BOSTON—The Massachusetts Lottery is considering developing a daily fantasy sports game as the online competitions have exploded in popularity—and faced increased scrutiny about their legality.
Michael Sweeney, the lottery’s executive director, said exploring options amid such games’ legal ambiguity is necessary if state lotteries are to remain viable in a changing gambling landscape.
“Until such time as it becomes absolutely clear that this is illegal, we have an obligation to really grapple with the potential,” he said. “It’s about figuring out what’s the next step. How do lotteries engage the technology of the mobile and online world and what should that look like, if anything?”
Massachusetts’ lottery is among a handful in the country—including Delaware, Arizona and Iowa—that have toyed with offering a daily fantasy sports game.
Montana’s lottery is one of the few actually doing it. But that state’s offering differs from typical daily fantasy sports games because it’s not fully online, Sweeney said. Players still need to fill out a game card and turn it into designated brick-and-mortar locations, much as they would with a Powerball ticket.
What Massachusetts’ daily fantasy sports game would ultimately look like, if the lottery decides to pursue it, is still up in the air.
The first step is issuing a formal “request for information” sometime in December, following the state Lottery Commission’s decision Monday to move forward with the inquiry.
Sweeney said the request is a fact-finding effort and would not obligate the state to make any financial commitments.
The goal, he said, is to have industry experts, from startup software developers to industry giants like Boston’s DraftKings, weigh in on a broad range of questions.
“There are a lot of moving parts,” Sweeney said. “We’ll try to cover as much of the gamut as possible. We’ll ask about products that are completed and ready to go and products in development. We’ll ask about various aspects of consumer protection like location services, securing bank transactions and age verification.”
The lottery would also need legislative authority to offer a daily fantasy sports game. State Treasurer Deb Goldberg has voiced support for exploring all options, but Gov. Charlie Baker has been skeptical. A handful of bills are pending to allow the lottery to expand into online gambling, generally, or to daily fantasy sports, specifically.
The lottery’s interest in daily fantasy sports comes as Massachusetts and other states take a hard look at the legality of the industry and whether additional regulations need to be imposed.
The online contests involve players assembling teams of athletes and scoring points based on how those athletes do in real-life games. Fantasy sports players pay an entry fees and compete for cash prizes in the contests.
DraftKings and other daily fantasy sports companies have said they support efforts to develop possible regulations but argue their games should not be subjected to casino-style regulations because they’re not gambling, but “games of skill.” They also point to a 2006 federal law they suggest exempts the fantasy sports industry from the nation’s ban on online gambling.
The lottery’s interest in daily fantasy sports also comes as its internal data suggests the lottery’s customer base is skewing older, leaving out a critical demographic of gamblers in their 20s and early 30s.
Massachusetts’ lottery is among the most lucrative in the country, generating nearly $1 billion in profits annually and representing the single largest source of state aid to the state’s 351 cities and towns.
“We’re always going to be exploring how to get reasonable and responsible growth,” Sweeney said. “That’s incumbent on any business.”