Fantasy games legislation fails in Delaware General Assembly

Legislation that would allow Delawareans to bet on fantasy sports, and direct the state to create regulations for the industry, has failed to pass in the General Assembly.

The bill, sponsored by state Rep. Charles Potter, D-Wilmington, and state Sen. David Sokola, D-Newark, failed in the Senate Thursday with a 10-11 vote.

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 not gambling because it’s 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. Similar legislation has passed in twelve other states. Potter attempted to pass similar legislation last year, but the bill never made the House floor.

Those in favor of the bill have argued creating a regulated industry would protect customers and ensure games are organized ethically. They also say it would bring in significant revenue to the state—an estimated 150,000 Delawareans play fantasy sports, and there would be an estimated $515,000 in revenues generated from legalization.

However, the bill failed after the argument of skill versus chance was brought up on the senate floor Thursday, prompted by Minority Leader Gary Simpson, R-Milford, who questioned the validity of labelling fantasy sports a skill.

Sokola argued otherwise.

“It is a game of skill, especially if it’s laid out in the way this bill describes it,” he said. “As someone who follows, basketball, football, hockey and baseball, and has investigated around the edges of things there’s no way I could spend the time I would need to spend to be (good at this), so I would say it is a game of skill.”

Some senators also disagreed with some of the fee requirements in the legislation. In addition to applying for a license, operators of paid fantasy sports would be subject to a 15.5% 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. Delaware would always have a fee equivalent to the highest rate in the country, which is currently in New York.  

The fees would be based on the proceeds after cash awards are handed out.  

State. Sen Brian Bushweller, D-Central Kent, said he was against the bill because he believes the rate is unfair to casinos, which are taxed at more than double the rate.

Votes for and against the bill came from democrats and republicans. State Sen. Colin Bonini, R-Dover, switched his vote from yes to no to be on the prevailing side of the vote so he can attempt to bring the bill back at a later date for another vote.