Smaller DFS Operators Raise Concerns Over Proposed New York Regulations
Both DraftKings and FanDuel are pulling out of the real money DFS market in New York until their legal battles with Attorney General Eric Schneiderman run their course. Of course they were made an offer they could not refuse by Schneiderman who basically said that if they stop processing customers in New York immediately they will be off the hook for past revenues owed to the state.
Schneiderman is leading an anti DFS crusade which equates it with real money gambling. The two main powerhouses in their industry DraftKings and FanDuel have adopted different strategies but of late they seem to be following that of appeasement and not confrontation.
While they will almost certainly ride out the current legal storm in states like New York, the smaller DFS operators are raising concerns as to the new legislation being proposed there. Included in this is the $500k licensing fee that would be required to operate in New York.
These smaller DFS members number around 35 and have formed a trade association called Small Business of Fantasy Sports. They make up the “mom and pop type businesses” who operate in New York. Their grievances include the 15 percent proposed tax on gross revenues which they would like to see at 5 percent.
Managing partner for the Fantasy Football Players Championship, Alex Kagonovsky explained the contribution of the smaller operations to the overall sector. He said,” Small businesses have been the lifeblood of the fantasy industry for decades. “In fact, smaller daily fantasy sports and season fantasy sports businesses have been operating in New York for many years with thousands of New York customers who have been enjoying our products.” The new proposed legislation along with the $500k licensing fee has been included in the budget proposal for the upcoming fiscal year and is expected to pass.