Pennsylvania Looking To Tax Daily Fantasy Sports
The general opinion on the daily fantasy sports crisis is that the days of DFS operators paying 0% gambling tax are set to end. The honeymoon period that the likes of DraftKings and FanDuel have been enjoying until now is almost certainly coming to an end as legislators do not see the difference between fantasy sports and real money gambling.
The unprecedented prize money and sponsorship deals with just about every major sporting body in the U.S. have been a double edged sword for the major operators. Many believe that the branding and marketing success of DraftKings and FanDuel in media circles has set the spotlight on the industry which until recently was unchallenged.
It is now open for debate on a state level as to how they define daily fantasy sports. Pennsylvania is a good example of this new approach. State legislator Rep. George Dunbar is calling to revise his proposal he made earlier in the year which would have allowed DFS activity in the 12 state brick and mortar casinos. The new bill will force DFS operators to partner up with a brick and mortar casino as well as pay hefty fees. In terms of the proposal each individual casino wishing to offer DFS will have to fork out an operator fee of $5 million while each DFS site will in turn have to pay a $1 million vendor fee. In terms of state taxes, Dunbar recommends a 14% cut of DFS revenue which is a 100 percent increase from the 0% they are paying now.
It remains to be seen if the model of Pennsylvania will be followed by other states but it can be said with certainty now that DFS operators will have to contend with new ground laws whether they like it or not.