Fantasy Sports in Casinos: Pennsylvania Bill To License, Tax Brick-And-Mortar DFS Tournaments

Written By Dustin Gouker on May 13, 2015 - Last Updated on February 21, 2020

A group of Pennsylvania representatives has introduced a bill that would allow casinos in the state to offer daily fantasy sports contests, on property.

What the bill will do

Representative George Dunbar (R) announced his intention to introduce the bill in a memo seeking co-sponsors last week:

Presently most fantasy sports tournaments take place on internet sites like Fanduel. My legislation will allow our casinos to hold their own fantasy tournaments within the confines of the casino upon payment of a $50,000 licensing fee. The rules and regulations for this activity will be determined by the Pennsylvania Gaming Control Board.

The bill (House Bill 1197) was actually introduced on Wednesday and was referred to the House Committee on Gaming Oversight. Bill tracking here; full text here. Dunbar’s bill has seven co-sponsors, currently.

The language of the bill alters Title 4 (Amusements) of the Pennsylvania Consolidated Statutes, adding a chapter to deal with fantasy sports. Here are some the most important details of the bill:

  • license is required to operate fantasy sports tournaments, and the bill only pertains to contests held in brick and mortar establishments. (“A licensed gaming entity that holds a valid fantasy sports tournament license from the board may operate fantasy sports tournaments.”; “A fantasy sports tournament operated by a licensee shall be conducted within the licensed facility.”)
  • A licensing fee costs $50,000, and a “tournament vendor” — any company that works with a licensee to provide fantasy contests — would have to pay a fee of $10,000.
  • PA would collect a tax of 5 percent on “monthly gross tournament revenue.”
  • Potential licensees can apply 90 days after the adoption of the bill into law. The Pennsylvania Gaming Control Board (PGCB) will issue or deny licenses within 120 days of the application.
  • Gaming interests that are already licensed in Pennsylvania will be issued a fantasy sports license, if they want one.
  • Licensees can develop and/or provide a website or a mobile application to track the contest, but not to enter it.
  • Players must be 21 years of age to participate.
  • The bill contains a “bad actor” clause that prevents companies that are in violation of the Unlawful Internet Gambling Enforcement Act (“The licensee shall comply with 31 U.S.C. Ch. 53 Subch. IV (relating to prohibition on funding of unlawful Internet gambling”)).

The bill also defines fantasy sports much like the carveout for fantasy sports in the UIGEA and in other state legislation. It also authorizes the PGCB to create further regulations for DFS tournaments.

It appears the bill would allow current DFS providers to work with gaming facilities to provide an online architecture for a fantasy sports contest. But players would have to pay the entry fee for the contest while on site at a casino.

Joining the crowd

Pennsylvania becomes the ninth state to consider legislation dealing with daily fantasy sports this year.

Here’s a quick rundown of the bills:

  • The majority of those bills seek to simply clarify state law on DFS or legalize fantasy sports: Illinois, Iowa, Kansas, Louisiana, Washington. A bill in Montana is dead for this legislative session.
  • In Texas, a bill would regulate and license DFS operators.
  • Indiana’s bill is most similar to the PA bill, as it authorizes fantasy sports in racinos.

This isn’t the first time the subject of fantasy sports came up in Pennsylvania this year. Pennsylvania State Representative John Payne, the Chairman of the House Gaming Oversight Committee, broached the subject in March:

“For me, I’d rather have Internet gambling, fantasy sports betting, fix the small games of chance bill [bar machines], than vote to raise income or sales taxes,” Payne said.

The bill also comes at a time when casinos in Pennsylvania and online poker and iGaming operators are partnering with each other as a bill legalizing online gaming picks up momentum.

So…DFS, in a casino?

It’s not exactly clear how DFS contests would work in Pennsylvania, but will have to be contested on property. The bill brings up a lot of questions, which will likely be ironed out if the PGCB is tasked with creating regulations for contests:

  • What are the “tournaments” going to be like? Are the games going to approach the level of sophistication on the variety of DFS that are available throughout the U.S.? Or are they going to be far simpler? Are they going to be daily, or will there be large field, large buy-in contests held periodically? Or both?
  • Is this a soft entry into sports betting? If the contests provided are not complex, it may be Pennsylvania is just looking at a way to generate revenue with something akin to sports betting, which is not allowed in Pennsylvania, or most states. Dunbar mentioned the Unlawful Internet Gambling and Enforcement Act carveout for fantasy sports as a skill game in his memo. The bill is pretty detailed on describing what a fantasy contest consists of, so it seems unlikely this will cross over into the realm of sports betting.
  • How is the tournament delivered to patrons? It seems unlikely a casino would build its own online or mobile platform for DFS, without partnering with a vendor. So an analog delivery system (like traditional sports books), or partnering with an existing DFS site to provide a platform, would seem to make the most sense.

Intersection of casinos and DFS

The idea of brick-and mortar establishments providing DFS isn’t a new one, and it’s a subject that has come a lot recently in the gaming and fantasy sports industries.

Jim Murren, CEO of MGM Resorts International, recently said people who consider DFS something other than gambling are “absolutely, utterly wrong,” just last week. He also alluded to the idea that MGM was looking at launching a DFS site, but those plans have been put on hold.

The subject also came up at the recently held Global iGaming Summit & Expo (GiGse). Among the comments:

  • Jason Robins, CEO of DraftKings: “I have talked to a lot of traditional gaming companies that are intrigued with the [DFS] space and some are potentially looking to get in, and others aren’t. My opinion, and it’s just my opinion, is that the reasons that a traditional gaming company might want to get into this space, are probably not the right ones. Meaning, I don’t think this is the best monetization engine of this type of customer, and I don’t think it necessary complements or fits well with a brick-and-mortar offering. I can’t imagine how you would really do fantasy sports in a brick and mortar operation. It doesn’t monetize as well as live sports betting or other casino games can.”
  • Seth Young, COO of Star Fantasy Leagues, in response to Robins’ comments: “I agree with a lot of what you said, but I disagree with the fact that this is not well suited for brick-and-mortar or traditional gambling operators. I actually couldn’t disagree with you more. … I think it depends on the goals of a brick-and-mortar group, it may not necessarily be to monetize … I think casinos and brick-and-mortar groups that might be looking to enter a market with fantasy sports, may do it for different reasons than just to run a viable standalone business, which it can be if done correctly.”

Monmouth Park in New Jersey is working on launching a DFS product. And MGT Capital Investments and Seneca Gaming Corporation recently announced they are partnering in New York to launch DFS games online and in-house.

How will it shake out in Pennsylvania? Providing DFS contests in casinos appears to be pretty noncontroversial. And it seems like we are seeing real momentum for brick-and-mortar establishments to offer DFS.

Photo by Doug Kerr used under license CC BY-SA 2.0.

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Dustin Gouker

Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.

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