Fantasy Sports Companies Will Pay Annual Fee Under New Regulatory Framework

Dec 26, 2017

The Scott Administration has signed off on a regulatory structure for fantasy sports companies in Vermont.

During the last legislative session lawmakers passed a consumer protection bill to more tightly regulate fantasy sports.

In that bill, the Governor's office was directed to propose a tax fee structure for companies that want to operate in Vermont, and the regulatory framework has been sent over to the House and Senate finance committees.

Secretary of Administration Susanne Young says fantasy sports companies should have to register with the Secretary of State and pay a $5,000 annual fee.

In the letter Young sent to lawmakers she says the money "covers the Secretary of State's administrative costs related to regulation."

Young says the $5,000 annual fee "are essentially the same registration requirements imposed on other business entities doing business in Vermont."

Young says if a new tax was added it would bring in about $80,000 annually.

Fantasy Sports are organized, online games, that people can play from any computer.

Participants choose individual athletes from a professional sports team and build a "team" of their own.

Those chosen "teams" then compete based on the individual statistics of the players.

It's estimated that between 80,000 and 100,000 people in Vermont play fantasy sports, and players have to pay a registration fee to international companies that control and maintain the web sites that the players use.

Lawmakers argued that Vermont needed a regulatory framework in place to protect consumers and passed Act 70 this year.

DraftKings and FanDuel are two of the larger fantasy sports companies in the world.

A spokesman for those companies, Marc La Vorgna, says Vermont's proposed registration fee structure is in line with the other states that regulate the industry.

"The Vermont package, including the new recommendations, makes sense for the state, and we think it makes sense  for the industry" La Vorgna says. "It makes sense for fans of fantasy sports. It will protect them, protect their right to play, and ensure that any company that is offering fantasy sports contests is operating by a basic set of guidelines and sort  of consumer protection rules."

Eighteen other states have fantasy sports laws.

During the legislative hearings assistant attorney general John Treadwell said fantasy sports violated Vermont's gambling laws, but La La Vorgna says Treadwell's testimony was a "an opinion that didn't carry the force of law" and that fantasy sports are legal.

The Scott Administration did not go so far to recommend a new tax structure for fantasy sports companies.

Some states have passed new tax rules for fantasy sports companies, or the players.

In her proposal Secretary of Administration Young says "operators are currently subject to Vermont's income tax laws like any other business in Vermont."

Clarification and correction 12/28/17 11:35 a.m. Fantasy sports companies will continue to pay an annual fee, under the proposed rules, and if a new tax was instituted it would bring in $80,000.