Delaware Secretary of Finance Tom Cook

Delaware Finance Secretary Tom Cook is the most recent state official to look into the legal merits of daily fantasy sports. (Image: Bob Herbert/The News Journal)

Delaware is officially reviewing the legitimacy of daily fantasy sports (DFS), Secretary of Finance Tom Cook confirming late last week that his office is investigating whether such practices are legal in the state.

Just days after Nevada issued cease and desist orders to the two market leaders, DraftKings and FanDuel, The First State is following its online gambling partner in questioning the so-claimed “skill” component of participating in DFS.

“When Nevada made the first move to shut down the sites, we felt that it was our obligation to certainly understand their reasoning behind it,” Cook said on Friday.

Nevada Gaming Control Board Chairman A.G. Burnett concluded that “wagering on the collective performance of individuals” constitutes sports betting, and though sports betting is legal in Nevada, online operators must apply and obtain a gaming license from the state.

DraftKings and FanDuel are currently unlicensed platforms but continue to operate in 44 states due to the contests being considered games of skill.

Even Church Bingo Has Oversight

It seemed to be only a matter of time until the onslaught of television commercials and continued rise in popularity of daily fantasy games drew the attention of lawmakers and legal critics.

A multi-billion dollar industry that is rapidly growing, DFS is predominantly unregulated.

In addition to DraftKings and FanDuel, Yahoo has launched its own DFS platform, and Internet gambling mega power Amaya launched StarsDraft to follow the branding of PokerStars, the largest iPoker network in the world.

There are no licensing fees being paid to states that New Jersey, Delaware, and Nevada presently collect for online casino operators, nor are states reaping the tax benefits of overall revenues.

“Even church fundraisers for bingo night have some oversight,” California Assemblyman Adam Gray (D-District 21) told the Associated Press. “We’ve got to have some regulation.”

Nevada and Delaware aren’t the only two states concerned with DFS. Pennsylvania is set to hold a committee vote this week to limit DFS to land-based casinos, and Michigan is also examining current laws to see if DFS is in violation.

DraftKings CEO Admits Gambling?

DraftKings and FanDuel are on damage control as the two networks defend the industry as a whole, but a recently discovered three-year-old interview will only make that defense harder.

During an “Ask Me Anything” discussion on the website, DraftKings CEO Jason Robins reportedly linked DFS to being a “mashup between poker and fantasy sports.”

“Fantasy sports has a carve out from the 2006 gambling regulation because it’s considered a game of skill,” Robins posted. “This concept where you can basically ‘bet’ your team will win is new and different from traditional leagues.”

Those words could damper DFS’ case to continue utilizing a loophole in the Unlawful Internet Gambling Enforcement Act that banned online sports betting but permitted fantasy games as long as they don’t rely on the outcomes of single events.

States will likely continue lining up to gain a piece of the DFS prize by forcing operators to obtain some sort of operating licensing and pay taxes on revenues generated to each state.