Commission expects final regulations on daily fantasy sports by summer 2017

After Indiana became the second state in the country to authorize daily fantasy sports activities during the 2016 legislative session, the Indiana Gaming Commission told state lawmakers Tuesday that it is moving closer toward its goal of developing a set of rules to regulate the new industry.

During the third and final meeting of the Legislature’s Interim Study Committee on Public Policy on Tuesday, Indiana Gaming Commission Executive Director Sara Tait told committee members that her organization was looking toward a summer 2017 deadline for the full implementation of the daily fantasy sports industry and its state regulations.

Much of Tait’s report at the meeting focused on the differences between the daily fantasy sports industry and the traditional gaming industry. Senate Enrolled Act 339, which authorized paid fantasy sports games, specifically states that fantasy sports activities are not considered gambling and, thus, are exempt from the state’s illegal gambling statute, Tait said. Similarly, the executive director also noted that the language in the statute is limiting and does not allow the commission to exert the same control over the paid fantasy sports industry that it can exert over casinos.

Those differences have made the process of developing regulations for paid fantasy sports more challenging, so Tait said she and her staff have been conferring with industry experts and stakeholders to determine the best way to draft the regulations.

Some guidance has come from the language of SEA 339, which provides that participants must be at least 18 years old, prohibits contests on college or amateur sports, mandates an annual financial audit and requires paid fantasy sports operators to create a method for participants to self-restrict, similar to voluntary exclusion at casinos, Tait said.

But Tait also acknowledged that the paid fantasy sports industry is new and evolving daily, which means her job is to regulate the burgeoning industry while also allowing for flexibility to account for the inevitable innovations in the industry. Because it is a business that depends so heavily on technology, Tait said the daily fantasy sports industry has more in common with the tech industry than with the traditional gaming industry, which makes flexibility imperative to the regulations.
    
Aside from developing flexible regulations, the commission is also looking for ways to support child support payments through paid fantasy sports, a support system that is already in place through the traditional gaming industry.

At casinos, a person who wins a jackpot must show their ID when they collect their winnings, and if their name is included on the list of parents with delinquent child support payments, a portion of their winnings is automatically withdrawn and put toward the delinquent payments.

But in the paid fantasy sports industry, winnings are not reported to the IRS until the end of the year, and that report represents the net total of a person’s winnings, said Greg Small, general counsel for the commission. That reporting system creates problems for the delinquent child support payment withholdings because it does not provide an accurate picture of a person’s day-to-day winnings, but instead only shows the amount of winnings they have left at the end of the year, he said.

Lawmakers who sit on the study committee seemed troubled by that issue, with Rep. Todd Huston, R-Fishers, saying it didn’t seem like the current paid fantasy sports reporting system would do much good for delinquent child support payments at all.

Tait and Small agreed that there were several flaws with the current system that would have to be resolved, but Tait also pointed out that the commission, the state’s Child Support Bureau and industry leaders are already meeting to develop a better method that will benefit children whose parents are delinquent on their child support payments.