Protectionism 101: HB 279 and the regulation of Fantasy Sports

[TL;DR warning – this is a long one.]

I usually stick to writing about local issues at this site since I feel I can have the most impact in and around Huntervsille, but occasionally the General Assembly will motivate me to write about something outside of the confines of Mecklenburg County. Last week, Mecklenburg County Commissioner Matthew Ridenhour alerted me to just such an occasion when he commented about HB 279, or the “Fantasy Sports Contest Act,” on his facebook page. I, for one, am glad the majority party in Raleigh is finally taking action to protect all North Carolina residents from the scourge of unregulated fantasy sports. Because if there was a single overarching reason voters returned Republicans to the majority in Raleigh last November, it was definitely to grow the size of state government by enacting more paternalistic regulations.

Becki Gray wrote a column at Carolina Journal last week asking a very reasonable question, “As hundreds of bills are filed in the General Assembly, I ask: What problem are lawmakers trying to solve?” I asked myself the same question about HB 279 – what problems are the sponsors of this bill trying to solve? The answer wasn’t readily apparent so I decided to email the fourteen sponsors of the bill and ask them what problems they were trying to solve and why NC needed to regulate fantasy sports? I haven’t participated in fantasy sports in a few years, and I have never participated in the growing phenomenon known as daily fantasy sports, so maybe I just wasn’t aware of the problems that needed solving by state government.

Rep. Jason Saine (R), a primary sponsor of HB 279, promptly responded to my email (and cc’ed the bills other primary sponsors) with an outline of their justification for the legislation. He wrote in part, “It is important to note that without a legal definition and parameters, other states have seen confusion regarding fantasy sports.” As evidence of this confusion he linked to an April 2016 news story about an opinion by the office of the Attorney General in Tennessee that fantasy sports contests constituted illegal gambling under TN law. TN became the third state to regulate fantasy sports when the governor signed a bill into law later that same month.

The current version of HB 279 is five pages long. If the primary concern of the bill sponsors is that an NC court could rule fantasy sports to be gambling, it seems like the concise language contained within the proposed section 78E-9 of the bill would be sufficient by itself to address this concern. Section 78E-9 states fantasy contests are not to be considered gambling under NC law. Problem solved, right?

I haven’t seen much written yet in the mainstream press about this bill since it was filed other than a short piece in the N&O last week, but I have read two opinion pieces. Both writers, Nic Haag in the Lincoln Herald and Keith Larson in the Charlotte Observer, raised excellent objections to HB 279, many echoing my own objections to this bill. HB 279, as currently written, is nothing more than another manifestation of protectionism that unnecessarily imposes arbitrary restrictions on competition.

Another concern I have (a concern also expressed by Commissioner Ridenhour in his facebook post) that neither of the other opinion pieces referenced is the overreach potential of this bill.  If the intent of the bill sponsors is only to offer consumer protections to fantasy players and not to regulate small fantasy leagues amongst friends/family/co-workers involving small sums of money (or even no money), why not clear up that ambiguity in the bill? The bill states no fantasy contest shall be offered in this State unless the operator has been registered with the [Secretary of State]. A “fantasy contest” is an online fantasy or simulated game or contest… and an “operator” is a person or entity that offers fantasy contests to members of the public.

There does not appear to be any language in the bill clearly setting forth the intent for it to only apply to fantasy sports companies operating a web based platform as opposed to fantasy leagues amongst friends who happen to use an existing web based platform like Fantasy Draft, Yahoo, etc. Without clear language setting forth the intent of this bill to exempt small leagues involving friends/family/co-workers, I could easily see the Secretary of State’s office or another state agency attempting to require registration and the registration fee for a group of friends/family/coworkers based on the ambiguous definitions of fantasy contest and operator – and I could easily see a court upholding such an attempt unless changes are made to the existing bill language.

Consider this hypothetical. You and your friends have run a fantasy league every football season for years, you charge a $25 buy-in, and use Yahoo’s online fantasy platform. This season two of your friends can’t participate and you want to replace them to keep the same number of participants in your league so you send out a quick social media post on your social media profile open to the public for anyone interested in joining your league to contact you. Are you now an “operator” offering a “fantasy contest” to members of the public requiring you to register with the Secretary of State?

I also received a response from Rep. John Bradford (R) to my question about what problems the sponsors of the bill are attempting to resolve. Rep. Bradford wrote in part, “The key concern for states, like NC, have been whether daily fantasy sports operators are collecting money from the general public, because that is the conduct where there is risk of harm… These operators create jobs and revenue in NC.” I have yet to be provided with evidence from any of the bill sponsors of any actual harm suffered by a fantasy sports participant in NC.

