Delaware became the 14h state to put a fantasy sports law on the books, and the most recent in a flurry of small Northeastern states to do so.
The new law turns around and a negative legal climate for daily fantasy sports in the state. DraftKings, FanDuel and other sites left the state about a year ago. Both sites intend to return to action in the state.
The Delaware DFS law
Gov. John Carney signed a bill formally legalizing and regulating paid-entry fantasy sports on Wednesday. That puts into action a bill (H 249) passed late in the legislative session in June by both the House and Senate.
The law sets Delaware up to have the most demanding fee and tax structure overseeing DFS in the United States. Operators will have to pay both a $50,000 fee and a tax rate on gross revenue in the state of either 15.5 percent or the highest current fantasy sports tax rate in the country.
Also in the law:
- The governor will choose which department regulation of the industry falls under.
- Whichever department oversees the industry appears to have wide authority to promulgate regulations.
- A number of consumer protections are established, including language regarding truth in advertising, responsible gaming protocols, and segregation of player and operational funds.
- It sets a minimum age of 18 years for players.
- The law bans contests based on college and amateur events, as well as horse racing.
- The law sunsets in 2019, with instructions for a report on recommendations to revise the law due in that year.
When will DraftKings and FanDuel return?
The law takes effect 30 days after it was enacted, meaning sites can not return immediately.
DraftKings’ intent to return was confirmed by a statement from Tim Parilla, general counsel for the DFS operator:
“DraftKings is looking forward to returning to Delaware, the fourteenth state to pass fantasy sports legislation. We are extremely grateful to Governor Carney and the members of the legislature for their support, especially Representative Charles Potter and Senator David Sokola, who provided tireless leadership in bringing fantasy sports back to the First State.
Today’s bill signing continues the progress DraftKings and our industry partners are making towards our ultimate goal of passing common sense fantasy sports legislation in all 50 states. Fantasy sports fans in Delaware will be able to play on DraftKings in late August, just in time to experience what we think will be the most exciting NFL season in DraftKings’ history.”
The late August timeframe would allow Delaware residents to take part in daily fantasy football contests for the NFL season.
FanDuel also confirmed its intent to return to the state.
The high fees and taxes make it seem somewhat unlikely that many other sites will join them. Draft, recently acquired by Paddy Power Betfair, could be one site that would agree to the burdensome fees.
Turning around a negative legal environment
Last July, the office of Attorney General Matt Denn came to the conclusion that DFS is illegal under state law. He proceeded to issue cease-and-desist letters to DraftKings, FanDuel and Yahoo DFS.
Under existing statutes, the state department of justice concluded those sites’ “online fantasy sports activities are not permitted under Delaware law.” The AG “asked that the companies add Delaware to their respective online lists of states in which players are not legally permitted to win monetary prizes.”
The law successfully ends that interpretation of the law. The DFS industry has turned around similar negative legal climates in New York, Mississippi, Tennessee and Vermont.
A number of negative AG opinions still have not been rendered moot by new laws.
The tally of states with DFS laws
Here is the the list of states that have laws about the fantasy sports industry on the books:
- Arkansas
- Colorado
- Delaware
- Indiana
- Kansas
- Maryland
- Massachusetts
- Mississippi
- Missouri
- New Hampshire
- New York
- Vermont
- Virginia
- Tennessee
All of those except for Kansas include some sort of regulatory component.
It’s the fourth state to pass a law this year, joining Arkansas, Vermont and most recently New Hampshire.
A bill also sits on the desk of New Jersey Gov. Chris Christie.
