New York Lawmakers Vote to Legalize Fantasy Sports Games

June 18, 2016, 2:28 PM UTC
A DraftKings logo is displayed on a board inside of the DFS Players Conference in New York
A DraftKings logo is displayed on a board inside of the DFS Players Conference in New York November 13, 2015. REUTERS/Lucas Jackson
© Lucas Jackson / Reuters

Fantasy sports moved a step closer to being legal in New York on Saturday when lawmakers approved the daily and season-long games, clearing a path for FanDuel, DraftKings and others to offer them to millions of players in the state.

The multibillion-dollar industry, where players draft fantasy teams for sports including football, basketball and baseball, has drawn increased scrutiny since last year with the attorneys general of several U.S. states, including New York, Illinois and Nevada, questioning the legality of the games.

Attorney General Eric Schneiderman had held off litigation against what he claimed were illegal gambling operations and the fantasy companies had suspended their “games of skill” while the proposed legislation was in train.

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New York’s Senate passed the measure 45-17, sending the legislation that regulates and taxes the operators of fantasy sports games to Governor Andrew Cuomo. It is unclear if he will sign the legislation that was passed by the Assembly on Friday.

Daily fantasy sports, a turbocharged version of the season-long game where players draft teams in live games played in just one evening or over a weekend, has boomed over the past decade.

State Assembly Gaming Committee Chairman J. Gary Pretlow predicted Cuomo will endorse the bill, partly because many young New York voters play the fantasy games and because it would generate tax revenues.

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“It’s a good thing for New Yorkers because there are more than three and half million participants, most of them millennials,” Pretlow said.

The legislation calls for a 15% annual state tax on gross revenues of all sports fantasy contests with an entry fee. Another 0.5% will be assessed each year on the companies with a maximum of $50,000.

State Senator John Bonacic, who sponsored the bill, estimates annual state revenues will be about $5.5 million, adding the measure is “going to make a lot of New Yorkers very happy.”

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The legislation survived heavy opposition from casino companies operating in New York. Opponents said it would weaken New York’s current gaming operations, including the horse racing industry which has been propped up by state government, by giving gamblers more options.

After intense lobbying from the fantasy gaming industry, which retained former pro quarterbacks Jim Kelly and Vinny Testaverde to promote the games, lawmakers beat a June 30 deadline to set regulations.

FanDuel and DraftKings are in early-stage talks to merge, people familiar with the matter told Reuters on Monday.