A legislative committee examined how consumer protections might be put in place for the growing daily fantasy sports industry. But that gave a chance for industry representatives, sports teams and players to express the need for fantasy sports to continue operating.
In recent months, there has been a growing trend in different states to heavily regulate companies like Draft Kings and Fan Duel that collect entry fees from players who use their platforms to assemble fantasy sports teams to compete against other players.
50 million players spend $15 billion to have a chance of winning prizes. Assembly Government Organization Chair Adam Gray, (D) Merced, wants to ensure that consumers are protected.
“To make sure games are fair, to prohibit underage usage, to prevent compulsive play, to guard against identity theft," Gray said.
Committee Member Marc Levine, (D) Marin County, who believes it's a form of gambling, had problems with recent ads touting the opportunity to win big.
“Unless you're pretty sophisticated, you are more than likely to lose your money," Levine said.
But the industry says the average player pays out $2 to $6 in entry fees for a game, and like any skill activity, every player has a chance to improve.
"When you first start out playing golf or tennis, your'e not likely to win but you get better...
anybody can play fantasy sports, and if they put in the time and they have the expertise, they will get better and they can win ... and that’s the nature of a skill game," said Peter Schoenke of the Fantasy Sports Trade Association.
Representatives of Fan Duel and Draft Kings say its a form of entertainment that entails skill and not chance and is therefore not gambling. Players testified that protections are needed but that the activity should not be banned because its a game of skill.
Representatives of professional sports teams like the Sacramento Kings, Golden State Warriors, and the Los Angeles Clippers of the NBA and the Los Angeles Kings of the NHL say fantasy sports is vital to their fan engagement strategies.
While the committee took up consumer protection issues, the determination of whether daily fantasy sports is a form of gambling or not may will be determined by the judicial system.