BOSTON– The sun is setting on the temporary legalization of daily fantasy sports gaming, and Sen. Eileen Donoghue is hoping to permanently regulate what she calls a “home-grown industry.”
The Legislature’s Committee on Economic Development and Emerging Technologies held a hearing Wednesday on the Lowell Democrat’s bill to make daily fantasy sports legal.
In 2016, lawmakers decided to make “fantasy contests” temporarily legal until July 31, 2018. Donoghue’s bill, S2273 would add a new chapter to Massachusetts General Laws to make online daily fantasy sports exempt from the state ban on “illegal gaming.”
The bill requires daily fantasy sports providers like Boston-based DraftKings and FanDuel to register with the Massachusetts Gaming Commission and pay a registration fee of up to $100,000.
Once approved, the provider would also pay a 15 percent tax on revenue, a lower tax rate than the 25 percent paid by state casinos or the 49 percent paid by slots parlors.
In her testimony, Donoghue said daily fantasy sports providers are worthy of the state’s support because of what they bring to the commonwealth. For example, DraftKings recently announced that it plans to increase its workforce from 425 current employees to 700 by 2019. The company said 600 of those jobs will be in Boston.
DraftKings issued a statement thanking Donoghue for her efforts, saying that the bill would provide “critical legal certainty” for the industry.
“We continue to review the bill’s full implications, and look forward to discussions with her, the legislature and the governor as we adopt common sense legislation that protects consumers and allows us to continue to innovate and create jobs in Massachusetts,” said spokesman James Chisholm.
Donoghue said the bill “strikes the right balance” in promoting the daily fantasy sports industry while protecting residents who participate.
“Permanently legalized DFS is not without risk, but if done right could provide unique benefits,” she said in her testimony.
The director of Massachusetts State Lottery also testified, asking that the bill include provisions to promote the lottery online, as do casinos.
Michael Sweeney asked that all providers have direct links to the Massachusetts State Lottery on their websites, allow the lottery to send push notifications through their apps and highlight lottery promotions. He also proposed that the commission confer with Sweeney and his colleagues when approving daily fantasy sports operators.
“The Legislature ensured that the state lottery could have product placement within the physical space for casinos,” he said. “Would the committee provide this, too?”
Commission members, including Rep. Keiko Orrall, a Lakeville Republican running for state treasurer, asked how the commonwealth will benefit and how much the bill will cost.
“That’s the reason for a registration fee that’s lower than a casino and slot parlor,” Donoghue responded. “They operate on much smaller margins. When we looked at it in preparing the bill, it seemed reasonable.”
Gamers can bet on horse races online. The State House News Service reported that Suffolk Downs, the thoroughbred track and simulcast center in Revere and East Boston, processed $150 million in legal wagers last year, including $100 million wagered by Massachusetts residents online through Suffolk Downs’ state-regulated advanced-deposit wagering systems.
Donoghue’s bill does not include online casino gambling and e-sports, but does consider a landscape in which sports betting is made legal nationwide.
She referred to Christie v. National Collegiate Athletic Association in her testimony.
The case, brought to the Supreme Court by the state of New Jersey, is currently challenging the Professional and Amateur Sports Protection Act, which limits which states can offer legal sports betting.
Donoghue’s bill includes a section that creates a special commission to handle what would happen if the court rules that states can legalize sports betting, a decision that would fall to Legislature and Gov. Charlie Baker. The eight-member commission would have to file recommendations within 120 days of the court’s decision.
Donoghue said the repeal of PASPA could be “a whole sea change.”
The original goal was to stop the spread of sports betting in the United States and was signed into law by President George W. Bush in 1992.
But, according to a 2017 UMass Lowell-Washington Post poll, 55 percent of Americans support making gambling on professional sports legal in all states.
The News Service reported that Attorney General Maura Healey’s office is following the Supreme Court case, and has advocated a “cautious approach” to expanding gambling in Massachusetts.
