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Sports Fantasy Companies Could Pay 15 Percent Revenue Tax

By William Vogeler, Esq. on January 26, 2018 | Last updated on March 21, 2019

Two things are certain: taxes and the death of an industry.

At least it could be that way for fantasy sports, which is in the crosshairs of lawmakers in Massachusetts. The legislature wants to impose a 15 percent tax on fantasy sports companies there, including the biggest players in the industry.

At the same time, the U.S. Supreme Court is expected to open up betting on real sports everywhere in America. So does it portend the end of fantasy sports betting? Don't bet on it.

Why Fantasize?

The Supreme Court will decide this term whether betting on college sports should be legal throughout the United States. It is already legal in Delaware, Montana, Nevada, and Oregon, and legislators in 18 states are betting on it with bills ready to regulate the industry.

The money question is how will the trend affect fantasy sports? Financial observers say fantasy players may move their money to real-world betting.

"If the Supreme Court opens the door to legalized sports betting, it will test the degree to which daily fantasy players have been merely biding their time," according to Bloomberg.

In Massachusetts, a state panel last summer recommended taxing fantasy sports. The big issue, apparently, is how much.

Pennsylvania, New York and Delaware

State Senator Eileen Donoghue has introduced a bill to set the tax at 15 percent in Massachusetts, similar to rates in Pennsylvania, New York and Delaware. Others have imposed lower tax rates.

The proposed law would reinforce state regulations that ban players under age 21, prohibit games based on college sports, and other consumer protections.

DraftKings, a major player in the business, said it is "committed to working collaboratively with the legislature to adopt common sense fantasy sports legislation."

The company does not appear to be too worried about the tax. It recently surpassed FanDuel in the $7 billion fantasy football market and is adding hundreds of workers to its Boston headquarters.

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