Georgia Moves to Legalize, Tax Fantasy Sports

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By Chris Marr

Georgia would regulate and tax fantasy sports under a bill proposed in the state House, a year after the previous state attorney general’s office cast doubt on whether the games were legal.

H.B. 118 would require consumer protections, annual registration fees and a tax set at 6 percent of revenue for fantasy sports operators doing business in Georgia. The bill is due to be considered by the House Ways and Means Committee, whose vice chairman, Rep. Trey Kelley (R), is sponsoring it.

The legislation also would exempt fantasy sports from Georgia statutes that prohibit most forms of gambling.

A similar bill—although without the 6 percent tax—died in the Georgia Senate last year shortly after the attorney general’s office provided “informal” guidance deeming fantasy sports to be illegal gambling. Then-Attorney General Sam Olens (R) has since left the position for a university president job and was replaced by Chris Carr (R), who previously ran the Georgia Department of Economic Development.

In a Feb. 26, 2016, letter, Deputy Attorney General Wright Banks Jr. and Assistant Attorney General Brooke E. Heinz wrote that fantasy sports included the elements of “consideration, prize and chance” that factor into the state’s broadly understood definition of gambling. The letter was labeled as “informal advice” in response to a legal inquiry by the Georgia Lottery Corp.

Industry Support

The Fantasy Sports Trade Association supports the new proposed legislation, although it would like to see the annual registration fee for small companies lowered, said Peter Schoenke, the FSTA’s chairman.

The association has supported efforts in many states over the past year “to clarify that fantasy sports are in fact legal and to provide consumer protections,” Schoenke told Bloomberg BNA.

Legislation was introduced in 38 states in 2016, including Georgia, and eight states enacted a fantasy sports law, he said.

Of the states that have passed laws or regulations, only three have imposed a tax on fantasy sports operators, he said— Tennessee at 6 percent, Missouri at 11.5 percent and New York at 15.5 percent. A bill is up for consideration in Missouri this year to lower its rate, Schoenke added.

DraftKings, FanDuel Back Bill

The wave of state regulation comes at a time when DraftKings and FanDuel, the two giants in the fantasy sports market, are seeking federal approval for a merger. The combined company would control an estimated 90 percent of the market, Bloomberg previously reported.

Marc La Vorgna, a spokesman for DraftKings and FanDuel, said the companies also support Georgia’s legislation.

“The bill takes the right approach by installing the consumer protections that have now been proven to work in many other states,” while updating state law to reflect technology changes and letting the state generate revenue, La Vorgna told Bloomberg BNA.

Effective July 1

In Georgia, fantasy sports operators would be required to register with the secretary of state and pay an annual registration fee ranging from $10,000 for the smallest operators up to $50,000 for companies with annual revenue of $5 million or more from Georgia players. The fees would be in addition to the 6 percent tax.

The Georgia bill, if enacted, would take effect July 1.

To contact the reporter on this story: Chris Marr in Atlanta at cMarr@bna.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bna.com

For More Information

Text of H.B. 118 is available http://src.bna.com/lIA

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