Christie to Consider Regulating, Taxing Fantasy Sports

The fantasy sports website DraftKings. Scott Olson/Getty Images

It’s up to Gov. Chris Christie to decide whether New Jersey will tax and regulate fantasy sports, a growing industry estimated to add $6.6 million a year in revenue to the state budget.

The state Senate gave final passage to a fantasy sports bill by a 29-6 vote on Friday, sending the measure to Christie’s desk. The Assembly approved the bill in May.

The legislation (S1927) would require daily fantasy sports companies to apply for permits from the Division of Consumer Affairs and impose a 10.5 percent tax on their annual gross revenue.

Daily fantasy sports allow players to deposit money into accounts and create virtual teams by choosing professional athletes. Players win or lose money based on how those athletes perform in real games.

State Sen. Jim Whelan (D-Atlantic), a prime sponsor, said the legislation is about consumer protection. In 2015, the fledgling industry was rocked by accusations of insider trading when an employee of the fantasy sports website DraftKings who had access to confidential information won $350,000 at a contest.

Under the bill, anyone with confidential information — or athletes whose performances would affect game outcomes — would be barred from fantasy sports contests.

“As I have said from the beginning, New Jersey can be a model for the rest of the nation of how to effectively and efficiently regulate daily fantasy sports,” Whelan said in a statement Thursday. “This bill protects consumers while at the same time creating an efficient regulatory environment so these companies can expand in New Jersey and create jobs.”

The bill is not expected to bring much money to the state’s coffers. The nonpartisan Office of Legislative Services estimated that the state would generate $6.6 million annually from taxing fantasy sports.

The game has become immensely popular in recent years. In 2016, more than 57 million people played fantasy sports in the United States and Canada, according to the Fantasy Sports Trade Association. That’s about twice as much as the 28 million players in 2009. The bill on Christie’s desk would apply only to fantasy games that charge fees, not free fantasy games.

Peter Schoenke, board chairman of the FTSA, said his group supports the New Jersey legislation because it states that fantasy sports cannot be considered gambling. His group argues that daily fantasy sports are not strictly games of chance because they also require skill and knowledge about athletes and sports statistics.

“We’ve been advocating states to clarify that fantasy sports are legal,” Schoenke said. “Our industry needs that legal clarity to continue. Otherwise, there’s this cloud of uncertainty.”

It’s unclear whether Christie will sign the bill. The governor has for years sought to legalize sports betting in the state, and his legal arguments on that score are now before the U.S. Supreme Court. But during his failed presidential bid, Christie had a “who cares?” attitude when asked about fantasy sports during a Republican primary debate.

“We have $19 trillion in debt, we have people out of work, we have ISIS and al Qaeda attacking us, and we’re talking about fantasy football?” Christie asked.

Christie to Consider Regulating, Taxing Fantasy Sports