Florida Senate President Andy Gardiner is exploring what the state can do to shut down daily fantasy sports, even as federal prosecutors are probing the online industry that has taken the nation by storm and drawn accusations of illegal gambling.
Gardiner has asked his lawyers to look into fantasy sports, in which players pay entry fees to draft "teams" that compete against each other for cash prizes based on the actual performance of players.
The fast-growing daily fantasy sports industry is the focus of probes by prosecutors in New York and Tampa, where the U.S. Attorney's Office recently subpoenaed the Florida-based Fantasy Sports Trade Association.
People in the industry contend that fantasy sports is not gambling because it involves games of skill, not chance, which are outlawed under most state gambling laws.
But gambling regulators in Nevada last week ordered companies like FanDuel and DraftKings to stop operating in the state after determining that online players' activity "involves wagering on the collective performance of individuals participating in sporting events." The decision prompted several online fantasy sports businesses to shut down operations in the state.
"I have asked staff to kind of start the process of researching as much as we possibly can," Gardiner, R-Orlando, told The News Service of Florida on Wednesday. "I would remind you we ran the Internet cafes out of the state of Florida because they were outlawed and they were bad. You have the Nevada Gaming Commission saying that FanDuel and DraftKings are gaming and gambling. So we have an obligation, if we're going to be consistent, that we need to look at them, and, if it is gaming, then we need to react to it."
Two years ago, lawmakers hurriedly passed a law shutting down Internet cafes in response to an investigation into Allied Veterans of the World, a bogus charity accused of running an illegal gambling ring throughout the state.
House Speaker Steve Crisafulli also has directed legal aides to explore the fantasy sports issue.
"It is early in this conversation and there is a lot to learn about the status of this industry under Florida law. We intend to understand that more before any decisions will be made moving forward," Crisafulli, R-Merritt Island, said in an interview Wednesday.
Brian Ballard, a lobbyist who represents the Fantasy Sports Trade Association, accused Nevada gambling regulators of "a hugely protectionist move" in shutting down the online games and said "it doesn't make sense" to do the same in Florida.
"You can see pretty clearly they're trying to protect the casinos and other interests they have," Ballard said Wednesday. "I don't think it's relevant to what goes on in Florida."
Ballard said that industry operators are amenable to regulations that would protect players, such preventing employees of daily fantasy sports operations like FanDuel from participating.
"I think you'll see legislation soon that talks about regulation and talks about consumer protections and really enhances the rights of players but also protects them from any problems that would treat them unfairly," he said. "I'm hopeful that we'll see a mix of keeping what's legal, legal, while protecting players' consumers' rights first and foremost."
Amid the growing debate over whether the daily fantasy sports sites are legal or not, the association contributed $70,000 last month to political committees led by Florida lawmakers, according to a state Division of Elections database.
And the association and FanDuel have retained some of the Capitol's most influential lobbyists, including Ballard, J.M. "Mac" Stipanovich and Marc Reichelderfer.
Congress exempted fantasy sports from a 2006 federal law that banned online gambling, but questions remain about whether the virtual competition violates a nearly century-old Florida statute. Five states – Iowa, Louisiana, Montana, Arizona and Washington – have banned fantasy sports.
Marc Dunbar, a Tallahassee lawyer who specializes in gambling and who teaches the subject at Florida State University's law school, said the activity is outlawed in Florida.
"The state statute is very clear. It says that you and I cannot wager against each other on a game of skill. Chess, checkers, cards, fantasy sports, horse racing – doesn't matter. We can't wager on a contest of skill. Most states don't have a statute like that," Dunbar said.
The Florida probe could link a violation of the state law with the federal Illegal Gambling Business Act, which Dunbar said could be a "death sentence" for the industry in the state. Under the federal law, any violation of a state gambling law could open up businesses to fines, forfeiture, or even prison, Dunbar said.
"The statute hits everybody. It hits investors. It hits everybody who aids and abets. It's a very, very, broad, intentionally broad, and aggressive statute. It was passed … as part of the Kennedy-era, anti-mob laws to deal with organized crime," Dunbar said.
Dunbar said he recently handled a case in the federal Middle District of Florida, where the fantasy sports investigation is centered, involving an online lottery.
"They don't play around. You're talking about forfeiture of everything related to the enterprise," he said.