Move to Regulate Fantasy Sports in New Jersey

By Briana Vannozzi

By the time next year’s professional football season begins, New Jersey fantasy sports gamers could find themselves logging in to play in a newly regulated and legalized market.

Sites like Draft Kings and FanDuel already operate in New Jersey, but lawmakers have been eyeing the billion dollar industry as a potential revenue source. They’re moving forward with a bill to tax and oversee companies operating in the Garden State.

“This legislation is important not only because it authorizes the activity, but it subjects it to the New Jersey regulatory process,” said Steve Perskie, former chairman of the New Jersey Casino Control Commission.

The new measure only regulates professional companies collecting fees. The state will impose a 10.5 percent fee on the gross revenues from New Jersey operators. It puts the Division of Consumer Affairs in charge of issuing permits and creating a regulatory framework. And requires users to be at least 18 years old to play.

But regulating the industry hangs on whether fantasy sports betting is determined to be a game of skill or chance. Perskie says the state constitution doesn’t allow the Legislature to regulate games of chance, and that gave his legal opinion extra weight.

“In my view, this is not gambling for a variety of legal reasons. It rather is an activity principally based on the skill, expertise, experience, information and strategies that are applied by participants and therefore the Legislature does have the power to regulate, authorize and regulate the activity in New Jersey,” Perskie said.

Users build imaginary teams, choosing different players depending on the sport — a shortstop from this one, pitcher from another — to build a roster and compete. The Office of Legislative Services estimates more than 1 million New Jerseyans play fantasy games and spend more than $625,000 annually.

“Not in New Jersey, but in other states there have been problems — within the industry itself — where people were gaming the system and insiders were winning the game, if you will, because they had inside information. So, we want to make sure that’s not capable of happening here in New Jersey,” said Sen. Jim Whalen.

“The entire fantasy sports community has worked very closely with the Legislature to craft a bill that has very strong consumer protections in it to make sure that anyone playing on any fantasy sports site, that those companies are abiding by basic rules of the road,” said Marc Lavorgna, spokesperson for Draft Kings and FanDuel.

The protections also ensure the companies aren’t gaming the players. And the spokesman for FanDuel and Draft Kings says they’re happy to pay the fee to be recognized as a legal outfit.

New York state’s attorney general shut down fantasy sports betting sites last year until consumer protections were put in place, but New Jersey lawmakers are hoping to avoid that. Revenue predictions vary anywhere from $1 million to $5 million a year — and that’s a pot of money the Legislature doesn’t want to see go.