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Daily fantasy sports came one step closer to achieving official legal status in Pennsylvania today after the House voted in favor of sweeping gambling reform. The Pennsylvania Senate voted in favor of HB 271 last night and passed on to the house, which approved the bill earlier this morning. Now, the bill awaits the signature of Governor Tom Wolf.
Nothing is guaranteed yet, but Governor Wolf is likely to sign off on the bill to make it law. Once the bill receives his signature, daily fantasy sports sites will finally move from the grey zone to become unquestionably legal.
HB 271 (full text here) covers many gambling related topics and seeks to legalize not only fantasy sports, but also online casino games and poker. Furthermore, the bill will legalize online sports betting in Pennsylvania if the federal government rescinds its prohibition of sports betting.
Licensing and Regulation
As far as daily fantasy sports are concerned, the bill will require operators such as FanDuel and DraftKings to acquire a five-year, $50,000 license to operate in Pennsylvania. Renewals will cost operators $10,000 every five years.
Once approved, DFS sites will be overseen by the Gaming Control Board and subject to consumer protection regulations including:
- Establish a minimum age of 18 to play fantasy sports
- Segregate player funds from operational funds
- Provide problem gambling resources to customers
- Offer and honor self-exclusion periods to customers who need to take a break
- Allow customers to place restrictions on the amount they may deposit over specified time periods
- Undergo an annual audit with a certified public accountant
- Undergo annual testing with a testing laboratory to ensure randomness and fairness
- Verify the age, identity and location of all customers before accepting their deposits
- Prohibit athletes and officials from participating in fantasy contests involving whichever sport those people are involved in
- Prevent the sharing of confidential information that could affect the outcome of a fantasy contest
- Prevent the use of scripts used by advanced players to get an edge over the competition
- DFS sites must offer “beginners-only” contests
- DFS sites may not hold contests based on college or high school sports
Licensed fantasy sports sites will be subject to a 15% tax on all revenues earned from players in Pennsylvania.
The bill also required licensed fantasy sites in Pennsylvania to identify “highly experienced players,” which the bill defines as players who have either entered more than 1,000 contests or who have won more than three fantasy contest prizes valued at $1,000 or more.
The Pennsylvania Gaming Control Board is granted broad powers to regulate DFS providers as it sees fit in order to “ensure the integrity of fantasy contests offered” in Pennsylvania. Specific powers and duties of the Board include:
- Issuing and revoking licenses
- Preparing an annual budget for DFS oversight and submit it to the General Assembly
- Maintain a publicly-accessible list of licensed fantasy sites
- Issue rules and regulations necessary to enforce and administer HB 271
- Investigate license applicants
Overall, this bill resembles other fantasy sports laws that have been passed elsewhere in the United States. The only thing that stands out in this particular bill is the hefty $50,000 licensing fee. Major providers such as FanDuel and DraftKings should have no trouble coming up with the cash, but smaller operators will struggle to enter Pennsylvania.