June 14, 2016
Last week, the governors of Colorado and Missouri, signed into law bills which officially legalize fantasy sports in their respective states, continuing a recent nationwide trend towards regulation of the industry.
What are some of the key provisions in the bills that have legalized fantasy sports in Colorado and Missouri?
Colorado’s new law legalizing fantasy sports contests includes, but is not limited to, the following main regulations:
- The Division of Professions and Occupations has been tasked with overseeing the fantasy sports industry, including setting applicable licensing and renewal fees;
- Consumer protections including, but not limited to, prohibitions on employee participation in fantasy sports contests, segregation of player funds from operating funds and mandates on data security;
- Prohibition on offering amateur athletic fantasy sports contests;
- Minimum age requirements for participants, restricting participation to those users 18 years of age or older; and
- Separate regulations for small fantasy sports operators with less than 7,500 Colorado users including, but not limited to:
- Registration with the State instead of application for licensure, obviating the need for such operators to pay the applicable licensing and renewal fees; and
- Submission to annual independent third party audits.
Colorado’s fantasy sports regulations are set to take effect on August 10, 2016.
Meanwhile, the key components of the Missouri bill legalizing fantasy sports include, but are not limited to, the following:
- The Missouri Gaming Commission has been tasked with exercising regulatory authority over the fantasy sports industry;
- Annual licensing fees of either $10,000 or 10% of net revenue based on players in Missouri, whichever is less;
- Consumer protections including, but not limited to, mandates on creation of procedures to handle consumer complaints, segregation of player funds from operational funds, and prohibitions on advertising to minors;
- An 11.5% tax on net revenues generated in the State;
- Prohibitions on participation by minors in fantasy sports contests;
- Prohibition on offering amateur athletic fantasy sports contests; and
- Annual third party audits.
Missouri’s fantasy sports regulations are set to take effect on August 28, 2016.
The Continued Push to Regulate the Fantasy Sports Industry
Colorado and Missouri have now joined a growing cadre of states that have legalized fantasy sports. In addition to the efforts of these states to formally legalize and regulate fantasy sports, similar announcements have come out of Tennessee, Mississippi, Indiana and Virginia regarding implementation of new rules governing fantasy sports contests and operators. Other legislative initiatives are underway in statehouses across the country including, among others, Wisconsin, California, New York and Florida. Fantasy sports contests and the laws and regulations that govern them, continue to grow and evolve. Accordingly, it is essential that fantasy sports enterprises keep abreast of the developing legal landscape. Operators should regularly review their respective contest platforms, entry fee and prize structures with knowledgeable counsel in order to effectively navigate this rapidly changing regulatory framework.
If you are interested in learning more about this topic or pursuing a fantasy sports venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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