The Ohio Senate’s Finance Committee is now holding hearings on a bill that would legalize daily fantasy sports (DFS) and put the licensing and regulation under the control of the Ohio Casino Control Commission. The house passed House Bill 132 by a large margin earlier this year.
If the bill passes DFS could be legal in the Buckeye state by early next year. If it does, it would be the seventh state to legalize it. Virginia, which was the first, passed its law last year.
Although the bill, which was introduced a year ago, would certainly benefit the large providers of the games, such as DraftKings and FanDuel, whose combined customer base is about 400,000 in Ohio, but small timers, like Kevin Day, who runs his own DFS website Fantasy Football Calculator would also make out.
In a letter to the Senate, which began hearings in the middle of September, Day wrote “This legislation lets me build out tools around the contests and leaves the option open down the line to host contests.”
Supporters of DFS, such as the bill’s author Rep. Jonathan Dever, concede that DFS is in a gray area, where some consider it gambling and others do not. Ohio has never before defined gambling to include the game. Dever would like to provide consumer protections for those who like to play. Operators would be required to pay a registration fee of up to $30,000 every three years.
According to Dever, who was interviewed by Crain’s Cleveland Business, his bill says “Hey, look, we recognize it, but we’re going to put some rules on it. We’re trying to do it in the least invasive way possible.”
Peter Schoenke, chairman of the Fantasy Sports Trade Association, told Crains that his association favors a registration fee that is based on the size of the company and increases as it grows.
“We want a law that makes it legal and adds consistency for our profession,” he said. “Our members don’t mind if our industry pays for that cost. We just want the system to have no barriers for entry — so the smaller companies out there can continue to operate, and others can come in without paying a huge fee.”
If DraftKings and FanDuel had their way, they would have been allowed to merge, and form a much larger DFS entity. However, when federal antitrust officials broadly hinted that this wouldn’t be allowed, they called off the merge.
The industry is growing, with nearly 60 million players in North America, according to FSTA. That number is growing rapidly.
Dever doesn’t anticipate that the state will make much money by legalizing DFS, the fees will cover the cost of regulation and not much more.
He hopes that the legislation will come to a vote in the Senate before Thanksgiving.
One public official who is encouraging the state to address DFS is Attorney General Mike DeWine, who said the law is unclear about the activity’s legal status. Several bills were introduced, some of them actively hostile to DFS, one describing it DFS as “schemes of chance” before Dever’s bill floated to the surface.
Recognizing the state’s interest in encouraging small players, the bill softened licensing fees, giving them a sliding scale and limiting them to no higher than $10,000 annually. It also does not include an operational tax, unlike laws that have been introduced in New York and Delaware that tack on a 15 percent tax. Ohio’s bill doesn’t envision DFS as a state cash cow.
The consumer projections include no participation by minors, age verification, and segregation of funds.
