Could New York Fantasy Sports Regulation Be Tied To State Budget?

Posted on March 16, 2016

Legislative efforts to legalize and regulate fantasy sports in New York haven’t gotten very far so far, despite the battle going on in the New York court system.

But that could change quickly, as the state Senate is apparently attempting to tie daily fantasy sports regulation to the state budget.

What the NY Senate did on DFS

In a story first reported at LoHud, the Senate included language regarding fantasy sports in its budget resolution. (You can see the single line on page 55 in the resolution here.)

The regulation in question is S 6793, which was introduced last month by Senate Racing and Gaming Committee chairman John Bonacic.

More from LoHud:

“Everything, of course, is subject to court decisions,” Bonacic, who sponsors the legislation, told Gannett’s Albany Bureau. “But it’s basically we’re sending a message to the court that we’re prepared in the state of New York to allow daily fantasy sports to continue — providing it’s monitored, it’s regulated and there are consumer protections.”

The inclusion in the Senate’s budget plans appears to be an escalation of the momentum behind the effort in the state, even though Bonacic’s bill still hasn’t gone through a committee hearing.

What’s going on in the Assembly?

LoHud indicated that fantasy sports does not appear in the Assembly version of the budget.

The key figure in the Assembly — Racing and Wagering committee chair J. Gary Pretlow — held a hearing on fantasy sports last year. There, he and other members of the Assembly indicated their willingness and desire to regulate the industry.

What Pretlow and the Assembly think about the Bonacic bill as currently constructed is unknown.

Who’s on board in NY?

Clearly, DraftKings and FanDuel will likely support just about anything that makes them legal in New York, while they oppose the cease-and-desist orders from New York Attorney General Eric Schneiderman.

The rest of the industry may take issue with the bill, as it’s written. Why? The bill creates a $500,000 licensing fee and a 15% tax on gross revenue. (The fee can be paid with taxes paid over a 36-month period, if an operator desires, however.)

The bill deals with online fantasy sports, and appears that it would and could be applied to season-long operators. And while New York is a huge market, agreeing to pay $500,000 is still a massive obligation for most DFS sites not named DraftKings and FanDuel.

The Fantasy Sports Trade Association already expressed concern with the fee structure in Virginia, where a law has already been passed.

What’s next in NY for DFS?

We’ll look for impetus for the actual regulatory bill from Bonacic, and a hearing in his committee; that has not yet been scheduled.

Fantasy sports regulation is an extremely minor part of the budget, so whether it makes the final cut or not is immaterial to New York’s bottom line.

New York’s legislature adjourns June 16, so there is time to pass DFS regulation. There is also no cross-over deadline for bills to reach the other chamber.

Given the speed with which the legislature has dealt with online poker — very slowly over several years — it might be a lot to expect a bill to pass in a few months. However, poker and DFS come from very different starting points.

Until we see discussions on the actual legislation, it’s hard to know what direction DFS regulation will take in the state, and how likely it is to pass.

Image Felix Lipov / Shutterstock.com

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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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