Many states have fantasy sports laws in place that are intended to create regulatory bodies within their borders for the purpose of overseeing and regulating fantasy sports operators. The big fantasy sports companies that come to mind are FanDuel and DraftKings, but many other corporate entities are doing business and thinking about launching gaming products for consumers to engage in different types of fantasy sports offerings.
Regulations, state-by-state, include the responsibility of fantasy sports operators to register to do business and often pay a fee for clearance. One such state that contains that type of requirement is the State of New Jersey, which became the sixteenth state to enact a fantasy sports law back in 2017.
New Jersey’s fantasy sports law provides the Division of Consumer Affairs in the Department of Law and Public Safety with the obligation to enforce the law. It explicitly states that fantasy sports operators must have a permit in place to provide fantasy sports services in the state. The law includes civil penalties for any person who provides fantasy sports activities without approval of the division.
We are finally seeing a state enforce its fantasy sports law against bad actors.
On August 22, the New Jersey Division of Consumer Affairs brought its first action to enforce the state’s fantasy sports law. It announced that it was fining Minneapolis-based SportsHub Games Network, Inc., which is the parent company of fanball, CDM Sports and LeagueSafe, in the amount of $30,000 for unlawfully operating a fantasy sports site in New Jersey.
To make matters worse, the Division found that SportsHub was also engaged in the practice of collecting information from customer social networking accounts and sharing that information with third parties, all without conspicuously disclosing same to its customers. Additionally, the Division took issue with LeagueSafe’s advertising claim that it is “the only fantasy sports consumer protection agency on earth.”
SportsHub, in agreeing to pay a $30,000 settlement amount to the State of New Jersey, also promised to alter its business practices to avoid making these types of advertising claims and to better make consumers aware of what it does with their data.
New Jersey has certainly made it clear that it intends to enforce its fantasy sports law, making SportsHub its first example of same. Expect the state to be vigilant toward other fantasy sports operators offering services within its borders, particularly those doing so without a valid license in place.
Additionally, other states with fantasy sports laws may soon follow suit, using New Jersey’s aggressiveness as foundation for using resources to enforce their respective regulations. All fantasy sports operators should communicate with their legal counsel to ensure that they are operating above board, when it comes to being properly licensed as well as complying with non-fantasy sports specific laws and regulations.
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