Pennsylvania DFS and sports betting: What new law means for fans

By Derek Helling | Oct 28, 2017

CHICAGO, IL - OCTOBER 16: The fantasy sports website DraftKings is shown on October 16, 2015 in Chicago, Illinois. DraftKings and its rival FanDuel have been under scrutiny after accusations surfaced of employees participating in the contests with insider information. An employee recently finished second in a contest on FanDuel, winning $350,000. Nevada recently banned the sites. (Photo illustration by Scott Olson/Getty Images) /

A bill regulating fantasy sports and providing a framework for legalized gambling on sports is about to become law in the Quaker state.

A bill approved by both chambers of the Pennsylvania legislature is expected to be signed by Governor Tom Wolf, and Pennsylvania DFS players, along with citizens who look to bet on sporting events someday, should educate themselves about the implications.

The bill sent to Gov. Wolf’s desk after it cleared the Pa. House on Thursday is H 271. In addition to legalizing online slot machines and poker, it provides a regulatory structure for fantasy sports that will affect both operators of and players in both daily/weekly and season-long fantasy contests.

The language of the bill is very similar to that already enacted in several other states, including New York and Virginia.

Companies/individuals wishing to offer daily fantasy sports games that require paid entries and offer cash prizes to Pa. residents have to buy a license from the state, which costs $50,000 for the first five years and then $10,000 upon reach renewal. In addition, game operators have to pay the commonwealth a monthly tax of 15 percent of “adjusted revenues.”

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There are other common regulations, like requiring “beginner-only” contests and identifying which users are “highly experienced.” These are nothing new to the major players in the fantasy sports world, however.

Companies like DraftKings and FanDuel, who have been operating in the state despite the lack of clarity regarding the legality of its contests, have already made the necessary changes to their platforms because other states required it. As soon as they purchase licenses from the commonwealth, they will be in full compliance with the new law. Life will go on as normal for fantasy sports players in Pa.

However, another part of this bill, the framework for legalized sports betting in Pa., represents potential changes.

Currently, it is technically illegal under federal law for Pa. citizens to bet money on the outcomes of sporting events. The enforcement of that law- commonly known as PASPA (Professional and Amateur Sports Protection Act) – has been lax across the nation since it was enacted 25 years ago. The Supreme Court of the United States is hearing a challenge to that law in December, with the potential to strike it down.

If that occurs, Pa. residents could begin to legally gamble on events like Pittsburgh Steelers games almost immediately, provided Gov. Wolf doesn’t veto this bill.

The first thing that Pa. residents should know is that the framework won’t be enacted until such a time as when PASPA is out of the way. If/when that occurs, the commonwealth will post a notice and begin to issue authorization certificates to qualifying game operators.

To qualify, a company or individual must have a physical place of business within the borders of Pa., along with already possess a slot machine license.

The certificates will cost $10 million to acquire and $250,000 to renew every five years. In addition, there will be four separate taxes on the revenue created by the bets placed. The first is the most substantial. Although this tax will be figured daily at 34 percent, operators will actually pay the tax on a weekly basis. Those tax revenues will go to Pa.’s general fund.

The second tax, which is a much lower two percent, is also configured daily and paid weekly. Those funds will be held in an account and then distributed as “grants for projects in the public interest” on a quarterly basis.

The final two taxes are both imposed at a rate of two-tenths of a percent, configured annually. Those funds will go toward supporting drug/alcohol and problem gambling treatment programs.

By having this framework in place prior to the potential repeal of PASPA, Pa. puts itself ahead of the game in getting the necessary infrastructure and staff in place to regulate sports betting if/when that does occur. Additionally, it has notified the casinos in the commonwealth exactly what the requirements will be when that time comes, so they can expedite the certificate process as well.

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The bottom line for DFS players in Pa. is that nothing is going to change as a result of this bill should it become law. For many of the same individuals who are hoping to legally bet on Philadelphia Flyers games someday, the pieces are now in place when the federal barriers get removed.