Should Massachusetts permanently legalize sports fantasy betting and impose a tax on it?


Eileen M. Donoghue

State senator, Lowell Democrat

Last year, the Massachusetts Legislature temporarily legalized daily fantasy sports, online games in which players create fantasy teams consisting of real-life athletes and compete for prizes based on their real-life performances. We established a commission, which I co-chaired, to do a deep dive into online gaming. This commission concluded that daily fantasy sports could be carefully and responsibly legalized to operate safely. The commission also recognized that daily fantasy sports can produce local jobs and generate new revenues for the state.

Like all gaming in Massachusetts, daily fantasy sports should be taxed fairly to defray expenses associated with its activities. Operators of the games currently pay zero taxes on their revenues in Massachusetts, in stark contrast with our casinos and slots parlors that must pay between 25 percent and 49 percent in taxes. Permanently legalizing daily fantasy sports is not without risk, but, if done right, it could provide distinct benefits to the state while allowing millions of fans to continue playing a game they love.

I recently filed legislation that keeps the sunlight on this industry by permanently legalizing daily fantasy sports. My bill requires operators to pay a fee (thus costing taxpayers nothing), and to be registered and regulated by the Massachusetts Gaming Commission. Commonsense consumer protection regulations that mandate transparency, accountability, and responsible gaming behavior would also apply to this sector. The bill also includes a reasonable 15 percent tax on daily fantasy sports revenue, significantly lower than casinos or slots, but similar to rates in New York, Pennsylvania, and Delaware.

Daily fantasy sports is a homegrown industry and worthy of support. We should recognize it for what it is and put to rest any lingering questions about its legality once and for all. Massachusetts must do so with the proper oversight and the right regulations in place to protect consumers, properly vet operators, and safely grow this new business in our state.

The people of Massachusetts lost $1.4 billion in 2017 to government-sanctioned gambling schemes — the difference between money spent on Lottery games and prizes awarded.

Yet some corporate gambling interests and politicians want to make our citizens even bigger losers. They are pushing legislation that would permit online gambling, the biggest expansion of gambling in state history. Nearly 70 percent of Massachusetts voters oppose online gambling.

Disguised as a bill to allow “daily fantasy sports,” the legislation is a naked attempt to legalize online casinos and lottery by the backdoor. It would allow the state — if it chooses — to bring online gambling into every home and smartphone in Massachusetts, all day, seven days a week.

Fantasy sports operator DraftKings is one of the bill’s special interests. The company has openly discussed becoming an online sports book if the US legalizes sports betting. By leveraging its database of mostly young male users, DraftKings is positioned for a potential financial windfall if it were to partner with a gambling operator with an existing sports betting platform.

Government-sanctioned gambling is touted by some politicians as a way to raise tax revenue. But history has shown repeatedly that this argument is wrong. A 2016 report by the Rockefeller Institute at SUNY-Albany found that while states creating new revenue streams from gambling may see momentary bumps in tax income, “the revenue returns deteriorate — and often quickly.”

One revealing truth most gambling operators and the politicians they partner with have in common: With the zeal of teetotalers, they don’t gamble. These hypocrites cause life-changing financial losses for thousands of people.

True to form, one of DraftKings founders told the Globe that prior to starting the company, “I had never even stepped foot in a casino. The three of us have computer science degrees. We’re a bunch of dorks that wanted to build something cool.”

During a time when Americans of all political stripes agree our country could be doing much more to provide opportunity for all, it is wrong for the state to team with corporate gambling interests to redistribute even more wealth away from ordinary citizens to those who are among society’s most powerful.