Florida moves to legalize fantasy sports but status of some poker games gets murky

Published Jan. 28, 2016

TALLAHASSEE — The Florida Legislature put its stamp on a plan to legalize daily fantasy sports games Wednesday as two key committees approved a plan to impose regulations on the sport that mirrors the way the state regulates arcade games.

But as lawmakers attempted to clarify one gaming issue, the Scott administration sent shock waves through the poker industry by reversing course on five popular card games. The Department of Business and Professional Regulation sent seven race tracks letters Tuesday declaring games such as three-card poker and Ultimate Texas Hold 'Em illegal, even though the agency had approved the games last year.

The reaction from some lawmakers is that the about-face by the state is an attempt to shore up support for Gov. Rick Scott's proposed gaming compact with the Seminole Tribe, which was signed in December but, three weeks into session, has still not received a hearing in either the House or Senate.

While progress continued to stall on the compact, a pair of bills to legalize daily fantasy sports games cleared two key hurdles, even as other states seek to ban the activity.

The bills, SB 832 and HB 707, were amended Wednesday to require fantasy sports companies that offer cash prizes to more than 750 participants to pay $500,000 each to register with the Florida DBPR and comply with regulations to bar children from playing. They must also ban employees from participating in the games their companies offer.

The provisions were added to the bills by the Senate Regulated Industries Committee and the House Finance and Tax Committee. Key to the bills is a provision sought by the Fantasy Sports Trade Association that would definitively declare that fantasy sports games are not forms of gambling and are not subject to state gaming regulations.

But as Florida continued to move to regulate the games, other states — including Nevada, New York, Arizona, Iowa, Louisiana, Montana and Washington — bar the games from operating. This week, the Texas attorney general declared that daily fantasy sports games are likely illegal in that state.

Sen. Joe Negron, R-Stuart, the sponsor of the bill, said his goal was to clarify a murky state law that is unclear about whether the games could be declared illegal or subject to the state's gambling laws.

"I don't thing anyone wants to criminalize an activity that 3 million law abiding citizens are engaged in," said Negron, who said he's concerned that a 1991 Florida attorney general's opinion could be interpreted as making all fantasy sports illegal.

Sen. Rob Bradley, R-Fleming Island, chairman of the committee, was one of two senators to vote against the bill because he sees a difference in season-long fantasy sports games and the recent proliferation of daily fantasy sports games marketed by companies like FanDuel and DraftKings. He said daily games rely on more chance, which feels more like traditional sports betting.

Because the games are considered gambling by the Seminole Tribe, Bradley said he expects the debate over the daily fantasy sports to be "woven into" the Legislature's discussions over the compact with the tribe.

The governor has said he has done his part and it is now up to lawmakers to decide whether to approve the agreement or not, but a decision by the state's Division of Parimutuel Wagering to file administrative complaints seven race tracks has drawn criticism from those who believe it's an attempt to pressure the industry to support the compact.

State regulators approved a rule in 2014 allowing card rooms in Florida to operate player-backed card games such as three-card poker, two-card poker, Pai Gow poker and Casino War. The Seminole Tribe filed a lawsuit last summer challenging the games, but the state continued to allow 18 tracks and jai-alai frontons to operate them, which give players the feel of a casino game because players play against each other.

After the compact was signed in December, however, the agency moved to repeal the rule but faced legal challenges. Although the rule remains in place, the administration now says the games are illegal but, rather than ordering the card rooms to stop them, they are asking them to appear before an administrative court judge.

When asked for an explanation Wednesday, DBPR Secretary Ken Lawson released a statement saying they "discovered violations of Florida law" but would not provide any details.

The parimutuels served with the notice include: Tampa Bay Downs, St. Petersburg Kennel Club, West Flagler Kennel Club, Palm Beach Kennel Club, Gulfstream Park, Jacksonville Kennel Club and Pompano Park Racing.

Howard Korman, CEO of Jacksonville Greyhound Racing, told the Senate Regulated Industries Committee that he was surprised by the state's action after regulators came to his facility before they installed the machines and approved them.

"We explained to them how the games are played, we had our internal controls approved, and it wasn't until just recently that all of a sudden they said, 'No,' " he said. "We basically felt we had complete permission. We were the 12th facility in the state to put them in."

Sen. Jack Latvala, R-Clearwater, said the move was unfair. "I've got to believe it's related to the compact," he said.

Contact Mary Ellen Klas at Follow @maryellenklas.