DFS to Get Online Gambling Treatment In Pennsylvania?

Home » Poker News » DFS to Get Online Gambling Treatment In Pennsylvania?

Tuesday, January 5th, 2016 | Written by Shane Larson

All over the country, there are widespread debates occurring on whether daily fantasy sports betting constitutes online gambling. Some states like Massachusetts have decided that daily fantasy sports betting is not the same as online games of chance, but other states are leaning in the opposite direction. Pennsylvania appears to be one of them, as the state is currently considering adding daily fantasy sports betting to its upcoming iGaming legislation.

The Committee Chair Speaks Out

John Payne, the chairman of the Pennsylvania House Gaming Oversight Committee was recently interviewed and asked questions about how the Keystone State plans to regulate various types of iGaming. During the interview, Payne was asked specifically about daily fantasy sports. Payne said that he felt that daily fantasy sports betting would likely be added to the current bill being considered in Harrisburg, which would legalize online gambling in Pennsylvania. If this occurs, Payne says it’s likely that licensed land-based casinos would be allowed to provide daily fantasy sports betting and that existing operators in the industry would need to partner with Pennsylvania casinos to operate in the state.

The Likely Course of Action

While it’s not quite clear how Pennsylvania will deal with daily fantasy sports betting, industry analysts have made some inferences based on Payne’s statements and statements from other Harrisburg lawmakers. It appears that Pennsylvania would require daily fantasy sports betting sites to obtain a license and pay taxes to the state and that the state gaming commission would oversee their operations in order to protect consumers and ensure fairness.

Possible Ways Forward

There are three ways that daily fantasy sports betting regulation could come to fruition in Pennsylvania:

1. Language could be added to House Bill 649 to include daily fantasy sports betting in the current iGaming legislation. This would require operators to pay $2 million to obtain licenses to operate in the state. Industry insiders feel that DraftKings and FanDuel would likely be unwilling to pay these fees, meaning that until casinos created their own daily fantasy sports betting sites, it would be illegal for Pennsylvanians to participate in daily fantasy sports.

2. Language could be added to House Bill 649 to include daily fantasy sports betting under a different set of requirements from those being used for online poker. With this scenario, operators like FanDuel and DraftKings would pay a lower, more reasonable licensing fee.

3. Pennsylvania lawmakers could draft a completely separate bill for daily fantasy sports betting with a unique set of regulations and completely different licensing fee and tax rate structures.

Pennsylvania Gaming Control Board Study

In the meantime, the Pennsylvania Gaming Control Board is currently undertaking a three-month long study of the daily fantasy sports industry before considering any gaming reform package. Commenting on the situation, John Payne said:

“They’ll come back with their recommendations and how we can regulate it and make it part of our gaming oversight. We’re really trying to push that and have it as part of the gaming package” in the spring.”

Questions About the Impact on Operators

The final question that looms about how daily fantasy sports will be treated in Pennsylvania is whether or not the state will allow operators to pit Pennsylvanians against players outside of the state. Currently, interstate game play is necessary for big payouts, and there are concerns that if Pennsylvania places restrictions on operators and requires a move to only allow intrastate play that the lack of liquidity could make daily fantasy sports less profitable for operators and less fun for players.

Bottom Line

Pennsylvania is the state that seems most likely to next pass an online gaming bill in the US, as the need to plug its huge budget deficit without raising taxes becomes more of a priority. Already 11 out of the state’s 12 land-based casinos have expressed support for regulation, and with much of the heavy lifting having already been undertaken, the only remaining step is to pass a bill. Of course a number of hurdles may disrupt its efforts, not least concerning differing views on whether daily fantasy sports should be considered a game of skill or chance, and how the game should be regulated. This could conceivably lead to extended discussions on the issue, ultimately slowing down the whole process towards iGaming expansion. Nevertheless, if Pennsylvania fails to advance iGambling expansion in 2016, it will be deemed a significant disappointment for the whole industry, with the potential to disrupt the momentum of other US states currently contemplating regulation of their own.