The House Regulatory Reform Committee held a hearing Wednesday May 17, 2018 regarding the newly introduced bills relating to fantasy sports,

HB 4742 and 4743.  These bills are identical to SB 461 and 462 that were introduced in the Senate in June 2017.   The Senate version of the fantasy sports bills were taken up at an October 19, 2017 Senate Regulatory Reform Committee.   The Committee voted 7-0 to refer the bills to the Committee of the Whole and no additional action has been taken on the Senate bills.  (See Michigan Gaming Newsletter, Vol. 23, Issue 33 – October 20, 2017).

HB 4742 amends the Michigan penal code to exclude fantasy sports from the definition of gambling, provided that the sponsor does not participate in the contest, the player performance is determinative of the outcome, and the prizes are made known at the time of entry.  Furthermore, the contest cannot be determined by the single performance of an individual athlete in a single event.  HB 4743 sets forth a new act regulating fantasy sports.  It defines a “fantasy sports game” like the HB 4742 definition and requires all operators to be licensed.  The license fee is $5000 for the initial one-year term and $1000 for each additional yearly renewal.  It also requires operators to ensure its players are over 18 and it requires operators to provide responsible gaming features such as opt-out and help resources.

The bills  sponsors, Representatives Jim Tedder (R-43rdDistrict) and Andrew Miller R-59thDistrict) presented the pair of bills.  Both indicated that this was the first step and that they welcomed input and were open to making changes.  The committee members had plenty of questions and appeared to be skeptical of the current bill status.  Mr. Tedder and Mr. Miller were questioned about the amount of the licensing fees, how the skill involved in fantasy sports was fundamentally any different from the skill in games such as poker, and whether the administrator of a league who also participated in the league would be subject to prosecution under the bill.  They were also asked why Department of Licensing and Regulatory Affairs was the proposed regulator instead of the Michigan Gaming Control Board (“MGCB”).  A representative from the MGCB was present at the hearing and acknowledged by Chairman Iden, but did not speak or take a position on the bills.

The bill sponsors were followed by Scott Ward, an attorney representing FanDuel and DraftKings.  He indicated that there are 53 million fantasy sports participants in the United States and 1.6 million in Michigan.  He noted that 19 states had passed legislation authorizing fantasy sports and that more bills are pending. Mr. Ward reiterated the fact that fantasy sports was a skill-based game in differentiating it from other online gambling.  Committee members pressed him on how it was any different from other gambling (such as poker) where skill also played a part.  Mr. Ward was also questioned how the legislation would result in any revenue for the state.  He indicated that the participants would have to pay income taxes on winnings and that the companies that received licenses would have to pay income taxes.  Mr. Ward noted that the bill does not provide for taxation of fantasy sports and indicated that if modified, his clients were not opposed to a moderate form of taxation.


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