Tribal gaming compacts still need to be amended in CT before DFS provisions take effect
Legal Sports Report

Connecticut’s Governor Signs Budget With Daily Fantasy Sports Regulation; Still Needs Tribal Approval

Connecticut governor signs DFS
Connecticut just about completed the New England sweep for daily fantasy sports laws, after all.

After months of struggling to come up with a budget plan, the state’s General Assembly passed a bipartisan bill through both houses. It was signed by Gov. Dannel Malloy on Tuesday.

The version that passed includes provisions to legalize and regulate DFS.

The law still requires changes to tribal compacts in the state to truly take effect (more on that below). But a new law that oversees DFS operators like DraftKings and FanDuel is in the pipeline.

The new Connecticut law comes just after Pennsylvania legalized DFS through a revenue package tied to paying for its budget.

Pennsylvania became the 17th state to enact a law overseeing paid-entry fantasy sports on Monday. DFS already had laws on the books in four of the New England states, and Rhode Island‘s attorney general said DFS contests are legal under current state law.

Connecticut finally gets a budget through

The 2018-19 fiscal biennium began on July 1, and Connecticut went 116 days without a budget in place.

Meanwhile, the state has been sinking further and further into debt, and the governor slashed spending via executive order. It was an extreme measure to keep the ship afloat under the weight of a $3.5 billion deficit.

The General Assembly did manage to pass a budget package last month, but it was too controversial to get the last signature it needed. The governor vetoed it and sent the authors back to work.

Last Wednesday, the Senate presented its updated proposal totaling just over $41 billion. This one passed overwhelmingly, given the green light by a 33-3 vote. And unlike the previous version, this one includes DFS regulation.

The bill was sent straight to the House of Representatives, which took less than a day to debate it. The House passed the bill 126-23 on Thursday.

Then it was up to Malloy, who quickly took action.

“After 123 days without a budget, it is time to sign this bipartisan bill into law and continue the steady and significant progress our state has made over the past several years,” Malloy said, according to the Hartford Courant.

DFS regulation included in budget

The DFS language included in Connecticut’s bill is similar to that of other states — like its New England neighbors, for example, most of whom have DFS laws on the books already.

Here are some of the key points of the proposed legislation:

  • Sets the minimum age for players at 18.
  • Gives regulatory oversight to the Commissioner of Consumer Protection.
  • Sets an annual registration fee for operators of $15,000 or 10 percent of revenue generated from Connecticut players.
  • Imposes a 10.5 percent tax on revenue generated from Connecticut players.

The state expects to generate $500,000 in revenue from DFS in 2019. The bill instructs the regulatory body to adopt DFS regulations prior to July 1, 2018.

It’s not perfect, but it’s good enough

The four months of budget delays frustrated Malloy, and he was was pretty vocal about it.

Four times, the governor submitted his own proposals to try to hasten the process. And when lawmakers did come together to present their own bill, he vetoed it.

The legislators mostly saw the efforts as a distraction and a case of the governor trying to push his own agenda. They insisted they could get it done on their own, and it appears they were right.

The DFS part of the budget was on again, off again, before making its way into the final language.

Because of the tribal compacts in place, though, the state must take a couple extra steps before the DFS provisions would take effect.

Tribes will pose the final hurdle for DFS

Connecticut has long-standing gaming agreements with the Mohegan (which has a relationship with FanDuel) and Mashantucket Pequot tribes, which give them exclusive rights to offer gambling in Connecticut. In return, the tribes give the state 25 percent of their slot machine revenue.

Back when the legislature first proposed DFS legalization, the Senate asked the attorney general to provide an opinion on the matter as it related to the tribal compacts.

AG George Jepsen cautioned that “any legislation authorizing daily fantasy sports contests must be viewed against the backdrop of the existing agreement between the State and the Tribes.”

From a legal point of view, then, the proposed legislation has a few cornerstones:

  • Excludes DFS from the definition of “gambling”
  • Excludes DFS equipment from the definition of “gambling device”
  • Stipulates that the authorization of fantasy contests does not terminate the gambling moratorium
  • Stipulates that the same does not relieve the tribes from their financial obligation to the state

These four items help separate DFS from the things that are protected by the tribal compacts — namely gambling and gambling machines. According to the bill, the governor and the tribes must specifically amend those agreements, too.

Both the General Assembly and the US Department of Interior must approve the amendments before the DFS portion of the budget will take effect.

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Eric Ramsey
- Eric is a freelance reporter and writer primarily covering the DFS industry. He comes from a poker background, formerly on staff at PokerNews and the World Poker Tour.