Legislature

Another push coming to legalize fantasy sports wagering in Iowa

Nick
Nick “1ucror” Dunham speaks in front of a spreadsheet at the DFS Players Conference about “The Process of a Top Cash Game Player” in daily fantasy sports betting in New York November 13, 2015. (REUTERS/Lucas Jackson)

DES MOINES — Today’s Super Bowl concludes another professional football season.

By the time the next season rolls around in the fall, if some state lawmakers have their way, it will be legal for Iowans to enjoy their pro football while playing fantasy sports.

State legislators are taking another run at passing legislation that would legalize fantasy sports wagering, including on popular online daily fantasy sports sites such as DraftKings and FanDuel.

Republican leaders are preparing to offer a bill that is practically identical to one that was considered a year ago but failed to make it through the legislative process.

If approved, wagering on fantasy sports would be legal in Iowa, taxed and regulated by the commission that oversees gambling and gaming in the state.

“I’m for freedom, economic opportunity, and I believe fantasy sports are something that Iowans have come to accept,” said Sen. Jeff Danielson, D-Waterloo. “They do it. Most were unaware that it (is) not legal. ... So I’m in favor of legalizing it.”

Under the proposal to legalize wagering on fantasy sports, the state Racing and Gaming Commission would license companies, investigate violations and levy fines and suspensions; fantasy sports providers would pay a 7.5 percent tax on revenues, and that money would go into the state’s infrastructure fund; players wagering on fantasy sports would be required to be 21 years old; and high school and college athletics would not be permitted to be the subject of wagering.

The proposal is supported by DraftKings and FanDuel and opposed by social groups that oppose an expansion of gambling and Mystique Casino in Dubuque. Other casinos across the state and their parent companies are registered as neutral on the bill.

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Rep. Guy Vander Linden, R-Oskaloosa, will shepherd the bill through the Iowa House this year. He said a key hurdle was cleared when legislators decided to treat fantasy sports as gambling — rather than a game of skill — and regulated as such and the fantasy sports companies agreed to that concession.

“We’ve been playing with this for a number of years,” Vander Linden said. “We pretty much now all agree that we’re going to treat it (as) gambling, first of all. We’re going to treat it like all other gambling. We’re going to regulate it through the Racing and Gaming (Commission). We’re going to tax it. People get out of line, we will do away with it. ...

“We have gambling in Iowa. It’s just another form.”

Danielson said he supports legalization, but he had a different opinion about whether fantasy sports are pure gambling or a game of skill. Danielson said that matters because of how the industry is regulated, and if regulations become too onerous, companies may not offer games.

But DraftKings and FanDuel support the current proposal, as does Danielson.

“I think (the companies) have been willing, as I have, to compromise as long as the essence of the game is still available,” Danielson said. “I support the bill as the House left it. I don’t know what will happen between now and then (if or when it passes this year).”

In 2015, there were 57.4 million people playing fantasy sports in the U.S. and Canada, and more than $1 billion is wagered each year, according to the Fantasy Sports Trade Association.

But legalization and taxation will not provide much of an economic boon in Iowa. Taxing fantasy sports companies’ revenues would produce, at best, $578,000 for the infrastructure fund, according to an estimate by the state’s nonpartisan fiscal agency.

DraftKings and FanDuel are daily fantasy sports providers. That portion of the fantasy sports industry has exploded in the past few years, with industry revenue surpassing $250 million in 2015, according to Legal Sports Report, which reports on the industry.

But after spending heavily on advertising during the 2015 NFL season, DraftKings and FanDuel, which have proposed to merge, pulled back in 2016, in part because the heavy advertising led to operating losses in 2015, the Wall Street Journal reported.

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Iowa is one of just five states in which daily fantasy sports is illegal, and most companies do not operate in five more states because of negative attorney general rulings there, according to Legal Sports Report.

Iowa is one of 10 states that has active legislation that would legalize daily fantasy sports.

“Fantasy is clearly an area where the state of Iowa can authorize it and legally do it, and we will enjoy economic growth and the ability of like-minded Iowans to get together and participate,” Danielson said.

HOW IT WORKS

What are fantasy sports?

A participant selects, often through a draft, athletes on professional sports teams and gathers points based on statistics each player accumulates during a game. The participant’s “team” of players competes against another participant’s, or a group.

What are daily fantasy sports?

Traditional fantasy sports contests are comprised of a group, or “league,” of participants whose teams compete against each other throughout a professional sport’s season. In daily fantasy sports, participants go head-to-head with new, random opponents each week of the sport’s season.

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