Regarding the “jobs and revenue” justification for this bill, maybe someone can point me to the bills filed by Rep. Bradford (or any other bill sponsor) seeking to legalize drugs and prostitution on the same basis.

Why not allow the fantasy sports companies to police themselves and let the market sort out what consumer protections may or may not be needed? This unregulated market seems to have worked out pretty well so far in NC. Fantasy sports have been around in some form or another in NC for at least 15 years – and that’s being conservative. The bill sponsors may argue daily fantasy sports are different, but HB 279 as written makes no distinction between season long and daily fantasy contests. The fact that the bill sponsors can’t come up with a single instance of a fantasy sports operator defrauding or otherwise causing financial harm to an NC resident over the past 15 years should tell you all you need to know about this bill.

To further bolster their support for this bill, both Reps. Saine and Bradford have pointed out that the industry supports oversight and regulations like HB 279. As I pointed out to Rep. Saine, I don’t think that helps their argument. It only reinforces the perception that this proposed legislation is nothing but protectionism being pushed by current market participants to erect barriers to entry for future competitors.

Rep. Saine attached the two letters below in his email as evidence of industry support (he also posted them on his twitter feed) and Rep. Bradford wrote the following in a facebook comment on March 9, “NC companies operating in this space specifically asked for legislation to clearly separate fantasy sports from gambling activities.”

FantasyDraft Support FSTA NC Support


So, which “NC companies” are Rep. Bradford referring to? He doesn’t specify so I am going to assume at least one of them is the company that wrote a letter in support to Rep. Saine, Fantasy Draft, LLC. Who is Fantasy Draft, LLC? In the timeless words of local radio personality Tremaine “QCB” Sloan, I had never heard of them.

Fantasy Draft, LLC (“Fantasy Draft”) lists a Cornelius, NC address on their letterhead. They have a corporate logo on the top of the building at that address as well as roadside signage and they are listed on the company directory on the first floor of the building. They’ve been featured in stories at the Charlotte Observer and Cornelius Today. A quick perusal of the “Press Box” page of their website shows Charlotte, NC on all of their bylines. A story from November 13, 2014 on their site announcing their launch states that Fantasy Draft is based outside of Charlotte, NC. The story goes on to state, “The investment group behind FantasyDraft is led by Charlotte-based entrepreneur and business owner Robert Stevanovski and includes senior individuals at The Jordan Company, a private investment firm, with more than $8 billion in committed capital among others. Stevanovski owns several businesses that have generated over $3 billion dollars in revenue over the last five years.” Mr. Stevanovski is one of the co-founders of ACN, LLC based in Concord.

Interestingly, when you run a property search of the Cornelius address listed by Fantasy Draft it shows the owner as West Catawba Ave, LLC. The managing member of this company according to filings at the Secretary of State is Pasicor, LLC. The manager of Pasicor, LLC is Robert Stevanovski according to filings at the Secretary of State. One of the other tenants in the building with Fantasy Draft is Xoom Solar. Xoom Solar is a subsidiary of ACN, LLC.

Based on the above, it would seem obvious Fantasy Draft is an NC company. But, over at the Secretary of State’s website, I was unable to locate Fantasy Draft when I performed a corporate name search (you can perform the search here). Just searching the word “fantasy” in the corporate name search brings up approximately 140 results, 26 of which appeared to be related to fantasy sports in some manner, but no Fantasy Draft. I also attempted a search based on company officials and was still unable to locate Fantasy Draft. I then did a search online in the Mecklenburg County Register of Deeds assumed names database (you can perform the search here) just in case they were operating as a d/b/a or an assumed name and still found no results.

After searching online it appears Fantasy Draft is incorporated in Delaware and has filed as a foreign limited liability company in Mississippi (where fantasy sports legislation has already been signed into law) with its principal office in Cornelius, NC. The question for the bill sponsors is whether a physical presence and employees in NC is alone enough to consider Fantasy Draft an NC company. There is nothing wrong with incorporating in Delaware and filing to do business in other states, however, it does not make Fantasy Draft an NC company in my opinion. Whether Fantasy Draft is a foreign corporation transacting business in this state without a certificate of authority pursuant to NCGS §55-15-01 is another question entirely.

To be clear, I reject the premise that the state should be involved with regulation of fantasy sports. But, because of the number of bill sponsors (14) and because it’s a bi-partisan bill, I recognize HB 279 has a good chance of passing the House and heading to the Senate. Let’s hope before it does some other members of the House or members of the Senate can scale this bill back and limit it to simply preventing fraud and abuse and maximizing competition.


