RE: Virginia Lottery Board DRAFT Sports Betting Licensing and Consumer Protection Regulations

Mr. Kevin Hall
Executive Director
Virginia Lottery Board
600 E Main Street
Richmond, VA 23219

Dear Mr. Hall,

The Fantasy Sports and Gaming Association (“FSGA”) is the leading representative of the fantasy sports and sports betting industry. The FSGA represents over 150 member companies which provide fantasy sports and sports betting products and software, including such major media companies as ESPN, CBS, Yahoo!, NBC, NFL.com and FOX Sports, content and data companies such as USA Today and SportRadar, long-standing contest and league management companies such as MyFantasyLeague and the Fantasy Football Players Championship and almost every major daily fantasy sports contest company, including FanDuel and DraftKings, and many other small fantasy sports businesses.

Based on our member’s extensive experience across the country and world in sports wagering, we submit the following comments on the proposed sports betting regulations for your consideration.

The FSGA is concerned with the prohibition on wagering on Olympic events (11 VAC 5-70-10 and 11 VAC 5-80-10, definition of “sports betting”) because it is not prohibited by authorizing statute. Eliminating Olympic events from permissible wagers serves no public safety objective, was not included in the intent of the authorizing law, and weakens the attempt to eradicate the illegal wagering market in Virginia. The Director has the authority to approve events on a case-by-case basis, and the FSGA argues that should be where the decision is made, rather than reducing the available offerings from the start and restricting future decisions about allowing wagers on a series of events with wide popularity.

On a similar note, the FSGA would recommend amending 11 VAC 5-70-230 (G)(8) to remove “amateur event”, as this term is not only undefined by the rules and regulations, it was not included in the list of prohibited event wager types in the law and the law makes explicitly clear certain sporting events that are prohibited from wagering. As noted above, the Director has the authority to approve or not approve events and permit holders are required to follow those approvals, and it should be at that point that the Director uses his or her discretion to approve an event, rather than binding by rule.

The FSGA finds the definition of principal overly broad, to the point of excess. Encompassing any individual in a managerial capacity for a permit holder, whether that individual has direct access to customer or bet information or not, creates a regulatory and financial burden for applicants that could potentially deter qualified entities from applying for a licensing in the Commonwealth. In particular, should this overly broad definition not be tailored to license employees that handle potentially sensitive data, it would create a significant financial burden, given the $50,000 permitting and investigative fee.

Section 11 VAC 5-70-230, Advertising and Marketing, contains a number of provisions that, due to being vague and overbroad, will prevent the industry from reaching its full potential. Quality advertising, which is necessary to encourage bettors to join the legal market and leave the pervasive illegal market, must be nimble, innovative, and creative. Requiring that all advertising be approved and comply with subjective requirements such as “good taste” or “excessive saturation” will make it harder for operators to know what they can offer, and will make it harder for them to compete with the illegal market. Finally, prohibiting or significantly limiting advertising on certain social media platforms could potentially eliminate one of the best tools permit holders have to bring bettors from the illegal market into the legal market. Every permit holder has the duty to avoid appealing to minors, but there are other provisions in both the marketing requirements and elsewhere in the proposed regulations that will prevent targeting minors, without eliminating social media marketing.

The FSGA would suggest removing 11 VAC 5-80-20 (B) from the proposed regulations. Businesses with large numbers of consumers, like our members, commonly include alternative dispute resolution clauses in their terms of agreement, as a way to effectively resolve consumer complaints. These clauses allow for faster, more cost-effective resolutions. Virginia law does not prohibit arbitration agreements and this dispute resolution tactic should be available to permit holders. Further, consumers have multiple avenues to resolve their disputes, as included in the Sports Bettor’s Bill of Rights and the Virginia Lottery Retailer Dispute Resolution Procedures.

While all members of the FSGA take consumer protection very seriously, we would like to note some concerns with the Sports Bettor Bill of Rights and how, as written in the regulations, it does not match the legislative intent of the sports betting law. As sports betting is rolled out in Virginia, there will be a lot of bettors that are new to sports betting, and the Bill of Rights should be designed to protect their interests, particularly requiring permit holders to provide information on the areas laid out in the authorizing law. The types of information that protect customers and are specified in the law include defining how their accounts and identities are protected, outlining a clear consumer complaint process, providing information on self-exclusion, describing consumer protection measures like fraud protection, and responsible gaming limits available on the sports betting platform. These are the areas that should be listed in the Bill of Rights. It is important that bettors understand features in place and available to them that impact their interaction with the sports betting platform.

Of particular concern in the current version of the Sports Bettors Bill of Rights are11 VAC 5-80-20(C)(1)(a) and (b), which require operators to display the handle and odds of winning. Handle changes constantly and will be of little use to bettors even if it could be displayed, and there are no set odds of winning. While all permit holders should seek to protect all consumers that use their platforms, if the statutory and regulatory intent is to protect sports bettors who are more unfamiliar with sports wagering, this information may only serve to confuse those bettors. Further, this information is considered proprietary and sports betting operators are not required to disclose this type of information in any other jurisdictions.

We appreciate the opportunity to provide feedback on the proposed rules and look forward to creating an enjoyable sports wagering experience for all Virginians.

Thank you for your time and consideration.

Sincerely,

Peter Schoenke
Chairman Government Affairs, Fantasy Sports & Gaming Association
1818 Parmenter St., Suite 300
Middleton, WI 53562
www.theFSGA.org