Kevin P. Braig of Shumaker, Loop & Kendrick, LLP
On September 26, 2016, Senator Bill Coley (R-West Chester) introduced S.B. 356, which if enacted would amend Ohio gambling law to expressly define daily fantasy sports (“DFS”) and e-sports contests that charge a commission known as a “rake” as a “scheme of chance.”
During his press conference introducing S.B. 356, Senator Coley made it clear that it is his view S.B. 356 will not change existing Ohio law. Senator Coley stated that the inclusion of a “pool conducted for profit” in the existing definition of “scheme of chance” in section 2915.01(C) of the Ohio Revised Code already covers DFS contests that charge a rake, such as contests offered by companies like FanDuel and DraftKings. He stated that DFS contests that charge a rake are “illegal under existing Ohio law.”
“When you are taking rake off the top, you are breaking the law,” Senator Coley said.
Senator Coley stated that Ohio has a long history of prohibiting gaming that has not been authorized by the Ohio legislature. If S.B. 356 is enacted as written, the express inclusion of DFS contests and e-sports contests in the definition of “scheme of chance” would subject such contests to the Ohio prohibition on bookmaking and schemes of chance contained in section 2915.02 of the Ohio Revised Code. Section 2915.02(A)(2) states that no person shall “[e]stablish, promote, or operate or knowingly engage in conduct that facilitates any game of chance conducted for profit or any scheme of chance.”
S.B. 356 authorizes the Ohio Casino Control Commission (the “Commission”) to promulgate rules applicable to any “pool not conducted for profit.” Unlike DFS and e-sports contests that charge a rake, pools not conducted for profit return 100 percent of the revenue collected from participants to winners as prizes. Senator Coley emphasized that non-profit pools are legal under Ohio law, but currently are not subject to any regulatory supervision or oversight by the state. He said some of the prizes in such non-profit pools have grown to millions of dollars and the amount of the dollars being handled by non-profit contest promoters justifies supervision, oversight and regulation by the Commission.
Senator Coley said that he did not want to prohibit non-profit promotional contests that pay out 100 percent of collected revenue as prizes because such non-profit promotions work and do not present a threat of facilitating unauthorized gaming.
But if a promoter of a contest pays out less than 100 percent of collected revenue as prizes, Senator Coley said, then the promoter “will have to change the business model.”
Braig can be reached at kbraig@slk-law.com. For his bio, see http://www.slk-law.com/Professionals/Kevin-P-Braig
