Vermont Becomes 12th State to Explicitly Legalize Daily Fantasy Sports

The first state to enter the Union became the 12th to expressly legalize the daily fantasy sports (DFS) industry, as Governor Phil Scott of Vermont signed a DFS regulation bill into law.

Officially known as S-136, the bill contained a suite of consumer protection measures unconnected to the gambling industry.

But amidst a wave of DFS regulation bills being introduced during the current legislative session, S-136 was written to include a section defining DFS as a game of skill which is exempted from the state’s strict gambling prohibitions:

“Fantasy sports contest means a virtual or simulated sporting event governed by a uniform set of rules adopted by a fantasy sports operator in which: (A) a fantasy sports player may earn one or more cash prizes or awards, the value of which a fantasy sports operator discloses in advance of the contest; (B) a fantasy sports player uses his or her knowledge and skill of sports data, performance, and statistics to create and manage a fantasy sports team.”

Through sponsorship by the Senate Committee on Economic Development, Housing and General Affairs, S-136 was introduced on March 21 – and by May 12 both the House and Senate held a conference committee to finalize its legislative language ahead of passage that day.

State senator Michael Sirotkin (D-Chittenden) was a participant in that conference committee, after which he told independent news outlet VTDigger why he supported S-136:

“Eighty thousand or more people engage in fantasy sports in the state of Vermont, and it’s a good thing to get some consumer protection and regulation around the whole industry.”

Chris Curtis, who serves as director of the attorney general’s Public Protection Division, also spoke with VTDigger to explain Vermont’s accelerated progress on DFS regulation:

“Our position has been that it’s better to regulate the industry so that there are rules of the road and so that consumers have an expectation that fantasy sports has a backstop for consumer protection.”

Under the terms of S-136, residents of Vermont and visitors to the state must be 18 years of age to play DFS. The use of computer scripting and other automated tools preferred by professional players is prohibited across the board, while employees and representatives – including sponsored athletes – are barred from participating in contests with a buy-in of $5 or more.

On the operations side of the law, DFS sites like DraftKings and FanDuel will be required to apply for a license through the Secretary of State’s office, with an annual fee of $5,000 attached.

The parameters for taxation of DFS industry revenue haven’t been finalized, with S-136 instead directing the Governor’s office and Attorney General to establish a “tax framework.” A deadline of December 15, 2017 has been set for that taxation scheme to be put in place.

A spokesperson representing both DraftKings and FanDuel issued a statement celebrating Vermont’s decision:

“More than 100,000 – and growing – fantasy sports fans can now breathe easy, as the state has made it crystal clear: fantasy sports are welcome in Vermont.

On behalf of those fans, we want to thank Governor Scott and the legislature – particularly Senators Kevin Mullin and Dick Sears and Representatives Bill Botzow and Michael Marcotte – for updating state law to affirm fantasy sports are legal and establish some common-sense regulations for all companies to ensure consumers are protected.

We look forward to continuing to work with Governor Scott’s team, Attorney General Donovan and members of the legislature on a final, comprehensive regulatory and tax structure.”

Vermont’s previous attempt to pass DFS legislation was derailed in 2016, when the state’s assistant attorney general John Treadwell told lawmakers that DFS contests “violate Vermont’s gambling laws.”

The Attorney General’s office has since reversed that opinion, paving the way for Vermont, and its population of 626,000 residents, to join regional neighbors like Massachusetts, New York, and Maryland in explicitly approving DFS.

The other states where DFS laws and regulations have been passed are Arkansas, Colorado, Indiana, Kansas, Mississippi, Missouri, Tennessee, and Virginia.