The legal daily fantasy sports (DFS) industry approved in late August by New York lawmakers has already contributed $2.8 million in tax revenue, per data recently released by the state’s Gaming Commission.
In a report published on March 3 by Albany’s Times Union newspaper, the productivity of New York’s nascent DFS industry was measured by several metrics, as revealed by the Gaming Commission data.
In the industry’s first five months, nine DFS operators operating under temporary permits combined to collect just under $180.4 million in tournament entry fees. That figure represents 10 percent of the approximately $1.8 billion in entry fees paid by DFS players over the same span – demonstrating the importance of New York to the overall iGaming industry.
That importance became apparent in late 2015, when New York Attorney General Eric Schneiderman issued cease and desist orders to the DFS industry’s two major companies, DraftKings and FanDuel. Schneiderman alleged that the rivals engaged in unscrupulous activities while operating in New York, including misleading advertising, while also determining DFS to constitute illegal gambling.
DFS firms fled the state in droves, leaving millions of players in the proverbial lurch, until lawmakers approved DFS regulation on August 3 of last year.
That bill allowed for a select group of operators to apply for licensure and begin running real money DFS tournaments online. At the time, government officials estimated that legalized DFS could produce $4 million in tax revenue during the industry’s first full year.
That revenue is generated via the 15 percent tax levied on all in-state gross revenues, along with an additional minor tax that cannot exceed $50,000 annually for any one operator. All taxes collected from DFS revenue are then deposited into the New York Lottery Fund, which supports a number of educational initiatives throughout the state.
The nine licensed operators in the state – a group consisting of industry titans DraftKings and FanDuel, along with mid-majors Yahoo, Fantasy Draft, Draft, DraftDay, Synkt Games, Fanamana and DataForce – are covered by temporary permits pending finalization of regulations by the Gaming Commission.
While signing the state’s DFS bill into law, Governor Andrew Cuomo offered an optimistic appraisal of the newly created industry:
“Daily fantasy sports have proven to be popular in New York, but until now have operated with no supervision and no protections for players.
This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections, and more funding for education.”
Assemblyman J. Gary Pretlow, a 25-year veteran of the state Assembly who serves as Chairman of the Committee on Racing and Wagering, was more direct in his prediction on DFS’ future financial benefits:
“Fantasy sports are more than online games – they have the potential to generate millions of dollars in revenue for New York State.”
Pretlow’s forecast proved to be prescient, as DFS operators in the month of November alone tallied $4.4 million in cumulative gross revenues – sending $667,129 to the Lottery Fund in just 30 days.