The country’s largest fantasy sports companies are suspending their games in Mississippi while state lawmakers consider a bill to legalize and regulate the industry, prompting fantasy sports customers to push their legislators toward reinstating the games.
The development is part of a growing national debate over the legality of daily fantasy sports, a fast-moving digital game popularized by Boston’s DraftKings Inc. and New York-based FanDuel Inc.
Twenty-one state legislatures have introduced bills that would explicitly legalize daily fantasy contests and regulate the companies providing the games, according to a DraftKings tally of legislative action.
Lawmakers in California, Indiana, Virginia, and West Virginia have passed those bills out of at least one chamber, moving them closer to potentially becoming state law. Kansas remains the only state to approve a law specifically exempting fantasy sports from gambling laws.
The legislative action has followed months of growing regulatory scrutiny for DraftKings and FanDuel, which raised nearly $1 billion combined from investors in recent years.
State regulators have increasingly questioned the daily fantasy industry’s legality in recent months and federal investigators have probed the industry’s practices. The cascade of legal troubles has cut into the industry’s growth and shaken its ties to the financial industry.
Twenty-First Century Fox Inc., a DraftKings investor, recently said it had cut the value of its $160 million stake in the company by nearly 60 percent. Some mutual funds that hold DraftKings stock also have marked down the value of their most expensive shares in the past few months.
Mississippi’s bill, which passed out of a Senate committee this week, was prompted by the attorney general’s January ruling that “fantasy sports wagering” violated state gambling law.
“As the legislative process plays out, we will voluntarily pause operations in the state and look forward to resuming offering daily fantasy sports to our fans in Mississippi,” DraftKings public affairs head Griffin Finan said in a statement.
The Mississippi bill’s sponsor, state Senator Sean J. Tindell, said companies like DraftKings and FanDuel had simply been targeted by regulators in some other states because of their rapid growth.
Tindell’s bill would require player prize money to be kept separate from company expenses and mandate annual audits to ensure compliance. It also would ban company employees from playing public games, leaving those workers able to compete against friends in games that are not open to everyday fantasy customers.
Curt Woodward can be reached at email@example.com.