Fantasy Sports Legislation Approved in Delaware

by Kyle Miller

DelawareDelaware becomes the latest state to approve daily fantasy sports operations.

It seems almost every few weeks a new state joins the group of states in the US that now offer legalized and regulated daily fantasy sports contests. The latest to join the fray is Delaware, with Governor John Carney signing HB 249 yesterday. The bill was approved by legislators on June 30th.

14th State To Authorize DFS

With the bill being signed into law, Delaware becomes the 14th state to authorize daily fantasy sports gaming. The state is in desperate need of new revenues as online gambling has been decreasing in earnings potential. On Wednesday, Carney signed the new bill into law which will amend the current lottery law and clarify that interactive fantasy sports are considered games of skill and not those of chance.

The bill also includes language that clarifies that fantasy sports are not bets placed on future contingent events not under the control or influence of the contestants as the outcome of the contests are not dependent on a single sporting event or one athlete’s performance. Because of this change, daily fantasy sports is no longer considered an illegal gambling activity based on state law.

Operator Requirements

The bill also sets in motion the requirements of operators who wish to offer daily fantasy sports services in the state. An annual fee must be paid by operators of DFS such as DraftKings and FanDuel of $50,000. 15% of gross revenues from players of the state must also be paid to the state. The fees and percentage of taxes to be paid are quite high considering several states do not require any fees to be paid or the fee is quite low.

By setting this higher price point, smaller daily fantasy sports operators may not be able to offer their services in the state. However, leaders in the industry like FanDuel and DraftKings are sure to pay up the amount to begin to legally offer services in the state.

The signing of the bill comes at a unique time as it was almost one year ago that the state decided to rule that DFS operators must block their services from the state as the activity was an illegal one. The new bill will not go into effect for thirty days so operators will have to wait a short time frame before being able to launch services. But since it is still summer, DFS activity will be able to kickoff just in time for the new football season.

Needing More Revenues

Delaware is one of just three states that offers online gaming legally in the US. As the smallest state, when compared to Nevada and New Jersey, Delaware has been unable to see large revenues from online poker and casino gaming. The state recently saw only $202,000 earned in June which was basically 33% lower than what was brought in during June of 2016.

Poker gaming earned just $18,000 which is much lower than 2016 totals and online table gaming earned just a little bit more than poker at $39,500. This was a huge drop from the $82,700 earned in 2016. It seems the state does not have the traffic to pull in big numbers and even after partnering with Nevada for online poker gaming shared liquidity, the state still earns less than stellar revenues.

It will be interesting to see if DFS gaming will help in any way to provide the state with additional revenue as far as online gaming of any kind is concerned. DFS operators may find that there is not a following for such gaming as online casino and poker operators have noticed as of late.