Mass. Attorney General Maura Healey.

After DraftKings and the daily fantasy sports industry got harsh treatment at the hands of New York’s attorney general, Maura Healey’s response has already been called “common sense” and “player friendly.” Announced on Thursday morning, the Massachusetts attorney general rolled out consumer protection regulations that enable daily fantasy operators to continue in the state, while simultaneously imposing new standards (full text of the regulations is seen at the bottom of the page).

“These are the rules of the road, should they wish to continue operating here in Massachusetts,” Healey asserted in her press conference. And rules that her office has devised (after a period of review) have already been met with approval from those in the industry:

Her proposed regulations aren’t soft. They are ahead of the game among states. Healey explained in her press release:

These regulations are first of a kind in the country for daily fantasy sports companies and they focus on important issues, like protecting minors, ensuring transparency, bringing more transparency to the industry generally and leveling the playing field for consumers.

How DraftKings will change under the new regulations

Mostly, the company’s fundamental model will be allowed to go on, which is undoubtedly good news for DraftKings and its players. However, a few alterations will take place:

  • Minors under the age of 21 are no longer allowed to play, meaning that age verification will now be a part of signing up for the site. According to Eilers Research, 12.7 percent of daily fantasy players are between 18-24, with 5 percent of that group being under 21, per estimates.
  • Daily fantasy college sports contests are banned. This is a loss for DraftKings, but not a huge one. In September its weekly college football entry fees hit $1.1 million, a fraction of its NFL business.
  • Daily fantasy advertising must make greater disclosures as far as likelihood of winning and the average win, holding more strictly to a “truth in advertising” standard.
  • Operators must account for and institute “problem gambling” standards, though DraftKings is quietly working this in, already.
  • Deposits in daily fantasy sites are limited to $1,000 per calendar month (though there are certain exceptions to this outlined below).
  • No credit may be issued to daily fantasy consumers from the operators.
  • Employees and contractors can’t play in public daily fantasy contests (they were already banned by the companies, but this just makes it official)
  • Players are restricted to a certain number of entries per contest, dependent on the size of the contest itself.

Additionally, DraftKings will have to change the specific rules regarding when its contests lock. Unlike FanDuel, DraftKings had different rules in this regard (allowing late substitutions). Now, those substitutions would be banned.

Student protections

One of the core elements in Healey’s regulations will focus on minors and their protection. Massachusetts will ban “persons under the age of 21” from playing, meaning that a large demographic of players among the state’s numerous colleges and universities are no longer eligible. Ads are also now limited in regards to minors.

The regulations, Healey said, “work to protect students, by banning advertising on high school and college campuses and prohibiting daily fantasy sports games based on college sports.”

Policing the “Highly Experienced Players”

The other notable aspect of the proposed regulations (seen in their entirety at the bottom of the page) is that Healey attempts to protect “beginners” (who are defined in the regulations as “any DFS player who has entered fewer than 51 contests offered by a single daily fantasy sports operator”).

Addressed in section 34.12 of the regulations, daily fantasy operators in Massachusetts will have to provide “beginner games,” allowing only those players who meet the “beginner” criteria to play. It’s designed to ensure a finite percentage of experienced players aren’t monopolizing the winnings.

And in regards to the “highly experienced players,” they will have to be clearly identified if they meet certain criteria (demonstrating their experience). One daily fantasy writer compared to a “verified” Twitter account:

“Scripts” will also be formally banned. These are basically computer programs that help professional daily fantasy players gain an advantage.

Conclusion

Though there is some question over how quickly daily fantasy companies will be able to ready themselves for the implementation of the regulations (which will be filed to the Mass. Secretary of State’s office on Friday), by and large the response from the daily fantasy community has been positive.

DraftKings issued a statement that essentially reflected this:

The Massachusetts Attorney General has taken a thoughtful and comprehensive approach to the Fantasy Sports Industry.  While we do have some concerns with the draft regulations, we intend to work closely with the Attorney General’s office to ensure we are operating in the best interest of our customers.  We will utilize the next 60 days to share our comments in the hopes of effecting some changes and are firmly committed to continuing to operate in a lawful and transparent manner.  We will immediately begin taking steps to prepare to implement the changes to our product that the Attorney General requires.

We appreciate that, in addition to Attorney General Healey, a number of state regulators and other authorities are taking a reasoned approach to the Fantasy Sports industry that considers the interests of sports fans who love to play these games and recognizes the value in innovation and entrepreneurship.

We believe the process followed by AG Healey and the Commonwealth of Massachusetts will ultimately result in a positive outcome for the millions of fantasy sports fans around the country who want to be able to enjoy DraftKings’ games in a fun, fair, and transparent environment.

The line about having “some concerns” clearly indicates that DraftKings doesn’t see the regulations as perfect, but a degree of pushback was inevitable.

FanDuel complimented Healey’s regulations as making a “tremendous amount of sense,” though they also noted an intention to “submit our comments.” Full statement:

However, Healey also had a warning for DraftKings and other daily fantasy operators. If they fail to meet her newly announced standards, prepare to face the consequences.

“Remember, these are games that you carry around in your pocket and lose money at the touch of a button,” Healey noted. “Violation of any of these regulations will be actionable under our state consumer protection laws.”

It’s clear that Healey is not committed too far one way or the other. Unlike her counterpart in New York, she hasn’t decided to move aggressively against them. (It’s important to remember also that state laws differ in terms of defining illegal gambling.) Yet she is perfectly comfortable labeling the daily fantasy industry as “gambling,” which the companies themselves refuse to do.

As she mentioned, the new regulations in Massachusetts are the first of their kind across the United States. And they offer a glimpse at a possible future, where the popular daily fantasy industry survives, but only if it adheres to regulatory standards. A review period of the regulations will now commence, ending Jan. 22, with a public hearing scheduled on them for Jan. 12.

As the question of daily fantasy’s legality and regulation will likely be left to the states, it’s possible Healey could set the standard. Though much is still left to be worked out (and implemented), the regulations that Massachusetts’ attorney general has proposed appear to be on point.

Daily Fantasy Consumer Protection Regulations in Mass. From Maura Healey

Image via @MassAGO

You can read more stories on Boston startups, technology and innovation at https://www.bizjournals.com/boston/inno