One by one, US states are hopping aboard the fantasy sports bandwagon, drafting legislation that will authorize, regulate and – in most cases – generate licensing revenue from season-long and/or daily fantasy sports (DFS) operations. But it seems both lawmakers and small businesses are getting caught up in the dollar signs, although for different reasons.
If the push to legalize other forms of online gambling in the US has taught us anything, it’s that the states that look kindly upon regulation are out for big bucks. When New Jersey Gov. Chris Christie approved a bill to authorize online poker and casino gambling, he (erroneously) estimated about $1 billion in tax revenue, spurring legislators into vigorous nods of agreement.
Watching Virginia and Indiana pass fantasy sports laws in recent weeks, it’s fairly obvious that protecting consumers isn’t the only goal they have in mind. They are looking to generate a new source of revenue for their governments’ coffers by charging high registration fees to operators.
Indiana wants to charge all fantasy sports operators a one-time $50,000 licensing fee, plus a $5,000 annual renewal fee. In Virginia, a $50,000 licensing fee would be required every year via annual renewal.
The situation is looking much more grim in New York, where lawmakers are contemplating legislation that would impose a $500,000 licensing fee.
The industry’s biggest players, DraftKings and FanDuel, should have no problem coming up with that kind of money, but what about the little guys?
SBFSTA Fights Back
| While the Fantasy Sports Trade Association (FSTA) was (arguably) formed to represent all interests in season-long and daily fantasy sports betting – operators, vendors, software developers, promoters, etc. – there’s a new association in town that’s looking out solely for the little guys.The Small Businesses of Fantasy Sports Trade Association (SBFSTA) is the new organization on the block, currently made up of 39 fantasy sports and daily fantasy sports operators, promoters and backend development companies. |  |
The SBFSTA’s mission is simple – to protect small companies in the fantasy sports industry from what’s slowly evolving into a legislatively-supported duopoly of DraftKings and FanDuel. The website claims that current “legislation aimed at regulating daily fantasy sports… will destroy all small businesses in their path.”
The SBFSTA has organized its own lobbying efforts to push for DFS laws that will support the industry as a whole. The original FSTA claims to do the same, but has achieved very little in the way of protecting anyone outside of DraftKings and FanDuel.
The organization is tackling the situation in New York first, where the so-called duopoly supports legislation that would require a $500k licensing fee – a fee only they could afford to pay.
Alex Kaganovsky, co-founder of season-long Fantasy Football Players Championship (FFPC) and spokesperson for SBFSTA, said in a press release, “We will take this fight across the country on behalf of all of the fans. We will not stand by while the two major players in the industry, which have direct financial ties with three of the major professional sports leagues, are permitted their own duopoly in New York.”
He called the DFS laws currently on the table in New York a “battle between David and Goliath” in which the country’s two leading operators would vanquish the competition from smaller businesses.
The SBFSTA is lobbying for fantasy sports laws that would impose the lesser of a $500,000 fee or 5% of net revenue, along with a fee waiver for any company that hosts less than 5,000 customers. The organization also wants amateur sports prohibited from involvement in fantasy sports betting, and an age requirement of 21+ for customers.
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