US: Daily Fantasy Sports clears first legislative hurdle of the year with Mississippi win

What happened in Mississippi for DFS

The Mississippi statehouse officially passed a piece of legislation legalizing and regulating paid-entry fantasy sports. H 967 passed the Senate on Feb. 9 and the House Wednesday. The bill now heads to the desk of Gov. Phil Bryant, who is expected to sign it.

The bill is not a major victory only in that the state already enacted a law dealing with DFS last year. However, that bill had a sunset provision than ran out on July 1. Had the legislature not passed a new law, the old law would have expired.

Such a chain of events would have been a been negative for DFS operators DraftKings and FanDuel. Had the old law gone off the books, they would have been left with a poor legal climate.

Under previous state law, the attorney general had opined that DFS constitutes illegal gambling. DraftKings, FanDuel and other DFS operators had left the state for a time, before the law had been passed.

A glance at the MS DFS bill

What’s in the bill? It’s much like many fantasy spots laws that were enacted last year.

Explicitly legalizes fantasy contests with an entry fee.

Gives oversight authority to the Mississippi Gaming Commission.

Provides for a licensing fee that costs an operator $5,000 over three years.

Taxes operators’ revenue generated in Mississippi at a rate of eight percent.

Outlines consumer protections such as: Ban on employee play at operators; establishes a minimum age of 18 for users; creates provisions relating to security of contest data and segregation of player funds from operational funds.

Under the old law, sites simply had to register with the state; there was no tax or licensing fee.

The segregation of player funds is a major topic in the DFS industry after a site declared bankruptcy after losing more than a million dollars of its players’ funds.

Mississippi just one of many battlegrounds for DFS

While Mississippi passing legislation was nearly expected after last year’s success, there are higher stakes in other states. Nearly half of the states in the US have active bills dealing with fantasy sports.

The current legal climate for these states vary wildly, from states where DFS operators have pulled out to jurisdictions where DFS was already considered to be legal.

One of the biggest legislative priorities is Texas, where DraftKings operates but FanDuel does not.