Last year, Mississippi lawmakers legalized fantasy sports gaming. This year, they’re moving to tax it and regulate it.
The House Gaming Committee on Thursday passed House Bill 967, which would have the state Gaming Commission regulate the fantasy sports industry and which would charge operators an 8 percent tax on their Mississippi revenue, same as the state tax on casino revenue. A Senate judiciary committee passed SB2896, a mirror to the House measure.
In 2016, a state attorney general ruling declared online fantasy sports games constituted illegal gambling in Mississippi. Fan Duel and Draft Kings — two of the largest online fantasy sports companies — halted operations in Mississippi, drawing an outcry from fantasy sports enthusiasts. Lawmakers last year passed a bill authored by Sen. Sean Tindell, R-Gulfport, legalizing fantasy sports, but also creating a commission to come up with rules, regulations and fees to present lawmakers this year.
Rep. Scott DeLano, R-Biloxi, presented the bill to the Gaming Committee on Thursday. It would treat fantasy sports similar to casino gambling, under the purview of the Gaming Commission. DeLano said it would set up a “robust licensing process” — and only companies licensed in Mississippi could operate. It would require annual, independent audits be submitted to ensure companies are complying with regulations. Fantasy sports gaming under the bill would also be allowed in Mississippi casinos, and would be restricted to those 21 and older.
Fantasy sports games and leagues have been around at least since the 1960s, but they have become extremely popular in recent years online. An estimated 57 million people in North America played fantasy sports last year, with an estimated 10 million of those players being teenagers. The industry reported about $1.5 billion in revenue, most from advertising on their sites.
Contestants pay an entry fee to play, which funds prize pools. They “draft” players, and win or lose based on the players’ performance.
Unlike regular sports betting, federal law allows fantasy sports contests because it is considered a game of skill instead of a game of chance. To avoid federal gambling regulations, contestants can’t bet on the outcome of a single game or on the performance of a single player. But some states have banned fantasy sports gaming, including Louisiana, Arizona, Iowa, Montana and Washington.
Lawmakers said they don’t expect a big windfall from the tax, at least in the short term. DeLano and others said state revenue would probably be well under $5 million a year from the tax.
“The public wants it for entertainment — believe me, we’ve heard from lots of people who want this,” said House Gaming Chairman Richard Bennett, R-Long Beach, lead author of the House bill. “This (bill) is more for that, to regulate it and protect the consumer, than for revenue.”
“One thing we thought was really important is that these companies be vetted just like a casino, and regulated,” Bennett said.
Tindell this session authored the Senate new Senate fantasy sports bill.
Attorney General Jim Hood last year criticized lawmakers for legalizing fantasy sports games without putting a tax on it. He said taxes on fantasy sports, and creating a state lottery, could help fund public education.
Bennett said he doesn’t foresee his committee taking up a lottery bill this year, or even any bill that includes code sections that could be amended for a lottery on the House floor. He noted the fantasy sports bill does not contain such code sections.
DeLano said the fantasy sports measure is not a step towards regular sports betting in Mississippi — an issue being litigated by other states and the federal government.
“No, that’s a federal issue,” DeLano said. “We’d love to have that opportunity, but this doesn’t get us any closer.”