SACRAMENTO, Calif. (CN) – California inched closer Wednesday to becoming the first state to regulate the booming daily fantasy sports industry, as lawmakers advanced a bill creating safeguards for consumers.
The Assembly Governmental Organization Committee voted 17-1 in favor of a bill that would tax and regulate the multibillion dollar industry that has been halted in several other states over legal concerns.
Assembly Bill 1437, proposed by Rep. Adam Gray, D-Merced, becomes the first daily fantasy sports measure to pass a vote in any jurisdiction and received bipartisan support from the committee.
Gray, chairman of the committee, told lawmakers it’s vital to introduce framework for the industry and called it a “new frontier” that could bring in more than $17 billion in entry fees by 2020.
“We have an opportunity to lead the way and set the tone for how to balance consumer protections with consumer demand for daily fantasy sports,” Gray said.
He highlighted the industry’s partnerships with professional sports leagues like the NFL and NBA and said the legislation would help stop underage users and problem gamblers from participating.
While the bill easily hurdled over its first committee vote, lawmakers expressed concern about the regulatory framework and who would act as the watchdog over daily fantasy sports operations.
Rep. Jim Cooper, D-Elk Grove, said adding daily fantasy sports to the California Department of Justice’s overloaded duty roster would be problematic considering it’s already behind on investigating California’s card rooms.
“The [department] is behind over 2,000 cases,” Cooper said. “We need some way where we can ensure that they have the proper tools to investigate these cases when they do come up.”
California Attorney General Kamala Harris has not previously commented on the bill or her department’s potential role in enforcing AB 1347.
Gray introduced the bill in 2015, but it was stashed late in the legislative year and had until Jan.15 to pass its first committee vote.
Rep. Marc Levine, D-San Rafael, has hounded the bill since Gray introduced it, insisting that daily fantasy sports do not involve skill and that companies like DraftKings and FanDuel are simply bookies.
“This is gambling, there’s no doubt about it – let’s not fool ourselves,” Levine said. “Playing these games is sports betting.”
Levine explained the irony that AB 1437 was being heard by the committee that deals primarily with gambling activities and not the entertainment arts committee. He has repeatedly argued the issue should be up to voters and not the Legislature.
California is the largest state to address regulating the industry, with an estimated 400,000 users. Daily fantasy sports have recently been banned in several states including New York, which deemed the activity illegal in November.
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