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The Legality of Fantasy Sports in Massachusetts

Published in Local News on February 26, 2018

Reading Time: 3 minutes

Fantasy sports is a fun way to spend New England winters, but there’s a new proposed bill going through the Massachusetts legislature that could change how players engage with their favorite fantasy sports. Gaming would be permanently legal, but players would see a serious tax hike. Here’s what you need to know about these changes and how it may affect you.

The State of Fantasy Sports in Massachusetts

Massachusetts is introducing a bill that will make it among the first states beginning to address legal sports betting. The bill would change the regulations around the future of daily fantasy sports.

The first thing the bill will do is replace an older paid-entry fantasy sports law. It authorizes a group to begin researching and studying online sports betting in Massachusetts. The bill will also begin considerations about the legality of online gambling.

In 2016, the attorney general created regulations about fantasy sports that were among the first regulations of their kind in the United States. Some of the regulations were that all players must be 21 or older, college events could not be included, and various others that were meant to protect the daily fantasy sports industry and tighten the regulations on it. The attorney general’s office has been the one to handle the rules. This new bill would shift responsibility from the attorney general’s office to the Massachusetts Gaming Commission, while still keeping the 2016 regulations in place.

The 2016 bill, called a comprehensive economic development bill, was also the first legislation that allowed daily fantasy sports companies to give out cash prizes. There were no fees or taxes included in this bill for fantasy sports companies.

With this new legislation, however, companies would be charged a fee and a tax rate. The bill would require any existing fantasy sport operators to pay $100,000, or else one and one-half percent of their gross revenue, from the last year. Massachusetts is widely known to have been especially kind to daily fantasy sports companies in the past, but changes introduced in this bill may frustrate some operators.

What the New Bill Means for Fantasy Sports Players

The new Massachusetts bill would mean players would have an increased tax on their winnings. Massachusetts daily fantasy sports players would be taxed 15% for their winnings. A tax rate this high, while close to rates in Pennsylvania, New York, and Delaware, would give Massachusetts players the highest taxes in the country for any winnings they make from betting on their favorite professional athletes.

Another segment of the bill that would most directly affect daily fantasy sports players is the legalization of fantasy sports as a type of online gambling.

Similar to the enacted fee on fantasy sports operators, many of the companies that operate daily fantasy sports have been hesitant to support this part of the bill. DraftKings, one of the largest fantasy sports companies, has concerns that this legalization may put them at odds with federal fantasy sports regulations and the regulations of other states. Despite these concerns, DraftKings has explicitly stated they plan to collaborate amicably with the state to continue developing legislation that can further the growth of the daily fantasy sports industry.

The Development of Fantasy Sports in Massachusetts

Right now, the name of the game is waiting. Until Massachusetts goes through the legislative process, fantasy play will stay the same. However, the proposed bill would be a literal game-changer for fantasy sports. Whether players are willing to pony up the extra money for taxes will be another question only the future can answer.

For more information, call our law office at (617)-391-9001. Or if you would prefer to email us, then please visit our contact page.

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