Fantasy Sports Officially Legal in Tennessee, pending Operational Licenses
In April, the topic of fantasy sports betting was high on the list for Tennessee State officials. On the one hand, Attorney General Herbert Slatery III opined that daily fantasy sports was gambling, thereby illegal in Tennessee. But that same month, legislatures passed a law exempting fantasy sports from the state’s definition of gambling.
As of July 1, 2016, that laws has gone into effect, officially legalizing daily and season-long fantasy sports betting in the Volunteer State.
However, while the activity is currently legal, there are not yet any websites where Tennesseans can legally participate in fantasy sports. That won’t occur until the state begins passing out licenses to approved operators.
Thus far, there are only laws explaining that fantasy sports betting is legal at state-licensed operators. Lawmakers are still in the process of defining the actual terms of licensure, including how much an operator will have to pay for it.
As of July 1, Tennessee has become only the third state in the US to have passed laws regulating daily and/or season-long fantasy sports. The first states to do so were Indiana and Virginia.
In those locations, an operational license has been priced at $50,000. Note that players of fantasy sports are not subject to any licensing fees or state registration.
Who Will Apply for Licensure?
The most likely fantasy sports operators to apply in Tennessee and dish up the licensing fee, whatever it may be, are DraftKings, FanDuel and Yahoo Sports. DraftKings and FanDuel are the two largest operators of daily fantasy sports in North America, while Yahoo Sports has been a leader in season-long fantasy sports draft for many years.
Since US federal and state officials began scrutinizing the activity last year, DraftKings and FanDuel have maintained their legal standpoint that DFS is a predominantly skill-based activity, therefore not a form of gambling at all. They contend that, because “fantasy sports” was specifically excluded from the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), relating to illegal online gambling, DFS is also naturally exempt.
FanDuel Pleased with Fantasy Sports Law
Despite that belief, on the whole, FanDuel was pleased by Tennessee’s acquiescence to regulating of the industry; especially when you consider the Volunteer State is not big on gambling in the first place. Up until now, the only legal forms of gambling were the state-run lottery and a few charitable fund-raising events designed to benefit non-profit organizations, like bingo and raffles.
FanDuel called the passage of a fantasy sports law in Tennessee a “positive”, estimating that about 1 million players from the state are already active fantasy sports bettors. A press release from the DFS operator reads:
“The legislature has passed strong, but smart regulations ensuring the more than one million fantasy players in Tennessee benefit from important consumer protections and can continue to play fantasy sports. We want to thank the bill sponsors Senator Jack Johnson and Representative Pat Marsh, and the members of the legislature for taking a detailed and careful approach to this issue, which delivered a reasonable solution for the state.”
Regulation, Licensure Not a Positive for All
Smaller daily and season-long fantasy sports operators are less inclined to agree with the DFS giant’s viewpoint. For an operation that only pulls in, at most, a couple hundred thousands a year in profits, paying a licensing fee of $50,000 isn’t so reasonable. But for now, we’ll have to wait and see what Tennessee sets its price tag at.