Welcome (Back) to New York: The Empire State Legalizes Daily Fantasy Sports

Fantasy Sports

On Wednesday, Governor Andrew Cuomo signed into law S. 8153, a bill authorizing daily fantasy sports (DFS) in the Empire State.  The law requires DFS operators to register with the New York State Gaming Commission, pay a 15% tax on gross revenue (with an additional tax of a half-percent of gross revenue, not to exceed $50,000), and implement a number of consumer protections.  These protections include:

  • One person, one account. DFS players may have only “one active and continuously used account” per operator.
  • No minors. Persons under the age of 18 are prohibited from participating in DFS contests.  If a registered operator learns of a minor’s participation in one of its contests, it must immediately refund the minor’s deposits.
  • Self-exclusion and compulsive gaming. Operators must allow players an opportunity to exclude themselves from contests and must “take reasonable steps to prevent such players from entering a contest from which they have excluded themselves.”  Operators must also list, “in a prominent place, information concerning assistance for compulsive play.”
  • Experienced players made known. The accounts of highly experienced players must be identified by “a symbol attached to such players’ usernames.”  A “highly experienced” player is one that has entered more than a thousand contests offered by a single operator or has won more than three prizes of more than $1,000 from a single operator. 
  • About those TV ads . . . Operators must make “clear and conspicuous statements that are not inaccurate or misleading concerning the chances of winning and the number of winners.”  These include statements about “the median and mean net winnings of all authorized players participating in contests offered by” the operator, along with “the percentage of winnings awarded by the registrant to highly experienced players  participating in contests offered by” the operator.
  • Contest transparency. Operators must identify the number of entries per player and the maximum number of total entries per DFS contest.  The law caps the total number of entries per person at the lesser of 150 per contest or 3% of the total number of entries.  The State Gaming Commission may raise or lower this cap.
  • Certain events are off-limits. Operators may not offer contests for high school or college sporting events, in addition to horse-racing contests.
  • Fund segregation. Player funds must be kept separate from operating funds, and must be “protected from corporate insolvency, financial risk, or criminal or civil actions against such operator or registrant.”
  • Fair play. The law explicitly bans the use of third-party scripts.

The law grants the State Gaming Commission broad implementation and enforcement powers.  This includes:

  • The power to approve and deny applications.
  • The power to review and approve each platform and each contest offered by an operator.
  • The power to investigate and mediate complaints.
  • Any powers “necessary and proper” to “fully and effectively execute” the law.
  • To take any enforcement proceedings that are “necessary and appropriate.”

The State Gaming Commission also has the authority to grant temporary licenses to operators that were offering contests before November 10, 2015.  As soon as the permits issue, operators are expected to resume business in New York.

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