hy did you come up with the DFS proposals? What was the need you saw for new measures?
John Gontrum: In 2012, the Office of the Comptroller was granted statutory authority by the Maryland General Assembly to enact regulations for the fantasy sports industry. Following the rapid growth of daily fantasy sports, Comptroller Franchot decided that consumer protections were necessary to ensure that the games are conducted on a fair and level playing field while facilitating the collection of appropriate taxes.
How do you assess the DFS market in Maryland? How many people bet on DFS contests in the state? How much revenue does the sector generate for the state?
Anne Klase: The industry says that 200,000 Marylanders participate in online daily fantasy sports competitions on a regular basis. We don’t know how much revenue is generated – the operators are not legally obligated to share business data of that nature.
"We feel confident these regulations provide the necessary and critically important protections for Maryland residents that play daily fantasy sports," Klase said
One thing that appears to be different than regulations proposed or enacted in other jurisdictions is a proposal that “requires game operators to notify Marylanders of their potential tax obligations.” Tell us about this.
John Gontrum: This provision is also included in the daily fantasy sports regulations that took effect in Massachusetts on July 1, 2016. As the tax administrator for the State of Maryland, Comptroller Franchot felt it was important to inform Maryland residents about their obligation to remit appropriate taxes on daily fantasy sports winnings by requiring operators to notify participants of their tax obligations before they compete in a competition and again if they win a prize in excess of $600.
Maryland was ahead of the curve on the fantasy sports front, legalizing the industry in 2012, years before regulatory scrutiny came down upon the industry in late 2015. How do you see the US DFS industry on a federal basis?
Anne Klase: It’s not our place to determine whether there should or should not be federal involvement in daily fantasy sports.
The Comptroller felt there was a need in Maryland to adopt reasonable and responsible regulations for the daily fantasy sports industry. He wanted to make sure everyone is playing by the same set of rules and that these games are being conducted fairly. We feel confident these regulations provide the necessary and critically important protections for Maryland residents that play daily fantasy sports.
What do you need for the new measures to come into effect? When would this happen?
Anne Klase: There is a process here in Maryland where a committee of the legislature, the Administrative, Executive & Legislative Review Committee (AELR) reviews the draft regulations. There is a minimum of 45 days in which the public will be free to comment on them. Those comments can lead to modifications to the regulations by the Comptroller’s office or requests for changes by the AELR committee that we would take into consideration.
If the AELR committee asks for changes, we can agree with them or decide to leave the proposed regulations as they are. Then, after the public comment period ends, the AELR committee has the power to vote to oppose the rules, to vote to approve them, or to do nothing. If the committee approves them then they are adopted. If they oppose them, it is possible for a review by the Governor. If they take no action they are finalized after a 30-day period.
John Gontrum: All in all, barring major issues, we anticipate the rules would likely be finalized before December, but this is a new issue, so we’ll wait and see what happens.