DFS Bill Takes Crucial First Step With New Jersey Lawmakers

Before a pending decision on whether the Supreme Court will hear New Jersey’s appeal to the federal law that widely prohibits sports betting, the New Jersey Assembly voted this week to pass a bill that would allow daily fantasy sports.

According to Legal Sports Report, the bill A3532 passed with a vote of 56-15.

What will the bill do?

Much of what we know about A3532 is found in the bill itself, but NJ.com‘s S.P. Sullivan summed it up nicely, saying it would “allow the state’s racetracks and casinos to seek permits to run large-scale fantasy sports games.”

These would be run-of-the-mill DFS games. Players select a sport, then pick a lineup based on that day’s games; wagering is up to the player and can vary greatly. DraftKings, FanDuel, and Yahoo are the three most popular DFS sites.

There are four basic types of DFS games:

  • Cash games: Traditional league-oriented competition where the winner gets prizes
  • Guaranteed prize pools (GPP): Free entry with payouts to top finishers
  • Head-to-head: Playing one other manager for a prize
  • 50/50: Top 50 percent of finishers earn around double their buy-in

You’ll find these game types in virtually every state that allows daily fantasy sports. In states where cash DFS games aren’t permitted — Florida, for example — players can still sign up for GPPs and/or create free competitions.

DFS could bring millions in revenue

NJ.com projects the bill, if passed by the House and signed by Gov. Chris Christie, could generate $6 million in revenue each year.

We took a look at the fiscal estimate associated with the bill and found out the revenue amount is actually $6.6 million.

That amount includes “projected annual revenue collections from a new fee imposed on the gross revenue of fantasy sports operators plus indeterminate collections from new penalties assessed for violations of fantasy sports activity regulations.”

How the state plans to bring in millions through DFS

The bill includes a description of how it will bring in revenue through taxes.

According to the current version, operators must pay:

  • An undisclosed “recurring permit fee that covers the department’s cost in regulating and overseeing fantasy sports activities”
  • A quarterly fee of 10.5 percent of DFS revenue

Sites and individuals that would run an under-the-table DFS operation are subject to fines of “not more than $25,000.” Other potential fines range from $50,000 to $200,000.

It almost goes without saying the Department of Law and Public Safety is allowed by law to revoke a permit if rules are broken.