Fantasy Sports Companies Call For Fees That Don't Shut Out Small Operators
Legal Sports Report

‘Small Businesses Of Fantasy Sports’ Launch New Lobbying Effort Apart From DraftKings, FanDuel

new daily fantasy sports lobbying group
A group of more than 30 fantasy sports companies has started its own lobbying effort and trade group that diverges from the path being laid out by the Fantasy Sports Trade Association and the two largest companies in the space, DraftKings and FanDuel.

The SBFSTA announces its presence

The Small Businesses of Fantasy Sports Trade Association held a press conference at the New York capitol on Tuesday afternoon; New York is one of the states currently considering legislation that would shut out a lot of small daily fantasy sports and season-long operators because of high licensing fees. The group made the case that state legislation, in many cases, was serving to further a DraftKings-FanDuel duopoly.

At the press conference, the group said that it met with staffers with for Sen. John Bonacic and Rep. Gary Pretlow, who chair the gaming committees in the Senate and Assembly in New York. Legislation dealing with fantasy sports will have to flow through their committees; Bonacic has introduced a bill, and Pretlow plans to.

Alex Kaganovsky, of the season-long operator Fantasy Football Players Championship, spoke at the press conference; he noted he believed that a lot of legislation being promulgated around the country has resulted from a lack of understanding of impacts on small businesses.

“In speaking to the assemblyman’s and senator’s offices, a lot of this is new to them,” Kaganovsky said. “Generally, we’ve spoken to lawmakers in Virginia and Indiana as well. Most of them are not aware of the scope of the fantasy sports industry. They are not really aware that these bills could and will impact small companies like ours. I think when they do find out about it, they are very open to understanding that clearly there’s going to be legalization of DraftKings and FanDuel … and basically putting out of business the rest of the industry.”

With laws on the books in both Virginia and Indiana that are seen as unfriendly to most operators outside of DraftKings and FanDuel, the new group is pushing to see its interests represented in the legislative process. It doesn’t mince words on its newly created website:

Legislation aimed at regulating daily fantasy sports is creating a nationwide fantasy sports duopoly of FanDuel and Draft Kings that will destroy all small businesses in their path. The majority of the fantasy sports industry is comprised of small businesses that could be put out of business if sensible legislation is not passed. Businesses affected include long-existing season-long game operators, small to mid-size DFS operators, startups, software and app developers, advice and content sites, media companies, and more.

A few of the companies that are a part of the SBFSTA earlier voiced their displeasure with the Virginia law and lobbying efforts by the FSTA — to which most fantasy sports companies belong. It continued that trend in a press release on Tuesday:

The Fantasy Sports Trade Association (FSTA), which is supposed to represent all of its members, big and small, has been co-opted by DraftKings and FanDuel, which have led the charge to pass legislation across the country that effectively shuts down smaller operators.

The member companies of the new fantasy sports group

The group, as it stands now, includes 35 companies. Among them are a number of daily fantasy sports sites including:

  • FantasyDraft
  • Fantasy Aces
  • Star Fantasy Leagues
  • Draftpot
  • Sportslock

A number of paid-entry season-long providers — like Fantrax, Scout Fantasy and the Fantasy Football Players Championship — as well as content providers such as FootballGuys.com, are also a part of the group.

You can see the full list here.

What they are lobbying for

The group has a number of issues its lobbying for and supporting. The biggest push is on registration fees, in which the group is asking for states to charge companies the lesser of a $500,000 fee or “5% of net revenue” — a condition that would allow many small companies to stay in state markets.

Other issues the group is lobbying for include:

  • A hardship waiver of any fees for companies with fewer than 5,000 customers.
  • A ban on fantasy contests based on amateur sporting events.
  • A minimum age of 21 years old.

FSTA reaction

The FSTA has tried to assauge the concerns of many of these companies in recent weeks, though apparently not enough to their liking — hence the creation of the new group. In the wake of the Virginia law passing, the FSTA noted that it was “deeply concerned” with a $50,000 licensing fee that was a part of the law.

On Monday, the FSTA sent out an email written by Jay Correia, of the FSTA’s Legislative Affairs Committee, to member companies. The email, in part, said this:

Additionally, the Board agreed to expand the FSTA Legislative Affairs Committee to better represent small businesses. …

The Legislative Affairs Committee and the FSTA’s lobbyists are 100% dedicated to protecting the interests of our ENTIRE industry.  We are 100% aligned on starting with a bill that contains no flat fees. Although we cannot guarantee success in all states, we as an association understand that these fees will hurt many of our members, spurn innovation and slow investment.

To get things started … in the last week, the legislative team has:

  • Drafted a template-driven letter that states the FSTA’s opposition to licensing fees
     
  • Contacted daily & season-long operators to get permission to use their company names
     
  • Obtained near unanimous support by operators for proposing alternative tax/fee structures
     
  • Attended in-person meetings with legislators in Mississippi and Minnesota to help address the FSTA’s concerns; we’re seeing progress in both states
     
  • Begun proactively planning for upcoming hearings in various states
     
  • Implemented new protocols to better oversee the messaging that appears on the FantasySportsForAll.com website and social media platforms
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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.