The Legality of Daily Fantasy Sports in Pennsylvania: A Pathway to Legitimacy
In the state of Pennsylvania, a new avenue has emerged for sports enthusiasts to engage in exciting and competitive gaming experiences. While sports betting itself is not yet legal in the state, daily fantasy sports (DFS) has gained official recognition as a legal alternative for individuals to participate in the thrill of sporting events. With the arrival of regulated and taxed DFS games offered by six prominent online operators, including DraftKings and Fanduel, Pennsylvania has become the 19th state to embrace and regulate this growing industry.
A Skill-Based Game
Unlike some states that perceive DFS as a form of illegal gambling, Pennsylvania lawmakers acknowledge the skill-based nature of daily fantasy sports. This belief is substantiated by an academic study that suggests all DFS winners possess a level of skill. Daily fantasy sports mirror traditional fantasy leagues, allowing participants to compete over shorter durations, often a single day or weekend, instead of an entire season. Consequently, purchasing entry into these events is considered an entry fee rather than a bet, reinforcing the notion that skill is at the heart of DFS.
Since its inception, DFS has experienced a significant surge in popularity, nearly doubling its user base from 32 million players in 2010 to an impressive 59.3 million in 2017. The average DFS player in the United States spends approximately $556 per year, showcasing the substantial engagement and financial commitment within the industry.
Regulated and Taxed Revenues
With the legalization of DFS in Pennsylvania, the state government stands to benefit from its taxation. DFS operators will be subject to a 15 percent tax on their gross revenues, with the generated proceeds directed into the state’s general fund. Although the exact amount of revenue DFS games will yield for Pennsylvania remains uncertain, the tariff imposed upon operators is considerable. As a reference, last year, New Jersey imposed a 10.5 percent tariff on revenues after legalizing DFS.
The introduction of DFS legislation in Pennsylvania is just one part of the broader changes in the legal landscape for gaming in the state. Alongside DFS, online casinos, poker, racing, and online lotteries will all undergo regulation, while several new satellite casinos will be licensed. Additionally, should the ban on sports betting outside of Nevada be lifted by the US Supreme Court, Pennsylvania lawmakers are prepared to regulate this area as well.
The legalization of daily fantasy sports in Pennsylvania marks a significant milestone, providing individuals with a legitimate means to engage in skill-based gaming experiences. The state’s recognition of DFS as a game of skill aligns with the growing academic research, emphasizing the role of expertise and strategic decision-making in achieving success in these contests. With the implementation of regulated operations and taxation, Pennsylvania is poised to benefit from the financial contributions of the DFS industry and further expand its gaming landscape.
1. Is daily fantasy sports legal in all states?
No, daily fantasy sports legislation varies by state. Some states consider it illegal gambling, while others recognize it as a game of skill and regulate it accordingly.
2. How does daily fantasy sports differ from traditional fantasy leagues?
In traditional fantasy leagues, participants compete over an entire season, whereas daily fantasy sports contests are typically completed in a day or a weekend, providing a more immediate and condensed gaming experience.
3. What is the tax rate imposed on DFS operators in Pennsylvania?
DFS operators in Pennsylvania are subject to a 15 percent tax on their gross revenues.
4. How does the legalization of DFS fit into Pennsylvania’s broader gaming landscape?
The legalization of DFS is part of a comprehensive overhaul of Pennsylvania’s gaming laws, which also includes the regulation of online casinos, poker, racing, and online lotteries, as well as the licensing of new satellite casinos.
5. Will Pennsylvania consider regulating sports betting?
Pennsylvania lawmakers are prepared to regulate sports betting if the ban on such activities outside of Nevada is lifted by the US Supreme Court.