Massachusetts Legislature Takes Up Bill To Tax, Regulate Fantasy Sports

Feb 14, 2018

  Lawmakers in Massachusetts are weighing a bill to regulate and tax daily fantasy sports operators.

   The legislation would impose a 15 percent tax on the gross revenue of companies that offer online contests where players assemble teams of real-life athletes and compete for cash prizes.  There would be a one-time registration fee of up to $100,000 for companies seeking to do business in Massachusetts.  The industry would be put under the jurisdiction of the Massachusetts Gaming Commission, which oversees casinos and horse racing in the state.

     The bill is sponsored by State Senator Eileen Donoghue (D-Lowell) and is based on the recommendations of the Massachusetts Special Commission on Online Gaming, which Donoghue co-chaired.

     At a public hearing on the bill at the State House Wednesday, Donoghue said she is looking to support “a home-grown industry.”

     Massachusetts-based DraftKings issued a statement saying the legislation would provide “critical legal certainty” for the industry. 

     Fantasy sports operators have long pushed back on claims that customers are gambling, arguing instead that it is a game of skill.               

    Gaming Commission Chairman Stephen Crosby believes fantasy sports fits the definition of gambling.

     "My opinion is that in Massachusetts 'skill versus chance' has nothing to do with it," said Crosby. "Darts is a game of skill, and in Massachusetts if you bet on darts that is illegal."

     The legislature in 2016 allowed Massachusetts residents to participate in paid daily fantasy sports contests under regulations issued by Attorney General Maura Healey.  The temporary authorization will expire on July 31st.

    The bill would not sanction online poker and other casino games.  The special commission recommended holding off on that in order to weigh the economic impact on the two resort casinos currently under construction.

    The MGM Springfield casino is scheduled to open later this year.  The Wynn casino near Boston is on track to open in 2019.

       Crosby said it is anybody’s guess how legalized online gambling might impact the brick and mortar venues.

     MGM Springfield President Mike Mathis said he believes physical casinos and virtual ones can coexist.

    "We think we can pair online gambling with a real time experience," said Mathis who added: " We are going to continue to study it."

     Donoghue’s bill contains a section that creates another special commission to recommend what Massachusetts should do if the U.S. Supreme Court rules states can offer legal sports better.

    The court is expected to rule on that later this year in a lawsuit brought by New Jersey.