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PGA Tour Reluctant to Gamble on Daily Fantasy Sports

December 9, 2015

The PGA Tour is the only major professional sports league in the United States that has yet to dive headfirst into the high-risk, high-reward waters of daily fantasy sports.

Why? It’s too much of a gamble.

Tour officials met with the office of Florida Attorney General Pam Bondi on June 3 and emerged convinced that a “conservative approach” was the best way to navigate the uncertain future surrounding the billion-dollar daily fantasy industry.

“We’re just kind of sitting back and seeing how it all plays out,” Tour spokesman Ty Votaw told GOLF.com. “It’s still very unsettled.”

Votaw wouldn’t say whether an interest in aligning the Tour with the daily fantasy sports (DFS) business prompted the meeting, only that it was “part of [the Tour’s] due diligence.”

The Attorney General’s spokesman Whitney Ray wouldn’t say whether Bondi’s Office expressly told the Tour to back off, only that they “provided [Tour officials] with [their] prior legal opinion,” which determined back in 1991 that the operation of a fantasy sports league would represent a violation of state gambling laws.

Golf is by some accounts the fastest growing category of DFS games and a proven method of generating interest in the television broadcasts of otherwise low-profile events. But Florida, home to the Tour’s corporate headquarters, is among the states most hostile to the DFS industry.

According to Dan Wallach, a Florida gaming attorney, Florida is a “danger zone” for DFS operators because the state has a particularly low bar for what constitutes gambling. While the broader battle over the legality of DFS will hinge in part on whether it’s a game of skill or a game of chance — DFS operators argue that its “skill-based” contests should not be considered gambling because participants can influence the outcome — that distinction doesn’t matter in Florida.

“Our anti-gambling laws prohibit wagers even on contests of skill, so that takes away the DFS industry’s strongest argument and shifts the debate to whether the entry fee is tantamount to a wager,” Wallach said. “That makes it an especially risky state for DFS operators. Florida has become a key battleground.”

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In October, the Miami Herald reported that DraftKings and FanDuel — the two leading DFS providers — and the Fantasy Sports Trade Association had stepped up their lobbying efforts in the state. Soon after, two Republican state lawmakers, state senator Joe Negron and representative Matt Gaetz, called the Attorney General’s opinion “outdated” and introduced identical bills in their respective houses that would “clarify in Florida law that fantasy sports are legal.”

While Attorney General Bondi has avoided the issue — her spokesman told GOLF.com that she believes the matter should be handled federally — Wallach reported that the U.S. Attorney’s Office in Tampa has convened a federal grand jury to determine whether DFS operators violated either Florida law or the federal Illegal Gambling Business Act, signaling the beginning of a significant legal battle in the state. The New York State Supreme Court is also expected to issue a ruling on the issue in the next few days, which could set a precedent for how other states confront the DFS industry.

“From the vantage point of the PGA Tour, it’s probably prudent to wait until a new law is passed before jumping in,” Wallach said. “They want to avoid legal risk and see little harm in waiting.”

The Tour sent a memo to its players on Sept. 24 banning them from playing or endorsing daily fantasy sports, and while the Tiger Woods Foundation inked a deal with DraftKings back in March that named DraftKings the “Official Daily Fantasy Sports Partner” of the Quicken Loans National and the Deutsche Bank Championship, Votaw told GOLF.com that he’s “not sure” whether those arrangements will remain in place next season.

The Tour’s caution may have already paid off.

On Nov. 21, two Florida-based DFS customers filed a class-action lawsuit against DraftKings, FanDuel and their business partners, accusing them of operating illegal gambling operations. According to legal expert and Sports Illustrated contributor Michael McCann, the defendants include a host of professional sports leagues, media networks and financial giants that “have either invested in DFS companies or facilitated DFS gaming.”

Said Votaw, “We feel like we made the right decision.”