Maryland Lawmakers Call ‘Time Out’ on Fantasy Sports Gaming Regulations

Published October 21, 2016

Maryland lawmakers are questioning proposed new restrictions on how consumers can play fantasy football and other online fantasy sports games.

In October, Maryland lawmakers placed a hold on regulations proposed by Maryland Comptroller Peter Franchot, restricting of the amount of money players are allowed to spend on daily fantasy sports (DFS) competitions and requiring companies facilitating DFS competitions to warn players about the skill levels of other participants.

Daily fantasy sports services allow players to compete online by selecting athletes for fictional “fantasy” teams. Players compete for prizes by comparing their teams’ real-world performance statistics over an agreed-upon period.

‘Legislating in the Blind’

Michelle Minton, a consumer policy fellow at the Competitive Enterprise Institute, says the new restrictions are solutions in search of problems to solve.

“If you’re going to regulate something, you should probably wait until there’s a problem,” Minton said. “This is legislating in the blind. There was no problem. No one was complaining. As far as I know, there was no single complaint. None of the players were saying they had been ripped off.”

Minton says consumers don’t need regulatory boards and government restrictions to decide which fantasy sports services to use. 

“People are generally smart,” Minton said. “If there is a website and there are people cheating on it, the gamblers know. They can tell if they are losing money on one site versus another. There’s nothing that motivates people more than money, and they will figure that out.”

Creating Advantages for Big Companies

Charlie Hughes, a research associate at the Cato Institute, says increasing regulatory costs favors big companies over smaller upstarts.

“There are unintended consequences and problems with these kinds of proposals,” Hughes said. “You’ll see that the larger ones, like DraftKings and FanDuel, will be able to navigate the waters and deal with the compliance costs. It might lead some of these smaller ones to exit the market.”

‘Perpetual-Motion Regulation Machine’

Hughes says the havoc caused by government regulations gives lawmakers and regulators excuses to further expand their power.

“It’s a perpetual-motion regulation machine,” Hughes said. “It’s part and parcel with the rush to regulate. There are unintended consequences of the regulation, and then those new perceived problems kind of bring forth a host of new proposed regulations.”