Virginia & Indiana Residents: Welcome Back To The NFBC

[Greg Ambrosius]

As our NFFC members already know, this summer SportsHub Technologies paid the licensing fees in two states that were requesting $50,000 fees to allow their residents to compete in pay-to-play fantasy games. Virginia was the first state to pass a DFS state law and they requested ALL pay-to-play fantasy game operators to pay $50,000. Indiana followed with a similar state law and fee structure.

Virginia's law went into effect last Fall and thus NFBC members from Virginia were exempt from the NFBC. However, on Aug. 26th we received our license to include Virginia residents and we are now fully licensed across all of our sports. Virginia residents will be allowed to compete for cash prizes in the NFBC going forward. Similarly, Indiana residents were good to go through a grandfathered clause until July 1st, but since then we've received a license with that state to continue operating pay-to-play games. Both states are good to go for NFBC players in 2018 and beyond.

We are committed to this industry long-term and you can see that by our applications in New York, Tennessee, Missouri, Indiana, Virginia and other states. Other high-stakes contests are exempting the states of Indiana and Virginia, but we are committed to both states this year and long-term. CDM Fantasy Sports, Fanball and the other titles at SportsHub Technologies are all part of this license.

It is definitely a changing environment for fantasy sports game operators and since obtaining these licenses other states have followed suit. Pennsylvania recently passed a DFS bill that is tougher than all of the rest, as did Delaware. Delaware not only requested a $50,000 licensing fee but 15.5% of net revenue from all Delaware residents. We announced earlier that we would not be licensed in Delaware and thus Delaware residents are not allowed to compete in our contests. We'd love to show these state legislators how they are hurting their residents with these across-the-board laws that have such onerous fees, but there's no stopping this train at this point.

The good news is that we are now licensed and good to go in most of the states and we have plans to expand our baseball games beyond just the NFBC in 2018. We will offer a Tuesday night salary cap contest just for NFBC participants each week with the top team earning a free 2019 Main Event entry and second place earning a free 2019 Online Championship entry. Look for more details on that contest soon, but it's similar to what we ran with FanDuel years ago. This one will be part of our DFS contest, Fanball.

We'll also have some Daily Drafts for those who want to continue drafting during the season. These will be one-day contests that feature 2-team, 3-team, 5-team and 10-team leagues. These are quick and easy with payouts to the top finisher for that day. We will have a starting roster of 9 players that folks will draft as soon as the league fills that day. We are currently using our new draft software for this format in football and it's been easy and fun.

And it's good news for CDM players as well, since they are now compliant in Virginia and Indiana. We know a lot of our guys play CDM as well and it's great news that they also can take signups from those residents. We are good in Tennessee, New York, Missouri and other states that fellow game operators are still not licensed in.

So let's welcome BACK Virginia residents. We missed you. But the good news is that Virginia and Indiana are now on Registration before the start of 2018. Good luck and enjoy.

Thanks all. Now Let The Games Begin!!

[Gekko]

Pennsylvania recently passed a DFS bill that is tougher than all of the rest

I took a brief look at the PA bill that was signed into law and it does not appear to be small business friendly. Some notables:
1. Game operators have to pay an upfront $50,000 license fee. License is good for 5 years
2. Game operators have to pay a $10,000 license renewal after initial license expires. Renewal license appears to be good for 5 years
3. Game operators have to pay a tax of 15% of its monthly fantasy contest adjusted revenues
4. Game operators have to maintain an office or place of business within the Commonwealth

There's a lot of other "game operator requirements" listed in the bill.

Question from someone who resides in PA: Is PA going to be an exempt state for 2018 NFBC or is Sportshub going to pay the PA gangsters?

I'm wondering if I should even look at baseball or if its DOA for me

[Greg Ambrosius]

Pennsylvania isn't small business friendly, but then neither is any other state. Nor do any of these states take the time to understand the difference between season-long games and DFS games. Every industry game operator is going to have to make the decision to either exempt these states, pay the fees or find work-around solutions. The days of those work-around solutions ARE OVER.

But you are right, an industry that was built by entrepreneurs and small businesses is being threatened by the government. There's no two ways to say it. These bills will drive small businesses out of the industry or into mergers with bigger companies.

Would we pay any of these fees if we were a stand-alone game product? No. Would STATS or Krause Publications have paid them? No. And who could blame them? Will other game operators who do just one game in one sport pay them? How can they?

We have a different business plan that involves more than just the NFBC and the NFFC. I can say with certainty that we will do what is necessary to remain in Pennsylvania. We chose not to do the same in Delaware. Each game operator will have to make that tough decision, but again we have a different long-range plan that involves other games and possibly other game operators.

But none of this legislation is fully for consumer protection. I wish it was. But you can see what is going on and it's not only affecting season-long games but DFS businesses as well. We'll see how it all plays out, but ...... sheesh.

