Rhode Island AG Declares DFS Legal, Legislation to Regulate Underway

In a surprising turn of events, the Attorney General from one US state has issued an official opinion that daily fantasy sports (DFS) are a legal form of gambling. AG Peter Kilmartin of Rhode Island said DFS betting does not violate any state laws, but urged legislators to pass a bill to regulate the industry and license operators.

Rhode Island State HouseThe Star Tribune reported Kilmartin’s acquiescence to daily fantasy sports, with the AG saying the games combine chance and skill, therefore are not prohibited by the current laws of Rhode Island.

After conducting his official review, the Attorney General issued his report to the state’s leaders, Gov. Gina Raimondo, Senate President Teresa Paiva Weed and House Speaker Nicholas Mattiello, all fellow Democrats. Immediately following the report, another fellow Democrat, Rep. Raymond Gallison, introduced legislation to license DFS operators.

Being a heavily-Democratic Assembly, chances are Kilmartin and Gallison will see swift success in their endeavor to authorize licensure for operators like DraftKings and FanDuel. The major question for DFS fans outside Rhode Island, however, is whether passage of the bill could spark a domino effect among other US jurisdictions.

Significance of Rhode Island’s Decision

What makes Rhode Island’s acceptance of DFS as a legal form of gambling is the fact that many other states have taken an opposing attitude toward daily fantasy sports.

Prior to recent challenges, DFS was only banned in Arizona, Iowa, Louisiana and Montana. Last year, Nevada moved to declare the activity illegal without official regulation. New York was quick to follow with AG Schneiderman opining DFS to be illegal in the Empire State. Within weeks, the same opinion was issued by AG’s in Illinois and Texas.

In Massachusetts and Hawaii, legislators are exploring the possibility of regulating DFS, but did not declare the activity legal under current law.

Bill to License DFS Operators in Rhode Island

As is always the case with regulation of online betting activities, taxation and consumer protection top the priority list of Rep. Gallison’s bill. In a press release issued Thursday regarding the impending legislation, Gallison said:

“This bill takes no position on whether daily fantasy sports are legal; it just recognizes that if they are, there exists a need for government oversight. Someone needs to regulate the activities to ensure the fairness of all the contests offered and protect the participating Rhode Island consumers.

“There are so many ways to transact businesses and interact with others across the globe, and businesses that operate solely online are not paying the same share as bricks-and-mortar businesses that contribute to our state and communities. Our laws need to adapt to the realities of the 21st century and find new ways to recognize that online industries are real, make serious money from Rhode Island consumers, and should be contributing as well.

“In the absence of federal regulations or standards governing daily fantasy sports or other online contests, this legislation takes us in the right direction, protecting the interests of the state and its consumers. I hope all of the businesses that operate sites covered by this bill will participate in the legislative process and take the opportunity to become licensed to operate in Rhode Island.”

Just one day out of the gate, the DFS regulatory measure has already received the sponsorship of four Democratic representatives in the state, including Rep. Gregg Amore, Rep. John M. Carnevale, Rep. Marvin L. Abney and Rep. Kenneth A. Marshall.

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