Legality of fantasy sports in Florida disputed

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TALLAHASSEE — As the Seminole Tribe offers online sports betting in Florida, a fantasy sports dispute intensifies amid efforts by gambling regulators to rein in companies accused of operating potentially betting games illegal.

In September, the Florida Gaming Control Commission sent cease and desist letters to three fantasy sports operators, threatening legal action if the sites did not shut down immediately.

But Sen. Joe Gruters, R-Sarasota, wants the commission to explain why the companies were targeted and clarify why they might be breaking the law when the industry's biggest players — DraftKings and FanDuel — are not. The senator raised these issues in a Dec. 18 letter to the commission's executive director, Lou Trombetta.

Gruters pointed to the cease and desist letters Trombetta sent to Underdog Sports LLC; SidePrize LLC, also known as Performance Predictions LLC, doing business as PrizePicks; and Betr Holdings Inc.

Gruters' letter questioned why “the two largest fantasy sports operators” in Florida had not received similar threats from the commission.

Related: Want to know the state of sports betting in Florida? Here are your answers

“The letters definitively state that “betting or wagering on the outcome of contests of skill…including betting on fantasy sports, is strictly prohibited and constitutes a misdemeanor.” It should be noted, however, that the commission's public position is less definitive. In the FAQ (frequently asked questions) on the commission's website, it states that “betting on fantasy sports” is “probably not” legal. I am concerned that the commission is applying an interpretation that is not supported by law and that it may apply its interpretation selectively,” Gruters wrote.

Gruters told the News Service of Florida that he spoke with Trombetta about the situation and asked why DraftKings and FanDuel were not being targeted.

“I guess the bigger players didn't get those letters. And so, for me, it's just a question of fairness. I think this should be generalized. I spoke to the general manager about it personally. He was in my office. And I think he said letters were going to come, but I don’t think they’re going out yet,” Gruters said in a phone interview Wednesday.

Gruters said he understands letters will be sent to DraftKings and FanDuel.

The Gaming Commission is “in the process of responding to Senator Gruters' letter,” Eric Carr, the commission's director of external affairs, told the News Service this week.

Months after receiving the cease and desist letters, the three daily fantasy sports operators appear to continue offering games on their apps and websites in Florida.

Questions about fantasy sports companies loom ahead of the 2024 legislative session, which begins Tuesday.

The three companies targeted by the gaming commission have hired a roster of lobbyists, including some of Florida's most prominent lobbyists, such as Nick Iarossi and Ron Book.

Gruters said he offered to introduce a bill to clarify the issue, but was told the commission was still “processing all the information.” Florida has laws regulating gaming activities, but does not have a law specifically addressing fantasy sports.

Meanwhile, Rep. Jason Shoaf, R-Port St. Joe, filed a fantasy sports measure that supporters say would mirror federal law. No Senate version of Shoaf's bill has been filed.

The fantasy sports dispute also comes as the Seminole Tribe has made strides in online sports betting.

A 30 year old agreement, signed by Gov. Ron DeSantis and Florida Seminole Tribe Chairman Marcellus Osceola Jr. and ratified by state lawmakers in 2021, gave the tribe “exclusivity” on sports betting — including mobile sports betting – statewide. Under the agreement, bets could be placed anywhere in the state using mobile devices, with bets processed on tribal lands. In exchange, the tribe agreed to pay the state at least $2.5 billion over the first five years of the agreement, known as a compact. The agreement also allowed the tribe to contract with the state's pari-mutuel operators to offer sports betting and gave the Seminoles permission to add craps and roulette to their casinos.

The agreement included an exception allowing “fantasy sports competitions” to be held.

But fantasy games targeted by gambling regulators could violate the pact, according to Jim Allen, who runs the Seminoles' gaming operations and was instrumental in brokering the deal.

Allen, president of Hard Rock International and CEO of Seminole Gaming, told the News Service that the types of games operated by the fantasy three companies are not permitted under the pact — or state law.

“We have made it clear that we have no problem with fantasy sports, especially what DraftKings and FanDuel offer. That said, when we get to Underdog, when we get to BetR and others like that, there's no doubt, not just in Jim Allen's opinion, it's not just the opinion of the Florida State Gaming Commission, it's not just the lawyer's. That's the general's opinion, but 11 other states… have categorically stated that what they're doing is gambling, that they're accepting live betting, and that it's illegal. And yes, it unequivocally violates the compact,” Allen said in a telephone interview last month.

On November 7, the tribe began accepting mobile sports betting from a limited number of players and expanded statewide. early December.

Fantasy operators targeted by regulators, however, claim their activities are legitimate.

“Our very popular fantasy sports platforms continue to operate legally in Florida, and we are certainly not violating the compact,” Allison Harris, a spokesperson for a group called Coalition for Fantasy Sports, told the News Service when asked asked to respond to Allen's comments.

Florida is not the only state targeting companies, which offer games known as “pick 'em style” fantasy contests or “over/under player prop pick 'em” games. Single fantasy players can choose from a pool of athletes who are assigned certain outcomes for different activities, such as a set number of yards or points scored. Players choose whether athletes will score above or below specified results.

DraftKings and FanDuel, on the other hand, offer games in which several fantasy players compete by building rosters of teams made up of athletes. Players earn points based on the athletes' performances.

A legal analysis provided to the Florida Gaming Control Commission by Joe Jacquot, a former general counsel for DeSantis who has worked for DraftKings and FanDuel, claimed that the three targeted operators were violating state law, which allows “games of address” but prohibits games of “chance”, unless authorized.

“FanDuel, as a sponsor of the contest, is simply setting up a purse that it is not participating in.” Companies that received cease and desist letters do the opposite: they enter the competition and win the prize if the contestant does not correctly guess the winning entries. Indeed, they say that under federal law it does not matter whether the contest involves the operator, but Florida law makes precisely that distinction,” Jacquot wrote in the document obtained by the News Service .

By Dara Kam, Florida News Service

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