Why can’t I buy beer before noon on Sunday?

This column originally appeared in the September 17, 2015 edition of the Herald Weekly. I decided to re-post this piece after the FB dialogue this weekend with Sen. Jeff Tarte and others and after reading the recent opinion piece in the Observer by Yaël Ossowski. Mr. Ossowski touches on a number of alcohol related laws in need of revising, including Sunday alcohol sales. But he also references the popular “Craft Freedom” movement attempting to revise the current distribution scheme for brewers in the state. I’m glad state legislators (and even the Observer editorial staff) are finally coming around to changing this decades old rigged system, but you have to ask what took so long (or you can just be a cynic and assume campaign contributions from a certain special interest group kept the rigged system in place for so long…). Apparently brewers just needed a catchy social media campaign to get the attention of legislators since basic arguments against protectionism failed to be persuasive.

Hopefully my #SundayEquality campaign will eventually have the same success in the legislature as the Craft Freedom campaign seems to be having.


Huntersville residents and all North Carolinians of legal drinking age should be allowed the choice to purchase alcohol anywhere it is sold before noon on Sunday. (For the purpose of this column, I’m referring to beer and wine only.)

The current reason this choice is not allowed is due to N.C. General Statute 18B-1004(c) which states, “It shall be unlawful to sell or consume alcoholic beverages on any licensed premises from the time at which sale or consumption must cease on Sunday morning until 12:00 Noon on that day.”

This is an antiquated law that needs to be repealed.

 Why did the legislature select the arbitrary hour of noon on Sunday to allow for the sale and purchase of alcohol to resume? Why not 11 a.m.? Or why not leave it at 1 p.m. like it was until 1993, when the legislature changed the time to noon [SL 1993-243]?

Why restrict alcohol purchases before noon on Sundays only instead of enacting the same time restriction every day of the week?

Why only ban the sale or consumption of alcohol before noon, but not the wholesale delivery of alcohol before noon as outlined in the exception granted to wholesalers in 18B-1004(e)?

These would be questions a reasonable person would ask if they had never heard of “blue laws” or our state’s limit on Sunday alcohol sales. I emailed every legislator in the General Assembly and the Governor and requested any rational reason for continuing to enforce N.C.G.S. 18B-1004(c); I received very few responses.

Sen. Jeff Tarte’s response was representative of the few responses I did receive – why change the status quo?

“I have no problem with the current situation because the vast majority of citizens have expressed no issue with the current law,” he wrote. “Nothing more and nothing less.”

Understood, but I would argue the lack of citizens explicitly requesting the law be changed is not evidence of their continued support of the status quo.

It’s not my intent to delve into the implied religious basis of this and other so-called “blue laws” here, but maybe a reader can point to the place in the Bible where it prohibits the sale of alcohol before noon Eastern Standard Time on Sunday? And what about Friday and Saturday? These days are considered to be Sabbath or significant by two of the largest religious groups in the world.

If the General Assembly won’t extend the statewide ban on the sale of alcohol before noon on Sunday for the entire week, surely they should respect the traditions of two of the largest religious groups in the world and also ban the sale of alcohol before noon on Friday and Saturday, right?

I recently spoke with representatives of the growing craft-beer scene in Huntersville and Cornelius for their opinions on this issue. Ray Steimel, co-owner of Primal Brewery, said the law doesn’t affect his business much because most of his customers don’t arrive until around 2 p.m. on Sundays.

But he did express frustration with the law as a consumer, as did Matt Glidden, owner of Ass Clown Brewery in Cornelius, citing Sundays on Lake Norman as an example. Glidden said he would love to at least have the option to open and sell alcohol before noon on Sundays for special events, but since this option isn’t available, he stated the law is, “out of sight, out of mind.”

Primal is currently open on Sundays, while Ass Clown is not. Glidden doesn’t think craft beer businesses would be greatly affected by a change in the law, but he does feel the coming craft distillery boom is going to be greatly hampered by both the noon prohibition and also the current monopoly on spirituous liquor sales in N.C. enforced by the ABC Commission.

The Sunday alcohol sales time was last changed more than 20 years ago. It’s past time for another change. I welcome readers to provide their own rational reasons for maintaining the status quo if they disagree.

