This week, Alabama Governor Kay Ivey signed a bill to bring daily fantasy sports back to Alabama for the first time since 2016. However, the new law, HB-361, will not create an immediate free market to offer daily fantasy games within the state. Instead, the new law gives a head start of up to 180 days to the companies that had operated daily fantasy sports in Alabama before the state attorney general opined that daily fantasy sports was illegal.
Specifically, Section 3(a) (1) of the new Alabama daily fantasy sports bill forbids companies from offering daily fantasy sports games “without first being registered with the Office of the Attorney General.” It also articulates that the applications for companies to register to offer DFS shall be made “available within 180 days of the effective date of the act.”
However, Section 3(a)(2) of the Alabama bill then creates a special carve-out to exempt from this waiting period any DFS companies that operated in Alabama before May 1, 2016. Such companies include FanDuel and DraftKings.
The Alabama bill’s delay period, of course, is not nearly as bad as the disgrace that has emerged in New York, where, three years later, earnest, new competition remains foreclosed. Nonetheless, the preferential treatment of companies that reasonably could be described as “gun jumpers” and potential violators of Alabama state law still seems problematic.
Among other things, the waiting period for new competitors to enter the Alabama DFS market could allow FanDuel and DraftKings to build their user base over the course of a full SEC football season without facing any new competitors. FanDuel and DraftKings already enjoy nearly a shared monopoly over the national DFS marketplace, and allowing them the first crack at building an Alabama DFS user base during SEC football season is likely to only increase their lead.
While it remains to be seen how quickly the Office of the Attorney General of Alabama rolls out its DFS applications to allow for new competitors, one should certainly hope that Alabama does not become a fiasco like New York, where lobbyist pressure and bureaucrat indifference have led to a shared monopoly over the popular and growing daily fantasy sports space.
The daily fantasy sports marketplace needs more than two big competitors, and the Alabama marketplace should not be dominated by those companies that entered the state before DFS was deemed legal.
One can reasonably doubt whether the Alabama bill does enough to facilitate this level of market competition that should be part of the state government’s legitimate objectives. Let’s just hope the Alabama Office of the Attorney General decides to do the morally right thing and roll out DFS applications simultaneously with the bill’s effective date, and not 180 days later.