This past weekend, the New York State Legislature passed a bill that will legalize and regulate the fantasy sports industry. The bill is being sent to the Governor’s office for review and potential signature. Should the Governor sign the bill into law, the provisions would take effect immediately as of the date of signing.

What are some of the key components of the anticipated New York regulatory framework?

Included among the main provisions of the New York fantasy sports bill are:

  • Mandatory registration with the New York State Gaming Commission (“NYSGC”) for all operators;
    • Operators who had been offering contests in New York as of 11/10/2015 will be permitted to continue operations while their application is pending approval;
    • Each platform and each type of contest must be reviewed and approved by the NYSGC; and
    • Registrations will last for 3 years, with a renewal process to be developed by the NYSGC.
  • Prohibiting minors from participating in contests;
  • Restrictions on advertising the likelihood of winning contests, including identification of the median and mean net winnings of participants and the percentage of winnings earned by highly experienced players;
  • Prohibitions on high school, collegiate and horse racing-related contests;
  • Mandatory technical requirements including:
    • Offering introductory procedures for participants;
    • Identification of highly experienced players for each platform;
    • Disclosure of the maximum number of entries a single user may submit to each contest; and
    • Development of procedures for participant submission of complaints.
  • Segregation of player deposits from operating funds;
  • Prohibition on the use of third-party scripts; and
  • Submission of annual reports to the NYSGC.

The Continued Push to Regulate the Fantasy Sports Industry

New York is now on the precipice of becoming the biggest state to legalize fantasy sports. Nevertheless, it joins a growing bloc of states to have formally enacted fantasy sports legislation recently. This group also includes Colorado, Missouri, Tennessee, Mississippi, Indiana and Virginia. Other legislative initiatives are underway in statehouses across the country including, among others, Wisconsin, California, and Florida. Fantasy sports contests and the laws and regulations that govern them, continue to grow and evolve. Accordingly, it is essential that fantasy sports enterprises keep abreast of the developing legal landscape. Operators should regularly review their respective contest platforms, entry fee and prize structures with knowledgeable counsel in order to effectively navigate this rapidly-changing regulatory framework.