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June 20 — Both houses of the New York State Legislature approved a bill June 18 to explicitly legalize daily fantasy sports in New York.
The bill ( A. 10736) would impose a 15 percent tax on DFS companies and require that they register with the New York State Gaming Commission, which would have regulatory oversight over the industry.
The bill comes some three months after Attorney General Eric T. Schneiderman (D) reached settlements with DraftKings Inc. and FanDuel Inc. that essentially shut down daily fantasy sports in the state. Schneiderman brought enforcement actions against each company in November 2015, saying the companies were violating the state's anti-gambling laws (21 ECLR 403, 3/23/16).
The settlements put pressure on the Legislature to act by placing all litigation on hold through June 30 to give the Legislature time to pass a comprehensive regulatory scheme. The litigation would have resumed in September without any legislative action (21 ECLR 439, 3/30/16).
Schneiderman said in a statement that while the legislation ends the anti-gambling claims, he will continue to pursue other claims against the companies.
“Today, the Legislature has amended the law to legalize daily fantasy sports contests, a law that will be my job to enforce and defend,” Schneiderman said. “We will nevertheless continue to pursue our claims that DraftKings and FanDuel previously engaged in false advertising and consumer fraud.”
New York is the seventh state to pass legislation regulating daily fantasy sports, according to a coalition called Fantasy Sports For All. Colorado, Indiana, Mississippi, Missouri, Tennessee and Virginia have enacted laws and 20 other states are considering measures, the coalition said.
The coalition, which received startup funding from FanDuel and DraftKings, said there are 30 DFS companies in New York and about 3 million players. In a statement, it said New York was a natural fit to become the location for DFS because every major professional sports league is based in New York City.
The bill differs slightly from earlier versions by imposing a 15 percent tax on DFS companies' gross revenues and an additional 0.5 percent tax, which is capped at $50,000.
“To see state legislatures and policy makers around the country take action to address and welcome a burgeoning industry is truly special, and to have New York added to that list is a wonderful thing,” DraftKings Chief Executive Officer Jason Robins said in a statement. “I am hopeful that Governor Cuomo will soon sign the bill into law so our fans can get back to playing the games they love.”
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