Two of Big Three want to tax fantasy sports
Rosenberg, like DeLeo, favors regulation, taxation of games
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SENATE PRESIDENT STAN ROSENBERG has joined his counterpart in the House by calling for regulations and taxes on the booming business of online fantasy sports gaming, dismissing the argument that it’s a game of skill and comparing it to horse racing.
“It’s clearly an area that has to be regulated and should be taxed,” Rosenberg told reporters. “It’s more like horseracing because you’re basically evaluating the potential for performance and then placing a wager on it.”
Rosenberg is the latest Beacon Hill leader to eye cashing in on the fantasy sports craze. State Treasurer Deb Goldberg floated the idea last week that the Lottery get in the game and run its own version of fantasy sports. Over the weekend, House Speaker Robert DeLeo said on WCVB (Channel 5) he thinks “the state should get its fair share” when it comes to fantasy sports revenues, indicating he’d be open to some form of tax.
Attorney General Maura Healey said her office would look into how the games are played and whether she would offer proposals for regulation, though she did say the fantasy sites are operating legally. A spokeswoman said Tuesday the office was still in the process of examining the industry and had nothing to say on Rosenberg’s and DeLeo’s comments. Gov. Charlie Baker said he would like to hear more from Healey before taking any stand on regulation of fantasy sports.
Opponents increasingly say the only reason it’s not treated as gambling is because of the congressional action. Five states – Arizona, Iowa, Montana, Washington, and Louisiana — prohibit participating in fantasy sports by banning players in those states from collecting prize money for winning.
Regulating and taxing fantasy sports play presents a myriad of problems because of the nature of how it is played. Participants set up accounts and pick their teams in a number of sports in games that are available on a daily basis. With the exception of Boston-based DraftKings, one of the largest fantasy sites, most all other companies are located around the country and even off-shore.
“Because it’s on the Internet, it can be located anywhere so all you need is a computer and a credit card,” Rosenberg said in acknowledging some of the logistical problems with setting up a system to tax and regulate the games.
A spokesman for DraftKings did not directly address the lawmakers’ desire to tax the industry, but he said the company will work with Beacon Hill should the Legislature move forward with regulations.
“We are open to having a productive discussion with the Senate President and House Speaker,” Griffin Finan, DraftKings director of public affairs, said in an email statement. “DraftKings is a Massachusetts based start-up and we value the opportunity to build a strong relationship with our hometown leadership.”
Fantasy sports have come under fire recently after it was learned that an employee of DraftKings won $350,000 playing on rival site FanDuel. The employee, content manager Ethan Haskell, also inadvertently released proprietary information before it was slated to be made public, which could have skewed the results.
While both companies insisted Haskell did not profit from inside information, they each placed a ban on employees from playing on any site for money. Previously, employees were only barred from playing on their own company’s site.
Fantasy sports players win based on selecting professional team athletes performance in games. For instance, in football, fantasy sports players accumulate points based on how many touchdowns, yards, or successful completions a quarterback on their fantasy team has, as well as points for running backs and receivers scoring touchdowns.
Before the onslaught of for-profit fantasy sites, fantasy players would select teams and either stay with those players the whole season or make trades to acquire other players. With the new approach, players can change their selections week-to-week in football and golf or even day-to-day in other sports such as baseball.
According to the industry’s trade association, fantasy sports play has skyrocketed since 1988, when about 500,000 people played in nascent leagues. Now, according to industry data, more than 56.8 million in the United States and Canada participate in fantasy sports each year, spending an average of $465 each for playing the games and purchasing support materials. In 2012, the average was about $80.
Football is by far the most popular fantasy sports game, with 73 percent of those surveyed saying they participate in football play on fantasy sites. The survey found that the average fantasy sports player was 37 years old, predominantly male, and more than half had a college degree.
Rosenberg said while he has gone from completely clueless of how fantasy sports operate to having a grasp on the games, he has no desire to play himself.
“I gamble every two years: The third Tuesday of September and the first Tuesday of November,” he said, referring to the state’s biannual primary and general elections. “That’s the extent of my gambling.”
Bruce Mohl contributed to this report