Healey laid out new regulations for the industry, which includes increased disclosure about who is playing the games, new restrictions on minors, and limits on the amount of deposits a player can make.
BOSTON - Attorney General Maura Healey wants to ban minors from playing daily fantasy sports and require companies to disclose when someone is playing against a professional fantasy sports player. These are just some of the new regulations on fantasy sports operators that Healey proposed on Thursday.
"Most people would be surprised to know in many contests less than 2 percent of people win 90 percent of the prizes," Healey said. "We need more disclosure about how contests work and who people are playing against."
Fantasy sports, of which the biggest companies are Boston-based DraftKings and FanDuel of New York, have come under increased scrutiny recently in Massachusetts and nationally. The multi-million-dollar industry is one of the few forms of online gambling that remains legal in the United States. New York has tried to ban fantasy sports, although the ban is being challenged in court. Nevada has also banned the games, ruling that they are illegal sports wagering. In fantasy sports, people create online sports teams made up of real players, and the teams perform based on the real-life performance of the players.
Healey is not trying to ban fantasy sports. She said her goal is to "level the playing field for participants" and make sure that consumers "have a fair shot while playing games." She said she wants to protect minors and help problem gamblers.
"This is an industry that cries out for transparency and robust consumer protections," Healey said.
The regulations will be filed on Friday with the Massachusetts Secretary of State. There will be a public hearing Jan. 12, and the public has until Jan. 22 to submit comments. Although the regulations will not be finalized until after that date, Healey said she hopes companies will take steps to comply immediately.
A DraftKings company spokesman said Healey had taken "a thoughtful and comprehensive approach" to fantasy sports, and the company will prepare to make the changes that Healey is requiring. "While we do have some concerns with the draft regulations, we intend to work closely with the Attorney General's office to ensure we are operating in the best interest of our customers," the spokesman said in a statement. "We will utilize the next 60 days to share our comments in the hopes of effecting some changes and are firmly committed to continuing to operate in a lawful and transparent manner."
The spokesman said it believes the process followed by Healey "will ultimately result in a positive outcome for the millions of fantasy sports fans around the country who want to be able to enjoy DraftKings' games in a fun, fair, and transparent environment."
Healey's proposed regulations would bar anyone under age 21 from participating in daily fantasy sports. Fantasy sports operators would no longer be allowed to advertise or run promotional activities in schools, on college campuses or at amateur or college sporting venues. They would be barred from offering contests based on the performance of student athletes.
Asked why she included college students in the ban, Healey said these are student athletes. "They should not be used as a basis for pecuniary games by those who want to play fantasy sports," Healey said. She said she also worries about students going into debt to play the games.
With allegations surfacing about company employees winning fantasy sports contests on a rival company's website, potentially based on insider information, Healey is proposing banning company employees, professional athletes or anyone else with insider information about a sport from playing fantasy sports games.
Healey also wants to ensure that professional players - those who develop software or algorithms that allow them to win huge numbers of contests - are identified as such on the site. The sites would be required to have games limited to beginners, where these professional players are excluded.
Ads will have to mention the average net winnings of all players and include information about assistance for problem gamblers. To address issues related to gambling addiction, fantasy sports companies would not be allowed to extend credit to players. They would have to limit deposits to $1,000 a month unless a player verifies his ability to sustain higher losses. Players would also need to have the option to set self-imposed limits for deposits or losses.
Violations of the regulations could be prosecuted under the state's consumer protection laws.
"These are the rules of the road should they wish to continue to operate here in Massachusetts," Healey said.
Healey said her office is continuing its investigation of the industry, although she declined to offer specifics. Healey said her regulatory steps do not preclude the Massachusetts Gaming Commission or the Legislature from taking additional steps.
The Gaming Commission is currently looking at the question of whether fantasy sports should be regulated, but the commission can only make recommendations. It will be up to the Legislature to act.
This story has been updated with a comment from DraftKings.