Ever play fantasy sports in Connecticut? By the estimate of DraftKings and FanDuel, about 600,000 of you have done so over the past decade, even if their business operates in a grayish area of state law and never has been licensed or taxed.
There is no gray, however, in the gambling bill scheduled to be debated Thursday in the House of Representatives. Not only would it legalize sports betting and online casino gambling, it explicitly outlines a licensing process for fantasy sports.
Ironically enough, once the bill becomes law, DraftKings and FanDuel would be forced to cease operations in Connecticut until the Department of Consumer Protection develops regulations and the companies get licensed.
The governor’s legal counsel, Nora Dannehy, declined comment Thursday on the ability of DraftKings and FanDuel to do unlicensed business in Connecticut for years, but she confirmed that under the proposed bill they clearly will need a license.
And that is a problem.
The effective date of the bill is July 1, and the drafting and approval of regulations can take months. Then the companies must get licensed through one of the three master license holders under the bill: the CT Lottery and the tribal owners of the two casinos, Foxwoods Resort and Mohegan Sun.
Exactly how long fantasy sports accounts must be closed is unclear. It could be until the fall or later.
A spokesman in Connecticut for the two fantasy sports operations did not have an immediate comment.
Connecticut passed a law in 2017 creating a sports fantasy licensing process and taxing schedule predicated on the legalization of sports betting and an amendment to the state’s gambling compacts with the tribes. Neither thing happened, no licensing process was established — and DraftKings and FanDuel continued doing business.
The Internal Revenue Service considers fantasy sports to be a form of gambling. (Like gambling losses, the entry fees can be deducted against winnings for tax purposes.) Most states, however, consider fantasy sports to be games of skill. The U.S. Department of Justice has not taken the view it is illegal gambling, nor have prosecutors in Connecticut.
Instead of betting on a team to win or lose, fantasy players assemble teams composed of real athletes, whose actual performances determine the winners. The prizes can be huge, and the activity is hardly underground.
You can read about one of the bigger winners on UConn Today: A UConn business professor with a background in data analytics won $2.5 million in January.
Oh, and one of DraftKing’s backers is ESPN, based in Bristol, Conn.