Fantasy sports could bring CT more tax dollars
States are considering and adopting new laws to regulate online fantasy sports games.
Connecticut should follow suit, as a means to both protect consumers and raise new revenues to help stem the state's mounting fiscal crisis.
Virginia last week became the first to regulate fantasy sports, a multi-billion dollar industry that has come under increasing legal scrutiny in recent years. At least 20 other states — including Connecticut — are mulling similar oversight. New Jersey, for example, is considering a bill that would regulate daily fantasy sports game operators and tax them 9.25 percent of their gross revenues.
Virginia is regulating the industry, but only assessing fantasy sports companies a $50,000 operating fee.
Connecticut's General Law Committee has raised a bill that gives the state Department of Consumer Protection the authority to regulate daily fantasy sports websites.
The bill is only a broad outline but it asks for regulations that: Don't label daily fantasy sports contests as games of chance; restrict individuals under the age of 21 from playing; and protect consumer deposits. It also requires fantasy game operators to use “truthful advertising” and that procedures be put in place to ensure the games' integrity.
It's not clear if Connecticut would tax fantasy sports revenues or require a permit fee, but we think the state should pursue both options. We typically don't advocate for new taxes, but since we already place a levy on lottery and casino revenues we should also take a piece of the action from online fantasy sports vendors.
It establishes a level of fairness — even though fantasy sports proponents argue their online offering is a game of skill not chance — and is a relatively easy way to raise new revenues without harming the state's overall economic competitiveness.
The state should also consider the more drastic step of legalizing, regulating and taxing Internet gambling like New Jersey did in 2014. That seems to be a smarter way to protect Connecticut's gaming industry revenue than building a third brick-and-mortar casino in the state to fend off competition from MGM's new casino in Springfield, Mass. But that's likely a debate to be had in future legislative sessions; we understand many legal issues would need to be hashed out — including questions around the state's compact with its casino-operating Native American tribes — before lawmakers pursue that avenue.
To be clear, we don't think gambling or online sports games are the answer to the state's fiscal troubles. But with budget deficits continuing to mount and the prospects of tax increases becoming more likely in the next few years, we'd rather raise revenues from companies like FanDuel and DraftKings — two major players in the online fantasy sports-betting world — than Connecticut businesses in industries crucial to our state's economic future.
We're also cognizant of the potential social ills brought on by problem gambling. However, we already know millions of Americans — including untold numbers in Connecticut — wager bets daily on online fantasy sports websites, so we are better off having laws in place to protect these players than ignoring the fact they exist. Also, the Connecticut Council on Problem Gambling (CCPG) said in written testimony that it's not opposed to legalizing/regulating fantasy sports. In fact, its parent organization is working to establish national standards to regulate the industry. CCPG wants fantasy sports labeled as gambling and some of the game's revenues to establish gambling addiction prevention and treatment programs.
The wild west of online betting/fantasy sports isn't going anywhere and its popularity is likely to grow in the future. Connecticut should get in front of the issue now, and help the state earn a few extra bucks in the process.
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