NEWARK – Attorney General Gurbir S. Grewal and the Division of Consumer Affairs (“the Division”) today announced that SportsHub Games Network, Inc. (“SportsHub”) has agreed to pay a $30,000 civil penalty for unlawfully operating an online fantasy sports site in New Jersey without a permit. The Minneapolis-based games provider also agreed to change its business practices to resolve allegations that its conduct violated the state’s consumer protection laws by, among other things, failing to clearly and conspicuously disclose that SportsHub collects personal information from consumers’ social media accounts and that it shares certain personal information with third parties.
SportsHub, which operates “Fanball,” “CDM Sports,” “National Fantasy Football Championships,” “Whatif Sports,” “Leaguesafe,” and other fantasy sports games, is the first operator to be penalized under New Jersey’s Fantasy Sports Act (“FSA”), a 2017 statute legalizing and regulating internet fantasy gaming activities in the state.
“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 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.”
Fantasy sports allow players to deposit money into accounts and assemble virtual teams made up of real professional athletes. Players win or lose money based on how those athletes perform in real games.
In August 2017, New Jersey enacted the FSA, which brought the fantasy sports industry under the regulatory authority of the Division and required, among other things, that operators obtain permits from the Division to do business here.
Fantasy sports operators who were conducting business in the state prior to the enactment of the FSA were given until February 6, 2018 to apply for a permit or cease operating in New Jersey.
A Division investigation found that despite SportsHub’s failure to file a permit application by the deadline, the company continued to conduct business in New Jersey, in violation of the FSA. SportsHub ultimately applied to the Division for a permit in September 2018.
- SportsHub collects information from consumers’ social networking accounts, including names, user IDs, images, email addresses, dates of birth, friend lists, school names, and other public profile information (collectively, “Personal Information”)
- SportsHub shares certain Personal Information to third parties and/or for use in research studies;
- SportsHub limits consumers’ rights by requiring consumers to bring any claim or cause of action against the operator through binding arbitration only, thus forfeiting the right to bring any claims or causes of action before a court, and to waive class action rights; and
- SportsHub does not issue refunds to consumers.
The Division alleges that SportsHub further violated the Consumer Fraud Act by:
- advertising on its website that “Leaguesafe,” a SportsHub online payment system that collects fantasy sports entry fees and pays out winners, is “the only fantasy sports consumer protection agency on earth”;
In a Consent Order resolving the Division’s findings and allegations, SportsHub agreed to pay a $30,000 civil penalty and also agreed to change its business practices to comply with all 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,” said Paul R. Rodríguez, Acting Director of the Division of Consumer Affairs. “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.”
Investigators Aziza Salikhova and Ediz Laypan of the Division of Consumer Affairs’ Cyber Fraud Unit conducted this investigation.
Deputy Attorneys General Roman Guzik of the Consumer Affairs Counseling Section and Robert N. Holup of the Consumer Fraud Prosecution Section within the Division of Law represented the Division of Consumer Affairs in this matter.