As baseball season begins, New Hampshire may join a growing number of states that regulate and tax fantasy sports contests.
An estimated 215,000 residents already play the online games offered by operators ranging from big-name businesses DraftKings and FanDuel to smaller organizers.
State lawmakers are hoping to get in on the action through legislation this year that requires fantasy sports sites to pay the state annual registration fees and turn over five percent of contest revenues each year.
“More and more people are playing fantasy games,” said Senate Majority Leader Jeb Bradley, a Wolfeboro Republican.
The Lottery Commission can’t estimate how much the change will generate in state revenue, but Executive Director Charlie McIntyre puts the dollar figure in the “hundreds-of-thousands” ballpark.
In fantasy sports games, players generally draft a team of professional athletes and score points based on their performance in real-life games. While some contests are free to join, others include entry fees and cash prizes for winners. The games can run daily or span the length of an entire season.
The legislation comes amid an industry push to clarify the legality of fantasy sports contests, after questions arose in some states about whether the daily games violate gambling laws.
At least 11 states have already passed laws regulating fantasy contests, while roughly two dozen more bills are pending nationwide, according to Peter Schoenke, chairman of The Fantasy Sports Trade Association.
“We’re trying to go into as many states as possible pass legislation to clarify it’s legal … and add consumer protections,” he said.
Representatives for DraftKings and FanDuel testified in favor of the bill, HB 580, at a recent hearing.
Expense reports filed with the secretary of state’s office show the entities have spent upwards of $33,000 on lobbying in New Hampshire within the last year.
The bill has already cleared the House and heads to the Senate floor on Thursday with a positive recommendation, but it faces a potential roadblock in the governor’s office. Republican Gov. Chris Sununu has “serious concerns” about the bill, which his office declined to further explain.
The proposal would require fantasy sites register with the Lottery Commission and pay $5,000 or 10 percent of gross revenue annually, whichever is less. Operators in New Hampshire would also pay an annual tax of five percent tax on gross fantasy sports contest revenues.
The upfront charge is lower than other states to attract more operators, McIntryre said. For example, Virginia charges $50,000, while New York charges a 0.5 percent tax on revenues capped at $50,000, he said.
The legislation drew opposition from some Liberty groups that argued the fees could be cost-prohibitive to smaller fantasy sports operations. Ed Talbot, of the New Hampshire Council on Problem Gambling, said he has concern the measure doesn’t divert any money to address addiction or problem gambling.
“We recognize that 95 percent of people can gamble responsibly,” he said. “There is a negative side to it, we feel that should be addressed through treatment, prevention and recovery.”
The legislation does include some consumer protections, such as limiting advertising on school campuses and separating advanced players from beginners.
“It’s already happening in New Hampshire, the question is do we have a regulatory structure in place that is reasonable and protects consumers,” said Concord Sen. Dan Feltes, a Democrat.