Court documents show Washington state residents are playing daily fantasy sports, but exactly what that means is still being determined.
Inside sports business
Some interesting courtroom developments in New York have bolstered suspicions that Washington residents are playing daily fantasy sports despite it being illegal here.
Within the past few weeks, court documents filed on behalf of New York attorney general Eric Schneiderman stated that industry giant DraftKings collected $422,000 in entry fees from Washington residents last year. That represents 87 percent of the combined $485,000 Schneiderman alleges was wagered on Draft-Kings by residents from six states where daily fantasy sports (DFS) operators supposedly ban anyone from accessing their websites.
If true, then most of the country’s illegal DFS play involves folks from this state.
It’s a drop in the proverbial ocean of money Draft-Kings and rival FanDuel — which control 95 percent of the DFS industry — legally collect nationwide. But the revelations have been enough to get the Washington State Gambling Commission to launch an official investigation into the claims.
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“It’s not really clear what it means,’’ commission chairman Chris Stearns says of the entry fees. “Were they paid by people who live in Washington? Or are they Washington residents who reside elsewhere?’’
The latter appears to be a factor — Washington residents playing from homes in other states.
A court brief filed by DraftKings on Wednesday declared Schneiderman’s allegations “false” — claiming 92 percent of the supposedly illicit cases originated from residences in states where DFS is legal. DraftKings told the court it shut down access to its site for users in the remaining 8 percent of such cases.
It remains to be seen whether the latest revelations help or hurt efforts to have some fantasy sports play declared legal in Washington. The knee-jerk assumption is that news of possible illegal activity in an industry already under intense scrutiny can only undermine efforts to legalize it.
Then again, the counter argument is that if residents here are already accessing DFS sites without fear of reprisals, it might as well be legalized and regulated. We’ve seen such arguments deployed on everything from marijuana to video poker, with varying degrees of success.
And the idea that wealthier Washington residents with second homes can legally play DFS while everybody else here can’t, might actually strengthen arguments about our laws being unfair and outdated.
The theory that second homes are behind Washington’s disproportionately large share of “illegal” DFS activity isn’t far-fetched, though we can’t blame the Arizona home-owning Seahawks fans. After all, DFS is as illegal in Arizona as it is here. So, it isn’t Washingtonians with Arizona homes getting around the law.
No, if we’re seeking culprits, my sense is to look more immediately south. Plenty of Washingtonians own homes in Oregon and California, where DFS is as legal as garlic fries at a Mariners game.
That said, we shouldn’t let the DFS site operators entirely off the hook.
A New York Times article this month revealed how proxy server software easily allows residents from states outlawing DFS to access DraftKings by appearing to have signed on from elsewhere. Within a week of that story appearing, DraftKings announced it was partnering with GeoComply and its Solus program, which detects proxy servers and prevents users from accessing sites that way.
Washington Gambling Commission chairman Stearns welcomes that development, though he adds that verifying the state location of users is something DraftKings was already supposed to be doing. Indeed, it has long been rumored that Washington residents have used such proxy servers.
In a late-October conversation, Sen. Joe Fain (R-Auburn), co-sponsor of a bill to legalize some fantasy play in Washington, mentioned such rumors and said he hoped to learn more.
“I have a fear that you’re just pushing a bunch of this activity toward the unregulated stages,’’ Fain said. “You’ve got folks that are putting down these different addresses and I don’t know whether they’re matching their IP addresses … or, whether they’re using different technologies to get around that.
“So, if people want to participate and they don’t care what the regulation is, they’re going to find a way to do it. I think it’s incumbent upon us to figure out … how much of that is going on here in Washington.’’
Fain’s statements were made a month before the New York court documents put an actual dollar figure on suspected illegal activity. For now, Senate Bill 5284, sponsored by Sen. Pam Roach (R-Auburn) and co-sponsored by Fain and others, has been slimmed down to encompass legalizing less-controversial seasonlong fantasy play — as opposed to DFS — with specific player numbers and betting limits.
As to whether proxy servers or second homes are behind our state’s DFS activity, that’s for the commission’s investigation to determine. But while Stearns says legal action could be taken against DraftKings, he noted the commission historically has not prosecuted individuals who gamble illegally online.
And as long as that remains the case, Washington residents wanting to play DFS badly enough will likely continue to bypass the law via any options available.