Playing daily fantasy sports in Pennsylvania

Daily fantasy sports (DFS) isn’t exactly legal in the state of Pennsylvania, but that doesn’t mean you can’t play.

State lawmakers spent the last few years considering a number of options in terms of legalizing and regulating DFS. They have yet to settle on one yet, but big-time DFS operators like Fan Duel and DraftKings continue to accept customers from inside the state.

The sites do not believe DFS constitutes illegal gambling. They also believe a clause in the 2006 Unlawful Internet Gambling Enforcement Act allowing real-money fantasy sports supports this theory.

The office of the Attorney General in Pennsylvania spent 2015 dealing with its own legal issues. By the time a new Attorney General took over in 2016, the legislature addressed the issue with new legislation.

DFS became part of a comprehensive gambling expansion bill the Pennsylvania House and Senate are currently debating.

Daily fantasy sports regulation in Pennsylvania

There have been several efforts to regulate and tax DFS operations in Pennsylvania. However, state legislators still have not passed any DFS laws.

The latest effort to legalize and regulate DFS in the state continue into June 2017. In May 2017, the Pennsylvania Senate passed a comprehensive gambling expansion bill that included language which would legalize, regulate, and tax DFS.

The Pennsylvania House made several amendments to the bill in June 2017, before passing it, and sending it back to the Senate.

In terms of DFS, the biggest House amendment to the bill raised the proposed tax rate on gross DFS revenue in the state to 19 percent. The Senate set it at 12 percent. This would represent the highest tax rate on DFS operations in the country.

The Senate may yet amend the DFS tax rate. Plus, the comprehensive gambling bill is far from becoming law thanks to contentious issues, including online gambling tax rates and the introduction of video gambling terminals at licensed establishments across the state.

The bill also sets the minimum age for DFS players at 21.

Pennsylvania’s Attorney General on daily fantasy sports

Kathleen Kane became Pennsylvania’s Attorney General in 2013. When the popularity of DFS exploded across the United States, Kane claimed DFS issues were under review.

Before that review ever came to pass, Kane was convicted of criminal charges, including conspiracy, perjury, and obstruction of justice. She resigned in August 2016, and Bruce Castor assumed the office. Governor Tom Wolf nominated Bruce Beemer to serve out the remaining balance of Kane’s term. Beemer subsequently spent most of his time dealing with the aftermath of Kane’s conviction.

Democrat Josh Shapiro was elected to the position and succeeded Beemer. However, state lawmakers had already grabbed the reigns in terms of DFS legislation. Shapiro has not commented publicly on the issue.

Pennsylvania’s biggest daily fantasy sports sites

When it comes to DFS, FanDuel and DraftKings enjoy better than 90 percent market share across the United States. Things are no different in Pennsylvania, where FanDuel and DraftKings are the two most popular DFS sites.

In November 2016, the two companies entered into a merger agreement, which should be finalized sometime in the second half of 2017. The deal is still awaiting the results of an anti-trust review by the Federal Trade Commission. The companies have not decided whether they will continue to operate as two separate DFS platforms.

How popular is daily fantasy sports in Pennsylvania?

With almost 13 million residents, Pennsylvania is the sixth-most populous state in America. Professional sports are prevalent. As a result, the state represents a rather large market for DFS operators. However the state’s history of passing some of the highest gaming tax rates in the country and expensive associated operators fees does threaten to derail the industry’s presence in the state.

Right now, it is estimated DFS sites are pulling in more than $7.5 million in revenue from Pennsylvania players. In fact, the state is responsible for close to 4 percent of all DFS contest entry fees in the United States.

Estimates suggest Pennsylvania has more than 65,000 active DFS players. Plus, those players are responsible for almost $80 million in annual entry fees, putting Pennsylvania in the top ten states for DFS activity.