Legislation that would allow Delawareans to bet on fantasy sports, and direct the state to create regulations for the industry, has moved forward.
The bill, sponsored by state Rep. Charles Potter, D-Wilmington, passed in the House Tuesday with a 28-6 vote.
“It gives Delaware an opportunity to make sure everything is legal, because you have people playing sports, betting on something that’s not regulated, and we want to make sure its regulated, and it’s an opportunity for people to enjoy the sport and for the state to generate some revenue,” he said.
Online fantasy sports betting for cash prizes is not permitted in Delaware. Last year, the Delaware Department of Justice notified several leading fantasy sports operators that “their respective online fantasy sports activities are not permitted under Delaware law.”
The decision followed moves from other states that declared fantasy sports a gambling activity, and that operators must have a gambling license.
Popular online fantasy sports operators have argued the activity is a “game of skill,” while others argue it’s a “game of chance,” and therefore gambling.
Potter’s legislation labels fantasy sports “games of skill,” asserting it is not a form of illegal gambling under Delaware law.
The legislation would require operators to apply for a license and comply with consumer protection safeguards. Operators of paid fantasy sports also would be subject to a 15.5 percent fee on their net adjusted revenues, or the equivalent of the highest rate set by another state, as well as a $50,000 annual fee.
Operators could not manage, promote or advertise any interactive fantasy sports contests in Delaware until final regulations have been established and the operator has been registered by the state.
The Delaware Director of Lottery has voiced he doesn’t believe the agency should oversee fantasy sports operations, so the Governor would appoint a regulator he deems appropriate within 120 days of enactment. The Department of Revenue would make recommendations on regulations after a two-year period.
Potter attempted to pass similar legislation last year, but the bill never made the House floor.
While most of the representatives voted in favor in the bill Tuesday, a few voiced opposition.
“I have a real problem with a gambling bill being taken out of the umbrella of the Lottery,” said state Rep. Timothy Dukes, D-Laurel. “I don’t believe this is a game of skill—ultimately, it is gambling and is a game of chance.”
An estimated 100,000 Delawareans play fantasy sports, and there would be an estimated $515,000 in revenues generated from legalization. Potter said popularity of the activity will continue to grow.
“If you were to take 100,000 [people] and the average person pays $50 a month that would be $5 million, and at the end of the year that would be $60 million,” he said. “So you can see there’s a great chance for revenue in the state, and it’s just going to grow because it’s not just one sport, it’s football, basketball, soccer, hockey, everything.”
If it passes in the Senate, Delaware would join twelve other states that have passed similar laws.