Louisiana Moves One Big Step Closer to Legalizing Daily Fantasy Sports

Louisiana has been a difficult state for the major daily fantasy sites with laws on the books that outlaw anything that even resembles online gaming except for horse racing betting. Past attempts to legalize daily fantasy sports in Louisiana failed to gain traction, but now it looks like residents may finally get their chance to join the party.

Yesterday, the Louisiana Senate voted in favor of House Bill 484 that seeks to create the Louisiana Fantasy Sports Contests Act. The bill goes next to the governor’s desk where for final approval to become law.

However, the governor’s signature alone will not yet bring daily fantasy sports to Louisiana. Several more things still need to happen before anyone living in Louisiana can actually log on to FanDuel or any other DFS site and participate in real money contests.

Voter Approval Required

HB 484 does not legalize DFS throughout Louisiana on its own. Instead, the bill calls for a statewide, parish-by-parish referendum on November 6, 2018. The referendum will ask residents of each parish to vote yes or no on allowing daily fantasy sports.

If the majority of a parish’s voters approve, residents of that parish will be permitted to play DFS. If the majority of voters disapprove, residents of that parish will be prohibited from participating.

This approach will likely result in a situation where fantasy sites must figure out how to determine players’ locations on a parish-by-parish basis. Legal gambling sites in New Jersey, Delaware and Nevada successfully prevent access to players from other states, but even getting that right was troublesome at first.

Geolocation technology is now effective at the state level, but how that would work on an even more granular level in Louisiana remains to be seen. The outcome may depend on how regulations are crafted. If regulators call for heavy fines even for accidental location breaches, I predict daily fantasy sites will have a tough time justifying the expense and risk of operating in such an environment until geolocation technology improves.

This is an unavoidable complication. The Louisiana constitution requires any expansion of gambling or gaming to first be approved by the voters any parish where such gaming would take place.

Regulations Need to be Crafted

HB 484 includes no regulations on its own, but rather calls on lawmakers to introduce new legislation to regulate and tax DFS, and the Louisiana Gaming Control Board to adopt rules governing operators.

From the bill:

“The board shall adopt, pursuant to the Administrative Procedure Act, all rules necessary to implement, administer and regulate fantasy sports contests as authorized in this Chapter.”

HB 484 will also amend two existing state laws to ensure fantasy sports contests are exempted from definitions of “gambling” and “gambling by computer.”

No DFS Until 2019 at the Earliest

No matter how quickly lawmakers move on this issue, sometime in 2019 is the earliest possible date Louisiana residents will be able to participate in legal daily fantasy contests. Assuming HB 484 is signed by the governor to become law, the next step would be to hold the referendum in November – well after the current legislation session adjourns.

After that, lawmakers would need to introduce new legislation establishing regulations and tax rates for DFS operators. That legislation would have to go through the entire process once again: making it through the House, making it through the Senate, dealing with amendments and disagreements and then going to the governor’s desk.

The next regular legislation session will convene at noon on April 8th, 2019. Lawmakers could work ahead to have a bill ready to go early in the session, but 2019 is the earliest possible timeline for DFS in Louisiana.