New York lawmakers pass bill to regulate DFS
FanDuel and DraftKings expect to resume operations in the largest DFS market in the US within days
New York lawmakers have passed a bill to tax and regulate daily fantasy sports (DFS), paving the way for FanDuel and DraftKings to return to the state following their withdrawal in March.
The DFS bill was passed by the Assembly on Friday by 91 votes to 22, and later by Senate by 45 votes to 17, with just hours to go before the legislature shut down for the summer.
Governor Andrew Cuomo must now decide whether to sign or veto the legislation which will become law if he does nothing for ten days.
However, executives from FanDuel and DraftKings said they were optimistic about Cuomo’s support.
The bill installs a variety of consumer protections on the activity, including age limits, self-exclusion options, identification of experts and the segregation of player funds.
It also calls for a 15% annual state tax on gross revenues of all fantasy sports contests with an entry fee, while another 0.5% will be assessed each year on the companies with a maximum of $50,000.
New York is arguably the most important state in the US for DFS operators as it has the largest market of players and is home to FanDuel’s headquarters and the league offices of the four major professional sports leagues.
FanDuel CEO Nigel Eccles said the bill’s passage had been helped by more than 100,000 emails and thousands of phone calls to lawmakers.
“Legislators heard them and responded,” said Eccles. “The bill represents a thoughtful legislative process, where bi-partisanship and willingness to compromise carried the day, and we are extremely hopeful Governor Cuomo will sign this bill.
“We decided long ago to build FanDuel in New York because it’s the sports capital of the world and a thriving home for tech startups – a natural fit for fantasy sports. Our success is due in no small part to the people, infrastructure, partnerships and opportunities here, which very few locations in the world can offer.”
Once the bill is official, DraftKings said it can be up and running again in New York within four hours.
“This is a significant victory not only for DraftKings, but for the people of New York and daily fantasy sports enthusiasts throughout the country,” DraftKings co-founder and CEO, Jason Robins, said.
“We would like to thank [bill sponsors] Senator John Bonacic and Assembly Member Gary Pretlow for their leadership on this issue.
“We are hopeful that Governor Cuomo will sign this important bill into law, and we will continue working closely with state officials on sound implementation of all forthcoming rules and regulations.”
FanDuel and DraftKings were both forced to exit New York in March after the state’s Attorney General Eric Schneiderman launched a lawsuit against the companies claiming that DFS violated anti-gambling laws.
Even in the wake of the new legislation, however, Schneiderman said he plans to continue with his legal action against the firms.
“As I have said from the start of my office’s investigation into daily fantasy sports, my job is to enforce the law,” Schneiderman said in a statement.
“Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend. We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud.”
DraftKings said it will reach out to Schneiderman’s office and try to “better understand” what his advertising concerns are and to make sure it doesn’t repeat those mistakes.
The bill’s passage in New York caps a positive run of state legislative progress in the last six months, with seven legislative bodies – Colorado, Indiana, Mississippi, Missouri, New York, Tennessee, and Virginia – passing a fantasy sports bill this year.
“This is a remarkable amount of progress in a short period of time,” added Eccles. “It speaks to the popularity of our game, the passion and advocacy efforts of our fans and the immense potential states are seeing in the fantasy sports industry.”
The news is a massive boost for the two DFS giants, which were last week involved in merger talks thanks to legislative uncertainty which threatened their ability to continue as a going concern.