While US daily fantasy operators have recently endured heavy scrutiny by lawmakers, regulators in Canada have shown a much more relaxed attitude towards the industry.
Room for interpretation
While the Canadian criminal code leaves room for doubt on the legality of daily fantasy, lawmakers there don’t seem to view DFS operators as much of a threat.
Section 197 of the code defines a “Game” as one of “Chance or mixes chance and skill.”
DFS operators claim that their contests are games of skill, and do not like to associate the industry with gambling at all. As Section 197 doesn’t reference games of pure skill, DFS sites believe that it is implied that they are not subject to that provision.
Bigger fish to fry
“[Canadian] authorities are more focused on anti-terrorism, and drugs, and biker gangs and the like, and they should be,” says Toronto gaming expert Michael Lipton. “We’ve always had a fairly liberal attitude regarding matters of this nature.”
But while the Great White North focuses on greater threats, politicians and law enforcement officials in the US have put extreme pressure on America’s DFS operators.
Last year, gaming regulators in Nevada declared that DFS contests were gambling, and that to continue operating in the state, sites would need to procure the proper gambling licenses.
A bigger blow came soon after, when New York Atty. Gen. Eric Schneiderman stated his opinion that daily fantasy was not only gambling, but was totally illegal. Both FanDuel and DraftKings are in the midst of a court battle in the state and are fighting to keep their doors open there.
Importance of New York battle
In a Q&A session on Deadspin, gaming lawyer Daniel Wallach explained why the New York case was so important.
“If DraftKings and FanDuel lose that one (still to play out), they lose not only the ability to operate in NY, but also face prospect of significant clawbacks under New York law. They would potentially be forced to disgorge all monies received from NY customers and a potential fine of $5,000 per offense (e.g., every NY transaction) under state law. Add that up, and now you’re in the ‘nine-figure’ or more territory. Plus, a loss in NY serves up a layup indictment for US Attorney Preet Bharara under federal law.”
In Canada, however, Lipton said that authorities have historically only shown interest in going after sites with servers inside Canada. He believes that when prioritizing their To Do lists, the country’s law enforcement officials put looking into DFS operators at the bottom.
“Does one have the resources? Is the public being harmed? Is there an issue that the public needs protected from?” Lipton asked.
Last year, Canadian gambling regulators requested a legal opinion on DFS from the former head of the Alcohol and Gaming Commission of Ontario, and were told that the contests constitute illegal gaming and should be regulated. Even so, DFS opponents there don’t believe that much action will be taken. “Frankly, no one’s about to bet their career on this stuff,” said one such lawmaker.