NFBC To Begin Charging Compliance Fees In 2020
Posted: Wed Jan 22, 2020 1:52 pm
Rotisserie Baseball was invented in 1979 by Daniel Okrent and in the last 40 years the industry has grown to unimaginable heights. Never could Daniel Okrent, Glenn Waggoner or the other Founding Fathers have imagined an industry that included Daily Fantasy Sports, High-Stakes season-long fantasy sports or fantasy golf when they created this game in 1979. And they never imagined that this hobby would turn into a multi-billion dollar industry 40 years later.
But that’s what we have today, and while Okrent is disappointed that this little invention grew into a multi-billion dollar industry, it’s grown through innovation, creativity and the love of all sports by so many others. He gave sports fans the tools to be the owner, general manager and coach of sports franchises and others invented even better ways to play his original game in all sports. You could even say that DFS made it easier for states to pass legalized sports betting laws because pay-to-play fantasy sports had already become so accepted.
All of this has been good for the industry, which has gone from a niche hobby of 1 million players in 1989 to a mainstream game of skill played by more than 57 million people in North America. Sports fans have benefited, but so have sports leagues, sports networks and even the states in general.
Unfortunately, there is a cost to this growth and we are seeing some of that at SportsHub Games Network right now. We acknowledge the need for licensing, legislative action and administrative costs to keep this industry growing, but those costs are no longer marginal or inconsequential. They are getting bigger and bigger by the year, and demand more and more resources. As of 2020, we have currently paid hundreds of thousands of dollars in licensing fees and compliance costs, in addition to hiring a full-time compliance officer.
This has resulted in our licensure or registration in a dozen states and counting. Without these licenses and registrations, we couldn’t operate in Arkansas, Colorado, Indiana, Maryland, Mississippi, Missouri, New Hampshire, New York, New Jersey, Pennsylvania, Tennessee and Virginia, among other states. Since we’ve joined SportsHub Games Network three years ago, we’ve kept the prize payouts the same, eliminated all live Events Fees and ate these expenses.
So, starting on February 11th, we will add on a compliance fee to each new signup, ranging from $2 to $10. This is an expense we will share across the board with all live and online entries and for all size of entries from $50 to $1,700 because we all benefit from the licenses. I say that because without the licenses we’d have to exempt more than a dozen states and hundreds, if not thousands, of our players, which in turn would reduce the participation and the grand prizes across the board.
We are NOT reducing the prize payout percentages at all, as our high-stakes contests will still range from payouts of 80 percent to 95 percent. We are NOT adding Events Fees like some of our competitors do (up to $150 per live event). We are NOT exempting a dozen states. And we are NOT covering our entire licensing fees with the compliance fees; far from it.
But the small fee will allow us to pay some of the state licensing fees we now incur and it will be shared rather equally by our players. It’s not something we want to do, but it is something we NEED to do to keep adding state licenses and to keep the prize payouts where they need to be. Each year more states will add fantasy licenses (whereas there were no states doing that prior to 2016), so we must be prepared to pay up or leave those states.
Here’s the breakdown of our fees, with some incentives in place to save money:
** No compliance fees will be applied to any signups before Feb. 11th. Sign up now if you want to avoid those fees. These compliance fees will be added starting Feb. 11th for NFBC and NFFC as follows:
** $10 compliance fee for entries between $1,000 and $1,700.
** $5 compliance fee for entries between $101 and $999.
** $2 compliance fee for entries between $25 and $100.
** If you buy a Special Package (3-pack, 5-pack, 9-pack), there will be just one compliance fee. You will be eliminating those other compliance fees with a Special Package.
At this point we are not planning to charge a compliance fee for entries over $1,700.
We apologize for the added expense of playing in our high-stakes games, but we will continue to get licensed in states that require a license and we will continue to be compliant in every way. By doing that, however, it leads to either lower payout percentages or higher fees. We chose a small additional fee that covers a small percentage of this expense so that we can keep growing with new customers while keeping current customers in states like Virginia and Indiana playing.
Thanks for your understanding and let’s grow our games together. Good luck in all our games this year.
But that’s what we have today, and while Okrent is disappointed that this little invention grew into a multi-billion dollar industry, it’s grown through innovation, creativity and the love of all sports by so many others. He gave sports fans the tools to be the owner, general manager and coach of sports franchises and others invented even better ways to play his original game in all sports. You could even say that DFS made it easier for states to pass legalized sports betting laws because pay-to-play fantasy sports had already become so accepted.
All of this has been good for the industry, which has gone from a niche hobby of 1 million players in 1989 to a mainstream game of skill played by more than 57 million people in North America. Sports fans have benefited, but so have sports leagues, sports networks and even the states in general.
Unfortunately, there is a cost to this growth and we are seeing some of that at SportsHub Games Network right now. We acknowledge the need for licensing, legislative action and administrative costs to keep this industry growing, but those costs are no longer marginal or inconsequential. They are getting bigger and bigger by the year, and demand more and more resources. As of 2020, we have currently paid hundreds of thousands of dollars in licensing fees and compliance costs, in addition to hiring a full-time compliance officer.
This has resulted in our licensure or registration in a dozen states and counting. Without these licenses and registrations, we couldn’t operate in Arkansas, Colorado, Indiana, Maryland, Mississippi, Missouri, New Hampshire, New York, New Jersey, Pennsylvania, Tennessee and Virginia, among other states. Since we’ve joined SportsHub Games Network three years ago, we’ve kept the prize payouts the same, eliminated all live Events Fees and ate these expenses.
So, starting on February 11th, we will add on a compliance fee to each new signup, ranging from $2 to $10. This is an expense we will share across the board with all live and online entries and for all size of entries from $50 to $1,700 because we all benefit from the licenses. I say that because without the licenses we’d have to exempt more than a dozen states and hundreds, if not thousands, of our players, which in turn would reduce the participation and the grand prizes across the board.
We are NOT reducing the prize payout percentages at all, as our high-stakes contests will still range from payouts of 80 percent to 95 percent. We are NOT adding Events Fees like some of our competitors do (up to $150 per live event). We are NOT exempting a dozen states. And we are NOT covering our entire licensing fees with the compliance fees; far from it.
But the small fee will allow us to pay some of the state licensing fees we now incur and it will be shared rather equally by our players. It’s not something we want to do, but it is something we NEED to do to keep adding state licenses and to keep the prize payouts where they need to be. Each year more states will add fantasy licenses (whereas there were no states doing that prior to 2016), so we must be prepared to pay up or leave those states.
Here’s the breakdown of our fees, with some incentives in place to save money:
** No compliance fees will be applied to any signups before Feb. 11th. Sign up now if you want to avoid those fees. These compliance fees will be added starting Feb. 11th for NFBC and NFFC as follows:
** $10 compliance fee for entries between $1,000 and $1,700.
** $5 compliance fee for entries between $101 and $999.
** $2 compliance fee for entries between $25 and $100.
** If you buy a Special Package (3-pack, 5-pack, 9-pack), there will be just one compliance fee. You will be eliminating those other compliance fees with a Special Package.
At this point we are not planning to charge a compliance fee for entries over $1,700.
We apologize for the added expense of playing in our high-stakes games, but we will continue to get licensed in states that require a license and we will continue to be compliant in every way. By doing that, however, it leads to either lower payout percentages or higher fees. We chose a small additional fee that covers a small percentage of this expense so that we can keep growing with new customers while keeping current customers in states like Virginia and Indiana playing.
Thanks for your understanding and let’s grow our games together. Good luck in all our games this year.
