May 11th, 2010

Louisiana (Hypocritically?) Shoots Down Fantasy Bill

Tuesday, May 11th, 2010

The Louisiana House of Representatives voted overwhelmingly Monday (73-16) to shoot down a bill that would explicitly allow fantasy sports winnings to be paid out to residents.

OK, perhaps the state is just overly sensitive about gambling and eschews any practice that involves paying in to vie for prizes.

Oh, wait …

It turns out, Louisiana offers and supports a state lottery, horse tracks, riverboat gambling and other such activities. When I say “supports,” I mean that in the most literal interpretation of the word. Check out this excerpt on horse betting from R.S. 27:352, enacted in July 1997:

The legislature hereby finds and declares it to be the public policy of this state that:

(1) Pari-mutuel wagering facilities which offer live horse racing have historically made great contributions to the economic development of the state at large and particularly the agricultural and horse breeding industries.

(2) Recent legalization of additional forms of wagering other than pari-mutuel wagering on horse races such as lottery, riverboat gaming, and land- based casino gaming have, and will continue to have, a substantial negative and detrimental effect upon live horse racing as well as the thoroughbred and quarterhorse industries in general.

(3) Authorization of certain specified gaming activities, such as the competitive offering of slot machine gaming at specifically defined eligible live racing facilities, will revitalize and rehabilitate those facilities within strategically located geographic areas of the state, and will further result in overall economic development and additional revenues to the state and parishes where those facilities are located.

Not only is horse betting allowed in Louisiana, it’s tracks are treated as pillars that must be protected from new forms of betting that threaten their livelihood. And that’s just one of various forms of gambling that are protected as “gaming” under Louisiana law, shielded as long as the operators carry state licenses.

This raises a clear question as to why Louisiana would set forth in state law recognition of the risks inherent in publicly available gambling and officially make it illegal, only to peel back the restrictions for those who ask acceptance. Perhaps we’re overly skeptical around here, but could revenue be some small part of it?

According to the annual report by the state’s Gaming Control Board, Louisiana brought in $723,499,522 in “direct gaming revenue” in fiscal year 2008-2009, and that presented a 1.9 percent drop from the previous year. That’s a pretty sizable chunk for a state that counts on about $8 billion in total revenue annually.

OK, if Louisiana has no trouble with “gaming,” perhaps House Bill 316 got shot down because it tried to sneak through some other undesirable piece of legislation at the same time.


The bill clearly states that its only action would be to exempt “‘fantasy competition’ from certain gambling crimes” — in other words, afford it the same protection as other activities tagged “gaming” by the state. As the bill states, its enactment would cost Louisiana nothing annually and would not generate revenue.

So, what exactly is the problem here? We can only guess, and further speculation won’t accomplish much in this case. That’s why will try to check in over the next couple of days with the Louisiana lawmakers responsible for keeping their residents from winning T-shirts.

Of course, before we drop this round, we have to wonder if fantasy sports payouts are even illegal in this state in the first place?

According to the definition for illegal gambling in R.S. 14:90: “Gambling is the intentional conducting, or directly assisting in the conducting, as a business, of any game, contest, lottery, or contrivance whereby a person risks the loss of anything of value in order to realize a profit.”

Firstly, this should allow winnings to be paid for any contest that a Louisiana resident has entered for free. Obviously, in such a case the participant would have risked nothing.

Beyond that, would the state carry any weight in trying to deny prizes from fantasy companies — particularly strongly backed, well-funded, out-of-state operations such as ESPN (the game host in this case)? Would the law hold up through a court challenge? Would a state fighting annual budget gaps be willing to pursue the matter in a case that could only generate bad PR, no matter the outcome?

We’ll leave it to the legal experts to determine the scope of this law. Unfortunately, when there’s even a question, many fantasy companies will opt for the safe path and not chance a potentially expensive fight.

That’s why it’s important to figure out the answers in cases such as these, especially because Louisiana isn’t the only state with cloudy rules in this area. We’ll let you know when we get them.

See also: Full voting results