SportsHub Games Network has become the first online fantasy sports business to be hit with a civil penalty for operating in New Jersey without a license.
The operator will pay a $30,000 civil penalty under the New Jersey Fantasy Sports Act (FSA), a 2017 statute that legalized and regulated online fantasy gaming in the state.
The statute came into effect from August 2017, with fantasy sports operators already active in the state given until 6 February 2018 to apply for a permit or cease all activities in New Jersey.
However an investigation by the state Division of Consumer Affairs found that SportsHub continued to do business in New Jersey despite failing to file a permit application, in violation of the FSA. It ultimately submitted its application in September 2018.
“New Jersey’s fantasy sports law offers fans an opportunity to fully immerse themselves in the sports they love, while ensuring a safe and enjoyable experience for all who participate,” said Attorney General Gurbir Grewal.
“As the settlement announced today illustrates, New Jersey enforces the laws in place to ensure transparency and protect consumers from hidden threats to their online privacy.”
In addition, SportsHub agreed to change its business practices as part of the settlement after the investigation discovered that it may have violated New Jersey consumer protection laws.
The operator failed to clearly and conspicuously disclose that it collects personal information from customers’ social media accounts, with some of this data shared with third parties. It also failed to make clear that it limits consumers’ rights by requiring any claim or cause of action against the operator the brought through binding litigation only.
Additional issues related to its Leaguesafe online payment system, through which SportsHub collects contest entry fees and pays out winners. It claimed that this solution was “the only fantasy sports consumer protection agency on earth”.
SportsHub will make the necessary changes to its terms and conditions to ensure it complies with all New Jersey laws and regulations.
“We are pleased that SportsHub has obtained the necessary permits to do business in New Jersey and has agreed to abide by all our laws and regulations going forward,” acting director of the Division of Consumer Affairs Paul R. Rodríguez said.
“As the fantasy sports industry continues to grow in New Jersey, we will closely monitor the activities to ensure that all operators are playing by rules.”
The investigation was carried out by Aziza Salikhova and Ediz Laypan of the Division of Consumer Affairs’ Cyber Fraud Unit. Deputy Attorneys General Roman Guzik of the Consumer Affairs Counselling Section and Robert N. Holup of the Consumer Fraud Prosecution Section within the Division of Law represented the Division of Consumer Affairs in the case.