New omnibus gaming legislation has been introduced to the Massachusetts State Senate which, if enacted, will significantly affect fantasy sports operators conducting business in the Commonwealth. Introduced with an eye towards preparing for potential legalized sports gambling in the event that New Jersey prevails in its fight against the Professional and Amateur Sports Protection Act (PASPA) at the United States Supreme Court, the bill also contains new fantasy sports-specific regulations.
What are some notable provisions of the proposed fantasy sports legislation?
The proposed legislation would require fantasy sports operators to continue to comply with regulations previously promulgated by the State Attorney General (on which we have blogged), in addition to new regulations created by the Massachusetts Gaming Commission. These contemplated additional regulations would include, but not be limited to:
- Registration requirements, with initial application fees equal to the lesser of $100,000 or 1.5% of gross revenue earned in the previous year;
- Those operators that generated no gross revenue in the previous year would have to pay a $50,000 initial application fee;
- A tax of 15% on gross revenue;
- Requirement for the use of geolocation technology to verify that players are not located outside of the Commonwealth;
- Requirement to segregate player funds from operating funds, and to limit player deposits;
- Requirement that operators submit to annual audits conducted by the Gaming Commission.
The proposed fantasy sports legislation also envisions civil penalties of up to $2,000 per regulatory violation, which can be increased to up to $10,000 for willful violations.
Evolution of Fantasy Sports Regulations and the Ongoing Need for a Fantasy Sports Lawyer
The proposed Massachusetts fantasy sports legislation demonstrates that even in those jurisdictions that have already blessed fantasy sports, the rules and regulations that govern fantasy sports operators continue to evolve. In addition, each state that has enacted fantasy sports regulations has implemented unique requirements in one way or another. As such, it is imperative for fantasy sports operators to keep abreast of the developing legal landscape. Given the shifting regulatory environment, operators should work closely with experienced fantasy sports lawyers to regularly review contest platforms, entry fees, prize structures and marketing campaigns.