Fantasy sports could be included in state’s gaming expansion

Fantasy sports could be included in state’s gaming expansion

The following article can be found in its original form at this link from The Meadville Tribune:

The Meadville Tribune: John Finnerty - CNHI News Service, March 9, 2017

In the coming days, sports fans will be busily filling out college basketball brackets and watching spring training for the latest news to fill the rosters of their fantasy baseball teams. 

Now, lawmakers are looking to see if Pennsylvania can start taxing that play when it takes place on commercial web sites.

Fantasy sports players pay a fee to join and then pick a "fantasy team" of professional athletes. Participants can win "jackpots" up to $1 million based on the individual performance of the athletes on the field in the coming week.

The industry estimates that more than 50 million people in the U.S. and Canada play fantasy sports, said Steve Brubaker, with The Small Businesses of Fantasy Sports. His group represents season-long competitions, as opposed to daily fantasy sports leagues like DraftKings and FanDuel.

Of that 50 million, most are involved in free leagues run by sports networks. Only about 14 million play in competitions run by companies offering prizes like those the state is seeking to regulate.

A gaming expansion bill that passed the state House and died in the Senate last fall would have charged a $50,000 license fee for large fantasy sports contest operators. For smaller companies, the application fee would be 7.5 percent of competition’s revenues in the prior year.

The distinction was important because it would have allowed the smaller competitions to get a foothold in the state, along with the major daily fantasy competitions, Brubaker said.

The fantasy sports operations would also be required to pay the state a 12 percent tax on revenue from Pennsylvania players.

Legislation spelling out the same requirements were in a Senate bill introduced Monday by state Sen. Thomas Killion, R-Delaware County. Regulating and taxing fantasy sports was also included in a proposal for broader gaming expansion, including online poker, introduced in the state House by state Rep. George Dunbar, R-Westmoreland County, in February.

State Sen. Pat Stefano, R-Fayette County, signed onto the Killion bill as a cosponsor. Stefano is vice chairman of the Senate Community, Economic and Recreational Development Committee, which on Tuesday held the first of a series of public hearings on gaming expansion.

Fantasy sports wasn’t on Tuesday’s agenda for the hearing. But Stefano and other lawmakers contacted for this story said they hope gaming expansion this spring includes measures that regulate and tax fantasy sports.

“We’re missing out on millions of dollars, if not hundreds of millions” in potential tax revenue, state State Rep. Ted Nesbit, R-Mercer County.

He said he doesn’t believe that taxing fantasy sports will increase gambling, but just allow the state to get a cut of the revenue.

State Rep. Brad Roae, R-Crawford County, said that if the plan has the potential to bring money to the state, it’s certainly going to get a long look from lawmakers.

"I think it will happen,” Roae said.

Stefano said the fantasy sports industry won’t likely oppose Pennsylvania’s bid to tax their operations. The fantasy sports web sites will consider being taxed as a better alternative to being banned, he said.

After New York passed a law setting rules for fantasy sports competitions, anti-gambling groups sued to stop the measure, arguing it was unconstitutional. It was not the first speed bump for fantasy sports in New York. Prior to that law, the state’s attorney general had sued to stop fantasy sports from operating in the state because he argued they could be considered illegal games of chance.

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