‘Show Me’ Legal Fantasy Sports: Missouri Legislature Passes Bill

‘Show Me’ Legal Fantasy Sports: Missouri Legislature Passes Bill

The following article can be found in its original form at this link from the Legal Sports Report:

Legal Sports Report: Dustin Gouker, May 12, 2016

Missouri became the sixth state legislature to pass a bill that would legalize and regulate daily fantasy sports this year.

The House concurred with a Senate version of the bill — the “Missouri Fantasy Sports Consumer Protection Act” — that passed earlier this week, sending the bill to Gov. Jay Nixon.

Legal Sports Report understands Nixon was involved in the process of getting to the bill as passed, and he is expected to sign it.

The Missouri DFS bill, at a glance

The bill went through a number of iterations, but the final version of the bill — H 1941 — appears here.

Key provisions include:

  • DFS is put under the purview of the Missouri Gaming Commission.
  • Fantasy sports are exempted from gambling law in the state.
  • The MGC is responsible for licensing DFS operators and is provided with wide oversight powers.
  • An annual licensing fee is set of the lesser of “annual application fee of ten thousand dollars or ten percent of the applicant’s net revenue [based only on players in Missouri]”
  • The MGC is authorized to investigate any license applicant, with costs — not to exceed $50,000 — to be paid for by the DFS operator.
  • tax on net revenue generated in the state is established at 11.5%. Failure to pay the tax would result in the revocation of the license.
  • Operators must complete an annual audit with a third party.
  • DFS contests cannot be based on amateur athletic competitions, including college sports.
  • A minimum age of 18 is set for online fantasy sports operators.
  • The bill institutes consumer protections such as the segregation of player funds from operational funds; creating a procedure for player complaints; allowing players to self-exclude; provisions to prevent advertising to minors; identification of “highly experienced” players and stop unauthorized scripts.

The fee and tax schedule appears that it will exclude almost all operators outside of DraftKings and FanDuel.

Industry reaction

Reaction was mixed from the fantasy sports industry. Legal Sports Report understands DraftKings and FanDuel are supportive of the bill.

But the Fantasy Sports Trade Association offered this statement:

“The state of Missouri’s bill largely falls in line with the core principals the Fantasy Sports Trade Association seeks with all legislation. The bill recognizes fantasy sports as a game of skill and installs basic consumer  protections.  However, the high tax rate will create challenges for small operators. We are in agreement with Representative Scott Fitzpatrick and Senator Eric Schmitt who both spoke out against the taxes and regulations that were added to the bill.”

And another group — the Small Businesses of Fantasy Sports Trade Association –outright opposed the bill in a press release:

“We appreciate that the legislature wants to address this issue but this bill will kill us,” said small business owner and co-founder of the SBFSTA Alex Kaganovsky. “Indiana and Virgina have already given FanDuel and DraftKings carte blanche to operate without competition. Currently, small businesses cannot operate in those states.”

The other states with DFS laws, or close to it

Three states have passed DFS laws this year:

Bills sit on the governors’ desks of two others:

  • Mississippi; Gov. Phil Bryant’s deadline to act is Friday; no action means the bill becomes law.
  • Colorado

Kansas passed a law formally legalizing DFS last year. Massachusetts Attorney General Maura Healey instituted regulations for the industry this year.

One victory, another setback for DFS

While Missouri legalized DFS, a legislative effort in another state is shelved for now.

Minnesota’s bill hit a roadblock in the Senate. The bill passed out of one committee but faced problems in the Senate tax committee. From KMSP in Minnesota:

“We had very large vote on the Senate floor last year to not allow online gambling,” said Senate Tax Chair Rod Skoe.  “This clearly, from my perspective is in line with that.  And my expectation is that the Senate as a body would not be supportive of that.”

With Missouri and Minnesota’s DFS bills nearly resolved, the prospects of more states joining them is currently an open question.

Clarification: An earlier version of this story said the minimum age for DFS players for was 21. The minimum age for DFS player online is 18; at land-based casinos, it is 21.

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