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March 28, 2016

Fantasy sports bill could bring millions in state revenue

Image | Contributed Daily fantasy sports websites like DraftKings may soon be authorized and regulated in Connecticut.

Legislation that seeks to officially authorize daily fantasy sports websites already operating in Connecticut and many other states has the potential to bring in as much as $7 million in state revenue, according to the co-chair of the committee that raised the bill.

Rep. David Baram (D-Bloomfield) cited the figure in an interview last week about Senate Bill 192, which was raised last month by the Joint Committee on General Law, which he co-chairs.

“Right now they are operating without any regulation,” Baram said of websites like FanDuel and DraftKings. “It's happening and it's nationwide.”

The latest version of the bill states that daily fantasy sports (DFS) websites are not considered gambling. Lawmakers also lowered the minimum playing age from 21 to 18, and created a first-time $50,000 registration fee for DFS operators, with annual renewal fees of up to $10,000.

Now, the Finance, Revenue and Bonding Committee is weighing additional revenue-raising measures, Baram said, which could include a per-transaction fee similar to a “rake” in a poker game or taxes on winnings.

Fantasy sports games allow users to build teams of professional athletes and compete against others based on the athletes' statistical performances.

The Boston Globe reported that FanDuel and DraftKings said they expected to pay out a total of $3 billion in cash prizes in 2015.

But the sites don't want to be considered gambling. The federal Unlawful Internet Gambling Act of 2006, which struck a deep blow to Internet poker companies and made it illegal for U.S. financial institutions to knowingly handle Internet gambling-related funds, contained a carve-out provision for fantasy sports.

Baram said the General Law Committee discussed with DFS representatives the vital question of whether the games are gambling or games of skill.

He said he was convinced DFS is a game of skill.

“Here, you're actually researching it and you're combining players on teams,” he said. “It was fairly convincing that this was much more than buying a lottery ticket.”

However, he concedes that some may disagree, including the state's two casino-operating tribes.

“There is tremendous concern by the state that if we regulate and legalize fantasy sports that it not violate the compacts” between the state and the casinos, Baram said. Mohegan Sun and Foxwoods pay 25 percent of their slots revenues to the state, which brought in $268 million in fiscal year 2015.

“Nobody wants to jeopardize that,” Baram said.

Earlier this month, Virginia became the first state to legalize fantasy sports. A number of other states are considering similar proposals.

– Matt Pilon

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