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Public hearing held on fantasy sports bill

By Sam Mattison
Alabama Political Reporter

Fantasy contests and gambling and how they relate to one another were the two main topics at a Senate Committee meeting on Wednesday.

The Senate Tourism and Marketing Committee meet on Wednesday to hold a public hearing on Senate Bill 270 concerning fantasy contests.

SB270 would make fantasy contests exempt from the State prohibition on gambling and require operators to register in the State. It would also provide protection for fantasy sports consumers in Alabama. There is also a House bill with the same provisions as SB270.

Fantasy contest are more commonly known as fantasy sports. In these games, people assemble non-existent teams from real players in the sport. They then compete in a fantasy game using the real-world stats of the players. These competitions usually involve wagering money on who will win. They also usually range from daily, weekly and seasonal play.

These contests are usually held online at websites such as FanDuel. RotoGrinder, a website dedicated to fantasy sports analysis, said that FanDuel has a 65 percent market share of the daily fantasy sports market. The second popular website to play fantasy sports is DraftKings.
More than 57 million people in Canada and United States play fantasy sports a year according to the Fantasy Sports Trade Association. Since 2006, the number of players has tripled.

In April 2016, then Attorney General Luther Strange sent a cease and desist letter to both DraftKing and FanDuel to stop their operation in Alabama.

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Strange said the contests relied primarily on chance and constituted as gambling in the State. Both websites responded by shutting down operations in the state. Alabama is one of eight states that ban fantasy sport contests.

The debate about fantasy sports being a form of gambling has been whether it is a game of chance or skill.

Sen. Paul Sanford (R-Madison) and sponsor of the bill, said it would legitimize an already popular activity. He cited that the bill would bring money into the State through taxes imposed on both the companies and awards to the winners.

Since these companies would have to register in Alabama, they would also have to pay taxes. Additionally, all awards payed out would be taxed also.

Sanford said that fantasy contests are about skill and not chance. He said he does not consider it gambling. He said that daily fantasy sports are “predominantly” entertainment purposes and not about wining money.

Sen. Tim Melson (R-Madison) was skeptical of the claim it was not gambling. He said that while it may be gambling, it is a “harmless” form of gambling. He did not say how he would vote on the bill.

Joe Godfrey, Executive Director of the Alabama Citizens Action Program, does not support the bill. He said that daily fantasy sports are a game of chance and not a game of skill. He said the game is not about entertainment but rather it is about winning money.

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“The money always comes from the losers,” Godfrey said.

During the hearing, Godfrey made a distinction between seasonal and daily fantasy sports. He said while seasonal sports may be considered gambling, they provided a community to those who played them. He said that he did not think that daily fantasy sports would build communities because it is mostly played with strangers. After the meeting, he clarified that he does not support seasonal fantasy sports.

Godfrey also had major concerns over the youth of Alabama having access to these websites. He said that this would turn every gaming console into a Las Vegas gambling machine. Godfrey said that he hopes the bill will not pass.

Jeremy Kudon, a partner in Orrick law firm, said that daily fantasy sports are a game of skill. Kudon represents FanDuel and DraftKings. He said that fantasy sports builds communities and has become an activity that a lot of Americans participate in including 700,000 Alabamians.
“Fantasy sports have become our new national pass time,” Kudon said.

Kudon said that the bill would also “close the door” on underage gaming in the State. He said that similar legislation would stop anyone under the age of 19 from participating in fantasy contests in Alabama. He also said it would prevent picking players from college or high school teams to be on a fantasy team.

Kudon also cited the financial benefit that the state would see with the passing of the bill. He said he was very “optimistic” about the bill passing. He cited nine other states where he successfully advocated for similar legislation that passed.

The bill was not voted on by the committee.

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