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New Jersey’s DFS Bill Full Steam Ahead to Full Senate Vote

With the news of neighboring New York’s decision to legalize daily fantasy sports (DFS) making national headlines, New Jersey’s own legislative push towards DFS authorization continues to gain momentum.

The state’s most recent attempt at DFS legislation, a bill known as S-1927, was passed on June 6 by the New Jersey Senate Budget and Appropriations Committee in a 9 to 3 vote.

This follows an earlier vote of approval by the State Government, Wagering, Tourism and Historic Preservation Committee which took place in March.

Next up for S-1927 will be a vote by the full state Senate.

S-1927 was first introduced on March 7 by chief sponsor Senator Jim Whelan, in the wake of a Senate hearing to discuss the rapidly expanding DFS industry.

Senator Whelan’s bill proposes to regulate DFS operators serving customers within New Jersey’s jurisdiction, such as industry leaders DraftKings and FanDuel, both of which currently do business in the state on an unregulated basis.

According to a report published by the Press of Atlantic City, Whelan’s vision for regulated DFS would impose a taxation scheme on DFS operators which closely mirrors that already applied to land-based casino properties:

“(S-1927) requires the fantasy sports sites to pay 9.25 percent of their yearly gross revenue in New Jersey as a ‘registration fee …the same tax rate on brick and mortar casinos.'”

Sites like DraftKings and FanDuel would be permitted to continue serving customers physically located within the state while they completed the licensing and permit process.

Another provision contained within the language of S-1927 would prohibit employees of DFS providers from playing real-money games, either on the site for which they work, or through competitors. The motivation behind this ban on employee play stems from the industry’s first major scandal, when DraftKings content manager Ethan Haskell won $350,000 in a major DFS tournament held on rival site FanDuel last October.

Allegations that Haskell, and other high-ranking DFS-company employees, may be able to use “insider” information to gain an unfair advantage over other players rocked the nascent DFS industry to its core, prompting inquiries from Attorneys General in several states.

While DraftKings and FanDuel have both taken internal steps to prohibit employee play, and both generally support this provision of S-1927, the DFS titans oppose the bill as currently written.

The companies have called for a clause which excludes DFS operators from casino industry regulations, but Senator Whelan’s version would subject both industries to the same level of oversight.

DraftKings and FanDuel also prefer language which explicitly defines DFS as a game of skill, but S-1927 only goes so far as define the games as being played “for a predetermined prize with the outcome reflecting the relative skill of the participants.”

New Jersey’s move towards DFS regulation comes as neighboring New York recently passed its own DFS bill through the full legislature. There, full legalization and regulation of DFS awaits only a signature from Governor Andrew Cuomo to become the law of the land.

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