Proposed bill would regulate fantasy sports contests

Proposed bill would regulate fantasy sports contests

The following article can be found in its original form at this link from the Scottsbluff Star-Herald:

Scottsbluff Star-Herald: Adrian Jania, February 1, 2017

LINCOLN - The increasing popularity of fantasy sports in Nebraska has drawn attention from lawmakers in the form of a bill to regulate the online games. The bill, LB 469, proposed by Sen. Tyson Larson of O'Neill, would create the Fantasy Contests Act.

Sen. Dan Watermeier of Syracuse said the bill would do two things -- license fantasy game operators and provide consumer protection for players. 

A fantasy contest is defined as any online game that requires knowledge and skill rather than chance, an entry fee and winning prize, and it must be free of an outcome based on an actual team or single performance. 

Watermeier said a great deal of advertising last year indicates a need to license and regulate these contests.

The bill would require any fantasy contest operator to register with the Department of Revenue before offering any fantasy contest in Nebraska. 

The bill calls for a licensing fee of $10,000 for operators of fantasy games, but Watermeier proposed lowering the fee to $1,000. "The fee is so high that it could kick out some of the smaller players," he said, noting that not all fantasy sports operators are large, high-profiting companies.

"We are very happy that Sen. Larson saw reason to help small businesses," said Steve Brubaker, representative of The Small Businesses of Fantasy Sports, a trade organization dedicated to protecting the existence of small businesses within fantasy sports. "Small businesses are the backbone of this country, and cost is always primary for whether they are going to make it or not make it.”   

The cost is relevant on the lawmakers' side of things, too.  

Derek Hein, manager of government affairs at DraftKings, a major operator of fantasy sports contests, assured the committee that tax dollars are coming back to them.

"Anyone who wins over $600 on our site receives a 1099," he said. 

An IRS 1099 tax form is used for filing and reporting income a person receives throughout the year that is not part of an original salary or wage. Sean Ostrow, the manager of government affairs at FanDuel, another leading sponsor of fantasy sports games, also told the Legislature's Government Affairs Committee that his company also provides a 1099 form for anyone who wins over $600.  

Aside from assuring the senators that players are properly reporting their profits, the representatives had other reasons for their support of the bill.

“Last year, you may have heard that this bill is an extension of gambling," Hein said. "It is actually quite the opposite It merely provides a set of rules that operators must follow."

According to Ostrow, the bill puts guardrails around something that will go on regardless of proposed regulations.

Fantasy sports can be seen as an innocent game of skill, but some feel otherwise.

"Wagering on fantasy sports contests is clearly gambling," director of Family of Nebraska Alliance Nate Grasz said. The uncontrollable components of chance are evidence that people can lose regardless of skill, Grasz said. 

"We must weigh this based on the average player, not a skilled player," she said.

Also in opposition to the bill was Pat Loontjer, the executive director of Gambling With the Good Life. Loontjer expressed compassion for her community and a longing for keeping it healthy.

"We love our state, we love our families, and we don't want to leave a legacy for our grandchildren that would hurt them forever," she said.

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