[Greg Ambrosius]

Just an FYI that Virginia is back as an exempt state for now when it comes to NFFC Registration or any of our NFBC in-season games that we'll be announcing soon. We paid Virginia's $50,000 fee two years ago to be licensed, but the state is now setting up new licensing regulations going forward. We were okay through March but need to await the new guidelines to be officially licensed going forward.

All talks with the state of Virginia are amicable, but we need to wait for the new licenses to be available to take new signups for our contests. Our hope is that this will all be taken care of in the next 2-3 months, certainly before the fantasy football season. We will provide updates as we know more.

While we are still working with Virginia on a new license for 2019, there appears to be some good news on another front. Iowa legislators yesterday cleared the way for a sports betting bill that includes language to allow residents to play pay fantasy sports contests. This bill still needs to be signed by the Governor, but if signed it could go into effect by July or August.

Here's the details:

https://www.desmoinesregister.com/story ... 539191002/

There isn't a lot of language in this story about DFS, but there is language in the bill that allows pay-to-play fantasy sports. I'm still trying to get feedback on season-long, but I'm told that is included as well. Game operators would need a license in Iowa, but I guarantee you we'd be interested as soon as they became available. Hang tight Iowans, we might be close to allowing you to play again in the NFFC, NFBC and NFBKC.

[Greg Ambrosius]

In the past few months, there has been more movement on the legalized sports betting front and in turn legalizing fantasy sports in some states. One of the five exempt states for fantasy sports game operators -- including the NFBC and NFFC -- has been Iowa. We have not allowed Iowans to compete in our contests for the last few years, but that could change this year.

Another exempt state that was close to joining the non-exempt states was Louisiana. Their residents passed a fantasy sports bill in 47 of 64 parishes in November to legalize paid fantasy sports games, but this month the state legislature failed to pass regulations that would allow it. Louisiana remains an exempt state and it looks like nothing will change there for at least the next two years. What a shame after the people had spoken.

Anyway, the FSTA continues to push hard in a lot of these states and the organization worked especially hard in Iowa. Here's an update from Peter Schoenke of the FSTA on a few of the fantasy bills working their way through the states:

IOWA
Iowa Governor Kim Reynolds signed a law in May that sets up sports betting in the state and also enables paid fantasy sports contests. Iowa was one of the five "any chance" states with laws that were always non-conducive for paid fantasy sports contests. The Iowa Racing & Gaming Commission will oversee paid fantasy sports contests and has already started taking applications with a goal of getting operators running in the state by August. SportsHub Technologies has started the application process and hopes to be legal in Iowa as soon as the state allows it.

ALABAMA
A bill was signed into law last week that confirms the legality of paid fantasy sports contests and adds consumer protection measures. The 2019 law includes an improved registration fee for smaller operators. Operators with national gross fantasy contest revenues under $10 million in revenues pay $1,000. The bill contains a 10.5% tax for in-state net revenue (after prizes are paid).

VIRGINIA
The regulator of the commonwealth’s paid fantasy sports law, the Office of Charitable & Regulatory Programs, has decided to lower the annual registration fee to $8,300 from $50,000. Effective July 1, 2019, the annual registration fee will be $8,300 for initial and renewal registrants for fiscal year 2020 and 2021. SportsHub Technologies has already applied for a renewal of our current license and hopes to be taking Virginia applications again in early July.

TEXAS
A bill that would confirm the legality of paid fantasy sports contests and included no registration fees or taxes passed the Texas House. However, the bill was not brought up in the Senate before the legislature adjourned. The Texas legislature is not scheduled to go into session again until 2021.

LOUISIANA
While a statewide referendum in November 2018 passed 47 of 64 parishes to allow paid fantasy sports contests, the Louisiana legislature still needs to enact a law to enable and regulate paid fantasy sports contests. Unfortunately that did not happen by the end of the 2019 legislative session. A bill passed the House and Senate that would set regulations for paid fantasy sports contests, but a corresponding bill to set a tax rate did not pass. Paid fantasy sports contests needed both bills to pass to move forward in the state. Since Louisiana is not able to take up bills involving taxes in 2020, the effort to get paid fantasy sports contests live in Louisiana will unfortunately have to wait until 2021.

[Greg Ambrosius]

FINALLY GOOD NEWS: Virginia has received our application and we are good to go in Virginia again. We are adding Virginia back to Registration now and you'll be able to sign up for any NFFC, NFBC, NFBKC, NFHC, CDM or Fanball contest once again. Sorry for the delay, but we're happy to be licensed in Virginia again.

As you know, we were licensed in Virginia the last two years, having paid an initial fee of $50,000. The state changed its fantasy law this year and requested all licensees and non-licensees to stop taking state registrations until the new license was available on July 1st. It has been 3+ months since Virginia residents were allowed to sign up for our new games, but thankfully the wait is over.

Tom and I will take care of the folks who asked us to secure their spots, but otherwise jump in now if you've been left out and join us in Las Vegas, New York or Online for the best NFFC season ever. Thanks all and good luck.