Regulators are attempting to keep pace with daily fantasy sports operators to make sure contests within their states comply with regulations, but with such rapid expansion and new offerings the law sometimes cannot keep up with the technology.

Trying to determine what games fall into the category of skill and that of gambling is a huge challenge regulators face as daily fantasy sports (DFS) companies are licensed in their states. Uniform laws across all states with DFS may help both operators and regulators avoid gray areas and improve clarity in the markets.

A panel of experts at SBC Summit North America spoke of the importance of operators and regulators working together to avoid costly mistakes and legal battles as both work towards a clearer line of what constitutes a DFS game and what constitutes gambling.

Clear Cut Rules Needed Throughout U.S.

From an operator perspective, more time is spent working with state regulators to ensure their games comply with all rules and regulations than it is actually developing new games or technology, said Derek Schmidt, a partner with Husch Blackwell, representing PrizePicks during the panel.

“We’d much rather spend our time and resources innovating in the marketplace and growing rather than dealing with issues in the regulatory space,” he said.

Uniform statutes and regulations across all states, a clear-cut line of what is allowable with DFS contests, and limited gray areas would be a welcome change for operators, Schmidt said.

“From our standpoint, we want to be regulated and we want to be taxed, which is not what you always hear from someone in the business community. Providing that clarity is very helpful to our business model. We don’t want to be spending more time than necessary discussing gray areas and turf,” he said.

Andromeda Morrison, general counsel for the Ohio Casino Control Commission, said clear lines of demarcation are necessary to avoid gray areas for both DFS and sports betting operators.

Having clearly approved regulations that explain what is allowed, what can be offered, and what cannot be offered can go a long way to ensuring operators steer clear of any costly mistakes, Morrison said.

“Engage with us. Reach out to us. Have those dialogues with us in Ohio. We believe in providing clear guidance and we’ve enjoyed worked with PrizePicks and others. We’ve had very productive conversations and have been able to that in a constructive way because we’re a very open commission,” Morrison said.

Conversation is Cheaper Than a Lawyer

Regulators are public servants, explained Justin Stempeck, deputy general counsel for the Massachusetts Gaming Commission.

Operators need to reach out to regulators in states where they hope to procure a license or launch a new game. A scheduled conversation with a regulatory body can go a long way towards helping an operator avoid a catastrophic mistake, he said.

And it’s a lot cheaper than hiring a lawyer after receiving a cease-and-desist letter, he joked.