Seeking to keep games going, fantasy sites enlist state lobbyists

The fantasy sports website DraftKings is shown. DraftKings and its rival FanDuel have been under growing scrutiny around the country.

The nation's largest daily fantasy sports sites are lining up top Maryland lobbyists and attorneys — including the state's former chief gambling regulator — to build support for keeping the games going as the state attorney general prepares to weigh in and the legislative session looms.

More than 100,000 Marylanders who have played on the sites of industry leaders FanDuel or DraftKings recently received company emails urging them to register their support for the games with Comptroller Peter Franchot, according to an industry trade group.


Maryland law grants regulatory authority over fantasy sports to the comptroller, who says he wants to assess whether consumers are being protected from "potentially detrimental industry practices."

"Some states have banned fantasy sports, and we are concerned that Maryland may be heading in that direction," FanDuel said in the email to its users.


In advance of the opening of the General Assembly session on Jan. 13, FanDuel and DraftKings have retained Baltimore and Annapolis lawyer Frank Boston III and officials from the Annapolis government relations firm Perry, White, Ross & Jacobson. All recently registered as lobbyists for FanDuel and DraftKings with the state Ethics Commission, according to online records.

In addition, FanDuel retained Baltimore attorney Stephen Martino, former director of the Maryland Lottery and Gaming Control Agency, to work on regulatory and legal issues.

The activity comes as lawmakers and regulators have expressed concern that the industry has changed — and grown — so substantially that reforms may be needed.

Last month, state Senate President Thomas V. Mike Miller asked the attorney general's office for advice on fantasy sports gambling. The opinion, expected within a few weeks, will "examine whether in our view it qualifies as an expansion of commercial gaming, which would necessitate a constitutional amendment, or whether a 2012 law exempting fantasy leagues from the criminal gambling prohibitions is operative," said David Nitkin, spokesman for Attorney General Brian E. Frosh

Miller's interest follows drastic changes in fantasy sports operations, once known mainly as platforms for friends and relatives to play against each other over the course of weeks or months. Today, it is an intensely competitive, multibillion-dollar industry supported not only by consumers but by substantial investments from media companies and professional sports leagues.

In 2012, Maryland modeled its fantasy sports statute after federal legislation. The state law, which exempts fantasy competitions from other gambling prohibitions, says fantasy games reflect "the relative skill of the participants."

The law "was designed for the guys at the bar or the guys in the den," said Del. Samuel I. "Sandy" Rosenberg, a Baltimore Democrat. "As with many other things, the Internet creates a different world."

The attorney general's input is expected to help frame the legislative debate.


"I am waiting on Attorney General Frosh," said Del. Eric Luedtke, a Montgomery County Democrat and the House chair of the joint gaming committee. "But I believe daily fantasy sports should remain legal and should have common-sense consumer protections. I will work on whatever legislation is necessary to ensure those two things happen."

In fantasy games, participants select or "draft" players in football and other sports, accumulating points based on the players' statistical performances.

Officials in other states have acted against New York-based FanDuel and Boston-based DraftKings.

The two companies face a legal challenge from New York Attorney General Eric Schneiderman, who ordered them to stop taking what he says are illegal wagers under that state's law. He also wants the companies, which maintain that their operations are legal, to return profits made in the state.

Nevada has limited daily fantasy sports to operators with gambling licenses. In Illinois, FanDuel and DraftKings are challenging Attorney General Lisa Madigan's assertion that the games are a form of illegal gambling.

FanDuel said in ads in 2015 that it would pay out an "expected $2 billion in real cash prizes this year," while DraftKings advertised "More than $1 billion guaranteed."


In Maryland, Franchot — a vocal opponent of Maryland's casino gambling expansion in 2012 — convened a meeting on fantasy sports last month that included representatives of Gov. Larry Hogan and of Frosh and the state's gambling control agency.

"Conversations among state officials and between the Comptroller's Office and industry representatives are ongoing as our office continues to look into ensuring that taxes are being properly collected, consumers are being sufficiently protected and that the companies are operating within the confines of the law," Andrew Friedson, a Franchot spokesman, said in an email Monday.

The Ethics Commission lists Boston and two officials with Perry, White, Ross & Jacobson — Jonas Jacobson and Jennifer McLaughlin — as lobbyists for the fantasy sites. There was no reply from Jacobson's firm, and Boston referred comment to a DraftKings official who was not available Monday.

A FanDuel spokesman provided a statement from Jeremy Kudon of Fantasy Sports for All, an advocacy group created by the industry's trade association.

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"Our players are passionate and they should know when someone is trying to take the game they love away from them," Kudon said.

Martino, now an attorney in the Baltimore office of Duane Morris, said Monday that he and others recently met with the comptroller's staff.


"The daily fantasy sports industry is not hostile to consumer protection oversight," Martino said Monday. "In fact, the CEO of FanDuel has called for it. The question is what form that oversight will take. I don't think intrusive, casino-style regulation is necessary or appropriate. And over-regulating it could kill an industry that millions enjoy."

FanDuel and DraftKings say they have more than 5 million and about 2.5 million users, respectively.

According to court filings, DraftKings has partnered financially with Fox Sports, Major League Baseball, and the owners of the NFL's New England Patriots and Dallas Cowboys, among others. FanDuel investors include the NBA, NBC Sports Ventures and ComcastVentures. The NFL has not partnered with either company.