Legalizing Fantasy Sports May Wreck Tribal Relations

Posted by

While lobbying for legislation has proven to be the path for Daily Fantasy Sports (DFS), a new twist has been added to the story. On April 18, 2016, Connecticut Attorney General George Jepson released an opinion that could severely jeopardize, or complicate, oncoming DFS legislation. In an opinion letter to Connecticut senators, Jepson stated, “There is a substantial risk that the passage of such legislation could jeopardize the State’s revenue-sharing arrangements with the Tribes.”

Connecticut had proposed legalizing fantasy sports with an 8.75 percent tax on the fantasy operators. However, the state could potentially lose the 25 percent share of tribal slot revenues that is based on the exclusivity promised to two Connecticut tribal nations, the Mashantucket Pequot Tribal Nation and the Mohegan Tribe. The tribes may see the legislation as a breaking the exclusivity agreement between the state and the tribes. Jepson commented in the letter that it is uncertain if the proposal would violate the agreement because DFS have yet to be classified a game of skill or a game of chance. If DFS is considered a game of chance, the Tribes can argue that the agreement is broken based on the game being placed on “a device considered a video facsimile.”

Senator Looney, upon receiving the Attorney General’s letter, remarked that “due to the risk and uncertainty that would result from a potential legal challenge, the prospect of passing DFS legislation this session is unlikely.” The 25 percent share results in more than $250 million each year, while the 8.75 percent proposal optimistically would generate $9.5 million.  The legislature wanted to use this proposal and its revenue to decrease state budget’s $922 million deficit. Thus, potentially losing the Tribal Revenue could create an even larger headache.

Leave a Reply

Your email address will not be published.