On the vote to replace Rep. Charles Jeter

The column below originally appeared in the Sept. 8, 2016 edition of the Herald Weekly. Mr. Jeter has been back in the news recently when it was reported in the Charlotte Observer CMS hired him as a lobbyist at an annual taxpayer funded salary of $91,000. How exactly a lobbyist produces $91,000 worth of value to the taxpayers isn’t explained in the Observer article. The Daily Haymaker has questioned this use of taxpayer funds since Mr. Jeter isn’t yet a registered lobbyist and is actually prohibited from even registering as a lobbyist until the “later of the close of session as set forth in G.S. 120C-100(a)(4)b.1 in which the legislator served or six months after leaving office” per NCGS 120C-304(a)(2).

Despite being in extra innings at the moment, the current session in which Mr. Jeter served before resigning is likely to end before the six month mark after he left office – which, if you calculate it based on when he formally resigned with the Board of Elections, August 9, and not when he informally notified party leadership of his intention to resign on July 25, would mean Mr. Jeter isn’t even able to register as a lobbyist until on or about February 9, 2017. Were there no other qualified candidates considered by CMS who could start work immediately? I have sent a records request to CMS in an attempt to find this out and will report back when/if I receive a response.

Funny how neither one of our local weekly papers was able to find space to cover this issue this week – but what do I know, I’m just another one of those outlets for fake news online pandering to the un-informed masses.

And my offer to provide a records request template to anyone interested in submitting their own records request still stands. Just send me an email.


How did we ever find outlets for our self-righteousness before social media?

My current social media platform of choice is Twitter, which at least keeps self-righteousness and virtue signaling limited to 140 characters (although Twitter’s increasing culture of censorship has me looking for an alternative platform).

The latest non-toll related online social media outrage du jour took place last month after the vote to replace former state house representative Charles Jeter.

Mr. Jeter notified Republican party leadership of his sudden intention to resign on the morning of July 25, citing personal reasons. He did not provide formal notice of his resignation to the state board of elections until the afternoon of Aug. 9 – 15 days later. There has still not been any explanation provided by Mr. Jeter for the 15-day delay in providing formal notice of his resignation to the appropriate officials at the board of elections. He has declined requests for comments via Twitter.

Why is this 15-day delay important? Because rules allow the Mecklenburg County Republican Party to nominate and vote on a replacement candidate in the event of a resignation, but only after notice has been given to the appropriate officials. The vote to replace Mr. Jeter did not occur until Aug. 17 – the same night, coincidentally, a vote took place to nominate a replacement for former Rep. Mike Hager of Rutherford County. Mr. Hager, by comparison, gave appropriate notice of his resignation on or about Aug. 12, and the replacement vote promptly took place a week later.

The candidate nominated to replace Mr. Jeter on the November ballot, Danae Caulfield, has a severely limited number of days to campaign before the election putting her at a distinct disadvantage compared with her Democrat opponent, who has reported raising over $100,000 this election cycle. The 15 days Mr. Jeter delayed in formally resigning did nothing to increase her electoral odds. [UPDATE – Caulfield did end up losing the election by approx. 3,676 votes. Could this margin have been overcome with more time to fundraise and campaign?]

You would have assumed wrong if you assumed the social media outrage referred to at the outset was directed at Mr. Jeter for his delay in formally resigning. Instead, Facebookers took to their keyboards to furiously vent about the Mecklenburg GOP executive board and Justin Moore, the nominee voted to replace Mr. Jeter for the remainder of the current term.

You see, this was just another example of the GOP elites conspiring to trample anti-toll conservatives by not voting for Mr. Jeter’s primary opponent from earlier this year, Tom Davis, even though Mr. Moore has also always opposed the I-77 toll plan.

Mr. Davis was apparently entitled to the replacement vote, according to some posts, because he nearly defeated Mr. Jeter in the primary. According to this logic, these same individuals would be expected to support Sarah McAulay and Jill Swain to be nominated for town board or mayor in the event of an absence since both were runners-up in the last election – an unlikely scenario.

Many were upset with Mr. Moore for not running for both slots, to finish the term and get on this fall’s ballot, since an incumbent running in November would have been more likely to prevail. But Mr. Davis made clear prior to the Mecklenburg GOP meeting on Aug. 17 he did not intend to run for the ballot slot (and, in fact, did not run for the ballot slot), and I have yet to hear the same criticism leveled against him.

If you really want to effect change locally, you have to show up to your party’s annual precinct meeting at a minimum. It will be interesting to see how many of those expressing their outrage online actually show up to be counted at next year’s precinct meeting.

An addendum: I received a few emails asking for records requests templates after my most recent column on public records. This led me to think there are likely other members of the public who want more information from their local government on various public policy issues or elected officials. So, if you’re interested in obtaining information related to a specific public policy or elected official, send me an email with details and I’ll consider whether to follow up with my own records request.