New York State Makes $3 Million From DFS in Months Since Regulation
Posted on: March 7, 2017, 04:00h.
Last updated on: March 7, 2017, 04:17h.
New York State is reaping the benefits of DFS regulation, according to figures newly released by its gaming commission.
The state’s first five months of licensed and legal DFS contests brought in $3 million in tax revenue, which will go, in its entirety, into the New York Lottery fund, and be used to fund education programs.
New York State is the second biggest DFS market in the world, after California, whose legislative effort to regulate failed in 2016.
Taxes were collected on more than $18.6 million in gross revenue from New York’s licensees, at a levy of 15 percent, plus an additional smaller tax that does not exceed $50,000 annually per operator.
The vast bulk of that haul comes from market leaders DraftKings and FanDuel, although, in all, ten companies obtained temporary licenses to operate shorty after New York Governor Andrew Cuomo signed the state’s DFS bill into law in August last year.
Fantasy Aces Scandal
Along with DraftKings and FanDuel, Yahoo, Fantasy Draft, Draft, DraftDay, Synkt Games, Fanamana and DataForce are authorized to operate.
The tenth, Fantasy Aces, was plunged into bankruptcy in early February, and later admitted to failing to segregate its players’ money from its operating funds, in violation of its licensing.
The New York Gaming Commission had little time to audit the company, since its DFS licensing regime was so new, but it is known to be investigating. We can only hope that, if such incidents occur in the future, they are caught swiftly by the regulator’s checks and balances.
Regulation, after all, must swing both ways, and with tax dollars must come the assurance of player protections.
Dueling With Kings
The relationship between the state and DFS operators was not always so cozy, of course. The legal battle that escalated between New York AG Eric Schneiderman and DraftKings and FanDuel in late 2015, took the companies offline in the state, while the AG threatened them with billions of dollars in fines and accused them “repeated and persistent fraudulent acts,” in relation to their first deposit bonuses. New York DFS fans took to the streets in protest at the DA’s heavy-handedness.
These events are covered in detail in a new book about the DFS industry, Dueling With Kings, written by Wall Street Journal sports reporter Daniel Barbarisi.
The book chronicles the meteoric rise of the DFS industry, through to its subsequent legal and political battles, and is interwoven with tales of Barbarisi’s own quest to become a DFS “pro.”
“I started wondering: How did a bunch of bros manage to legalize sports gambling, and nobody noticed? That’s how I saw it, and I thought it was amazing,” the author told the Boston Globe of his inspiration to write the book this week.
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