

State Rep. Chris Pringle, R-Mobile, chairman of the State Government Committee, predicted a legal challenge to Scott’s bill.

Said Godfrey, “We are dealing with a gambling legislation that requires a constitutional amendment, not a simple statute. It requires going before the people to allow this kind of gambling to occur in Alabama.”

Godfrey’s comments drew some colorful rebuttal on the committee. State Rep. John Rogers, D-Birmingham, compared daily fantasy sports to obtaining a life insurance policy, in that they both carry a form of risk.

“You can make gambling anyway you want to make it,” said Rogers. “With life insurance, (the insurance company) is gambling that I don’t die early. To me, life is a gamble.”

Rogers then broke out in a defense of legalizing lottery in Alabama, which has long been a sticking point and dispute among lawmakers because most states in the U.S. allow it.

“It’s about time Alabama gets out of the dark ages,” said Rogers. “Right now, every state is playing lottery. We are putting our money into other states and it’s about time we figure there is a lot of things we have to fund in Alabama.”

Godfrey replied back, “We’re not dealing with the lottery. We’re dealing with daily fantasy sports and the people who are hurt the most are the ones who are losing. The poorest among us are those who suffer the most from gambling.”

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