Pennsylvania State Senator Robert Tomlinson (R-6th District) penned a letter to members of the state House of Representatives, telling them not to rush into regulation of daily fantasy sports, among other issues.
Lawmakers have tied DFS to a larger expansion of gambling in the state, slowing its progress in the statehouse.
Setting the stage for the Tomlinson letter on DFS
In the correspondence from Tomlinson the state senator advocates for his fellow lawmakers to fix a casino tax deemed to be unconstitutional, while waiting on other issues related to gaming.
From the letter:
Given the complexity of these issues and the potential to harm “the goose that lays the golden eggs” (i.e., the existing industry), our leaders were smart not to rush into new gaming legislation.
Tomlinson is alluding to the Senate’s decision only to pass a bill fixing the tax. That body has ignored the House version of the bill that tacked on various gaming expansions. (The House passed such an omnibus gaming bill on more than one occasion in 2016.)
He lumps DFS into this category.
What Tomlinson wrote about DFS
DFS is the first specific example Tomlinson delves into in his letter regarding gaming expansions that the legislature should take its time on.
Here’s some of the section on DFS:
Licensed Fantasy Sports — The potential licensure and regulation of fantasy sports is not an issue on the front burner of public concern. Fantasy sports has been primarily a recreational activity and hobby for friends and families across the Commonwealth. While certain large scale actors in this space have changed the tenor of this activity with their business models and mass marketing, fantasy sports, in its simplest form, will persist with or without state involvement. Further, as currently drafted, the projected revenue for the Commonwealth is insignificant.
The formal legalization of fantasy sports requires careful consideration as to whether and how the Commonwealth should license and regulate the activity. Certainly, one can argue whether or not fantasy sports are predominantly based on skill or chance. Of greater concern, should the General Assembly determine to regulate this activity, is the business model of the commercial operators. This model is predicated upon receiving, and can only succeed if it continues to receive, as many new participants as possible. …
An additional concern for any viable regulated fantasy sports market will be the inherent advantage and market share enjoyed by the two primary commercial operators, as well as the fact that press reports suggest these two operators may combine to form one company and thereby even further distort the market. Such market dynamics would only further decrease interest among potential licensees and, thereby, decrease potential revenue to be garnered by the commonwealth.
What’s next for PA and DFS
One can take issue with what Tomlinson is saying on some of these fronts, but mostly he is correct:
- DFS will persist no matter what the PA legislature does (short of a negative opinion from the state attorney general).
- Revenue for the state from DFS would be insignificant vis a vis the state budget, likely in the seven-figure range.
- The pending merger of DraftKings and FanDuel provides an uncertain future for potential licensees in the state.
Whether any of that reasoning is compelling enough not to give legal clarity to the DFS industry is in question.
DFS has managed to go it alone — considered as a standalone issue — in the eight states that passed regulatory laws this year. But that’s not the case in Pennsylvania, something that appears unlikely to change.
Pennsylvania lawmakers will consider gaming issues again in 2017, DFS included. How those considerations go down in the statehouse remains to be seen.
But Tomlinson has at least outlined the stance of the opposition and why the Senate has been slow to act on this and other gaming issues.
