Maryland Opens the Door to Fantasy Sports

On May 2, 2012, Maryland Governor Martin O’Malley signed Chapter 346 of the Laws of 2012, allowing fantasy sports to operate in the State of Maryland.

Previously, Maryland’s criminal law contained two troubling provisions—a general prohibition against “betting, wagering, and gambling,” except as authorized by the state, and a provision that advised the courts and law enforcement that this prohibition provision should be construed broadly, thus preventing any fantasy sports entity from comfortably operating in Maryland without fear of potential prosecution.

Chapter 346 adds Section 12-114 to the Maryland Criminal Code, which states that “fantasy competition” is now excluded from the general “betting, wagering, and gambling” prohibition. “Fantasy Competition” is essentially defined in accordance with the exception provisions for fantasy sports set forth the Federal Unlawful Internet Gaming Enforcement Act. Specifically, participants in a fantasy competition may own, manage, or coach imaginary teams; all prizes and awards must be established and made known in advance of the game or contest; the winning outcome of the game or contest reflects the relative skill of the participants determined by statistics of the actual individual players; and no winning outcome is based solely on the performance of an individual athlete or the score, point spread, or performance of a single real-world team or combination of real-world teams.

What should fantasy sports operators do now? Planning for operation in Maryland should commence. However, Chapter 346 also allows for the Comptroller of Maryland to adopt regulations to carry out the provisions of the act. Until those regulations are adopted, we suggest refraining from entering the Maryland market, as there may be penalties for regulatory non-compliance imposed in the final regulations. We will continue to monitor the progress of these regulations and advise our clients accordingly.