Skill or chance? New Jersey debates nature of fantasy sports

TRENTON, N.J. (AP) Making a case they hope will resonate with states across the nation, representatives of the fantasy sports industry told New Jersey lawmakers Monday that regulators should not treat them the same way as casinos because success in their industry relies more on skill than on chance.

Their testimony to an Assembly committee was clearly aimed beyond the confines of the state: New Jersey's gambling regulations are considered the strictest in the nation, and a favorable determination could clear the way for daily fantasy sports in much of the rest of the country as regulators look to New Jersey for guidance.

Last month, Nevada required fantasy sports companies to obtain a gambling license, and states including Pennsylvania, Massachusetts, New York and Georgia have considered enacting their own rules.

New Jersey officials, backed by a Monmouth University legal expert, said at the hearing they may have to change the state's Constitution if the state deems daily fantasy sports to be gambling, legally defined as games of chance. Such a determination would expand gambling beyond Atlantic City, requiring a Constitutional amendment.

For the fantasy companies, the crucial issue is getting states to agree that their operations are games of skill, and therefore not subject to costly gambling regulations that apply to casinos.

''It's a form of entertainment, not gambling,'' said Jeremy Kudon, who represents DraftKings, FanDuel and the Fantasy Sports Trade Association. ''Fantasy sports is a game of skill, not a game of chance. You need to understand the skills of different players. It depends almost entirely on the amount of time, research and talent - otherwise known as skill. Chance is not a material effect in the contest.''

Several lawmakers were clearly skeptical of such claims.

''It is clear that chance is a material factor into the outcome,'' said Assemblyman Troy Singleton. ''I know a ton of people who are skilled in drafting. But at the end of the day, if Tom Brady breaks his leg, it doesn't matter how skillful you were in drafting Tom Brady.

''I've lost to my wife a number of times in daily fantasy sports, and I know she doesn't have as much skill.''

Daily fantasy sports allows people to deposit money in accounts, create fantasy rosters of sports teams by selecting real players and then compete against other contestants based on their players' statistical performances to win money.

Representatives of the companies said they welcome consumer protection legislation that unequivocally establishes the legality of such contests and ensures fairness and transparency. But several said they object to the costs associated with casino licensure.

New Jersey Gov. Chris Christie, a Republican presidential candidate, said during the last GOP debate that regulating daily fantasy sports is a frivolous pursuit while terrorists are on the march overseas and while the country suffers from financial concerns.

''They shouldn't regulate fantasy football,'' Christie said. ''It's a stupid idea.''

But a state senator and former Atlantic City mayor said after the debate he would introduce a bill to regulate them after conferring with the state Division of Gaming Enforcement. Sen. James Whelan's bill would classify daily fantasy sports as games of skill.

Assemblyman Ralph Caputo said no decisions on whether or how to regulate them will be made immediately.

Some New Jersey lawmakers said they are wary of doing anything that might hurt the state's ongoing legal battle to be able to offer sports betting. Assemblyman Ronald Dancer and Dennis Drazen, a management consultant to the Monmouth Park horse track, each cautioned against doing anything to harm the larger push for legal sports betting.

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Wayne Parry can be reached at http://twitter.com/WayneParryAC

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