The Senate two weeks ago passed and the Legislature sent to the governor a bill to allow daily fantasy sports betting in New Jersey.
Presumably Gov. Chris Christie will sign it, putting into law relatively light regulations to protect participants in the state.
Daily fantasy players pay to put together virtual sports teams based on real athletes. Teams compete in daylong or shorter games, and the victors, based on the performance of actual athletes, win cash prizes for their “managers.”
When Sen. James Whelan and Assemblyman Vincent Mazzeo, both Atlantic County Democrats, started working on the bill, daily fantasy was on a trajectory that seemed destined to make it a major player in internet gambling. The industry was forecast to reach $18 billion in revenue by 2021.
And a year ago, just three states had authorized daily fantasy, and New Jersey looked to be among the frontrunners. Now 10 others states have done so.
The pie they’ll share isn’t growing nearly as fast. More players than expected are abandoning fantasy, and states where it’s illegal are taking steps to get it out of their markets. The four-year revenue forecast has been revised down to $5.3 billion.
Just 10 days before the bill passed, the Federal Trade Commission delivered another blow, saying it would sue to block the merger of the two giants of daily fantasy sports — DraftKings Inc. and FanDuel Inc. The FTC said consumers benefit substantially from the companies competing with each other.
The Office of Legislative Services estimates the state’s 10.4 percent tax on daily fantasy revenue could generate up to $6.6 million a year for the state, which under the bill would go to the general fund. That’s not a lot, and Whelan says it’s not about the money, but protecting daily fantasy players in the state.
The bill would bar employees of daily fantasy sites from playing even with other operators, since they’d have access to advantageous inside information. People on casino self-exclusion lists couldn’t play. Daily fantasy games couldn’t be based on high school teams or players.
Atlantic City would get at least a little piece of the action. Out-of-state operators would have to have one daily fantasy computer server in the city. Casino daily fantasy operations would have to locate all their servers there.
A similar bill a year ago was opposed by DraftKings and FanDuel because it didn’t specifically exclude daily fantasy from casino gaming regulation. They hired Steven Perskie, a Linwood retired Superior Court judge and former state senator instrumental in getting casino gambling legalized in the 1970s, to convince legislators daily fantasy is a game of skill, not chance. It’s in the bill this time.
Gov. Christie may want the bill to send some or all of the revenue to support the struggling horse racing industry. Regardless, in the end he should sign it to provide a legitimate, less problematic basis for a form of gambling entertainment people would do anyway.