The first three state licenses have been issued to fantasy sports operators that will provide their paid-entry contests to sports fans in Indiana.
The IGC Approves DFS Licenses
In order to legally accept payments from Hoosiers, DraftKings, FanDuel, and Fantasy Draft all applied for licenses as required by the Indiana Gaming Commission (IGC) under Indiana SB No. 339. For a one-year license, the DFS operators were required to pay $50,000 upfront with a $5,000 annual renewal fee. As of Friday, there are still thirteen other operators that initially showed interest in obtaining licensure but ultimately opted out. The sites were permitted to offer their services under a temporary agreement arranged with the gaming authority, however they will have to pull out of the Indiana market by Saturday. “I should note that we have been communicating with these parties for quite some time, that information has been posted on our website,” said Sara Tait, Indiana Gaming Commissioner Executive Director. “So every party should have plenty of notice that they should cease operations in Indiana effective July 1.”In a situation where an Indiana resident enters a paid fantasy sports contest with an unlicensed operator, the Indiana Gaming Commission would not seek charges against the player. Serving only as a regulatory body, any gambling activity deemed as “illegal” would be handled by local prosecutors.
Inside Indiana Senate Bill 339
Indiana was one of the first states to pass fantasy sports regulations in 2016. Indiana Senate Bill 339 was signed by then-Governor Mike Pence on March 24th of last year and provided the complete regulatory framework for fantasy sports contests within the state. Here are a few highlights of the law:
- Fantasy sports are defined as a game of skill.
- Contests on high school and collegiate sports are prohibited.
- The minimum age to enter a fantasy sports contest is 18 years old, and operators must have verification procedures.
- The fantasy sports sites must be audited annually
Certain consumer protections such as the separation of player funds from operational monies, allowing participants to block themselves from playing, and barring immediate family members of employees from entering contests at sites for sports betting in Indiana were also included in the law.
Will The FanDuel/DraftKings Merger Effect Licensure?
Last year, FanDuel and DraftKings announced that they had entered into a merger agreement that was set to be finalized by the end of 2017. The reason behind the union of the two biggest DFS operators was initially unclear when their intentions became known to the public. However, after their 2016 losses were leaked in a report by Axios, it became abundantly clear that the merger was driven by finances. Together, the two companies had a reported loss of $151 million.
Combining forces has been put on hold by an ongoing investigation by the Federal Trade Commission (FTC) and the Attorneys General in the State of California and the District of Columbia. The FTC announced that they would be challenging the merger, arguing that if the two operators combine they would control more than 90% of the daily fantasy sports market in the United States.
Fortunately, the pending legal action against the two DFS leaders will not impact their standing in the Indiana daily fantasy sports market.
"We would each be operating as independent contractors...," stated Cory Fox, Counsel for Policy and Governmental Affairs at FanDuel. "If at some later date there's a possibility of a merger, we definitely would be in touch and discuss it with you at that point."