Make DFS legality permanent, says Boston senator

News on 23 Jan 2018

Massachusetts Sen. Eileen Donoghue has moved to make permanent the current temporary legality of daily fantasy sports (DFS) in the state as the expiry of its trial period approaches in five month’s time.

The senator proposes that the Massachusetts Gaming Commission oversees activity and collects 15 percent of GGR tax on operators in respect of business they do within state borders.

Our readers may recall that Donoghue chaired a special commission last year on DFS; she says her current proposal builds on the positive findings and recommendation of the commission in making a permanent regulatory structure applicable .

“I do think it’s important that we deal with this in a way that clarifies things. I think we have a lot more information than we did two years ago in terms of the nature of the industry, what’s happened here and in other countries and states, and how it’s been treated,” Donoghue said Monday afternoon. “We want to deal fairly with them and encourage what is an emerging industry.”

In 2016, after DFS had exploded into the mainstream with an advertising blitz, the Legislature cleared up what had been something of a grey area by adding a provision to an economic development law deeming “fantasy contests” legal.

The temporary legal authority the Legislature granted for fantasy contests is set to expire July 31, 2018 unless lawmakers again give DFS the green light.

Donoghue’s bill  requires operators to register with the Massachusetts Gaming Commission, pay a registration fee of as much as $100,000 and be approved by the Gaming Commission to operate.

Once approved to offer DFS games, the DFS operator would be required to pay a 15 percent tax on its gross revenue. Donoghue said she settled on a 15 percent tax — a lower tax rate than the state’s casinos will be required to pay — after talking to the DFS industry and looking at the tax rate in New York and Pennsylvania.

“The brick and mortar casinos are paying 25 percent under the gaming statute, but we did hear from the industry that they operate on smaller margins,” Donoghue said.

The Gaming Commission is tasked with drafting and implementing appropriate regulations under Donoghue’s proposal, covering contest fairness, the use of geolocation technology and the imposition of a 21 years minimum age limit. There are also provisions on responsible gambling, data security, the exclusion of criminal elements and the protection of problem gamblers.

Boston-based DraftKings has supported Donoghue’s proposals.

The senator stressed that her measure does not include online casino and eSport gambling, although these genres were examined by her special commission last year. Donoghue explained that she had chosen DFS as her starting point.

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