Smaller fantasy sports sites decry proposed state entry fee, tax

Smaller fantasy sports sites decry proposed state entry fee, tax

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

Newsday: Scott Eidler, March 29, 2016

ALBANY — Owners of smaller fantasy sports sites are urging lawmakers to revise a proposal they say charges a prohibitive entry fee to operate in New York State.

Lawmakers are considering a bill that would legalize fantasy sports games, which were the target of lawsuits from the State Attorney General’s Office last year. A bill, sponsored by State Sen. John Bonacic (R-Mount Hope), would require businesses to pay $500,000 to the state and a 15 percent gross revenue tax in order to take bets from participants in New York.

Alex Kaganovsky, a managing partner of Fantasy Football Players Championship, a New York City website, said the $500,000 entry fee is “beyond the reach of small businesses that operate in the fantasy sports industry.”

“This type of prohibitive fee allows the Goliaths of our industry, DraftKings and FanDuel, to operate, while closing the market to companies like mine and others in our organization,” Kaganovsky said during a news conference at the State Capitol Tuesday.

DraftKings, FanDuel and Yahoo have agreed to stop taking bets from New York customers as state lawmakers work to legalize the sites. The State Attorney General’s Office has called the sites illegal gambling operations, while supporters say the picks are based on “skill.”

About 35 companies have formed the Fantasy Sports Trade Association, created about two weeks ago. The group supports charging the fantasy sports companies 5 percent of net revenue derived from bets, or $500,000, whichever is lower.

Legislators say they would work with the companies to strike a compromise and have taken meetings with their representatives. State Assemb. Dean Murray (R-East Patchogue), who proposed similar legislation last fall, said “any legislation we do needs to be adjusted.”

“Numbers like $500,000 for a smaller company is a bit much,” Murray said, adding that a company’s fee could vary based on the volume of customers a company has. “That’s something that could be worked on.”

Murray said the legislation is not likely to be finished this week, when the state budget is due, but when the session ends in June.

Assemb. James Gary Pretlow (D-Mt. Vernon) said the smaller companies may have a beef. “They’re right, if what they are telling me is true,” the chairman of the Assembly Racing and Wagering Committee said. He said he wants to evaluate whether a different fee or fee structure would make sense.

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