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Online fantasy sports bill gets NY Senate final approval

Fans and employees of online fantasy sports websites

Fans and employees of online fantasy sports websites gather outside New York Attorney General Eric T. Schneiderman's Manhattan office on Friday, Nov. 13, 2015, to protest his attempts to keep websites like DraftKings and FanDuel from operating in the state. Credit: Craig Ruttle

ALBANY — The state Senate early Saturday gave final legislative approval to allow New Yorkers to participate in fantasy online sports, a national craze that has been suspended in New York over the question of whether the activity is gambling.

The Senate passed the bill at 2:15 a.m. Saturday after several hastily called meetings by the sponsor, Sen. John Bonacic (R-Middletown), to muster Democratic votes to compensate for several Republicans in the majority who opposed the measure.

Bonacic called the activity “sports” and stressed it is not “games of chance,” which would be illegal in New York. He said the games will be well regulated and provide $5.8 million a year in revenue.

Sen. Liz Krueger (D-Manhattan) lamented New York’s increasing reliance on gambling and alcohol sales as tools of economic development and for tax revenue.

“If it looks like a duck, it swims like a duck, it quacks like a duck, it’s a duck,” Krueger said. “This is another gambling bill . . . [and] I’m confident we will see more bills in the future that take us down this rabbit hole.”

The measure was approved by the Assembly and Senate, but not Gov. Andrew M. Cuomo, who joined the Legislature on several other measures Friday. That means Cuomo has another chance to weigh in on fantasy sports through his signature to make the bill law or by a veto to quash the measure.

Bonacic, however, said Cuomo was supportive of the idea. A Cuomo spokesman didn’t immediately respond to a request for comment.

The legislation is needed to categorize online fantasy sports, in which players can pick and run teams to win cash and prizes, as a game of skill, rather than gambling, which is illegal in New York unless specifically approved and regulated.

In October, state Attorney General Eric T. Schneiderman began an investigation into whether fantasy online sports might be considered illegal gambling. He eventually suspended play in New York by two of the biggest companies — DraftKings and FanDuel.

In the meantime, the Legislature has worked to develop legislation that would make the operations legal in New York, where unregulated gambling is outlawed by the state constitution.

The fight over the massive market for the business in New York was one of the longest and costliest lobbying battles in recent years in Albany, with lobbyists still buttonholing legislators near midnight Friday, trying to sway votes their way.

The bill imposes a 15 percent state tax on each fantasy sports company’s gross revenue “for the privilege of conducting interactive fantasy sports contests in New York state,” along with a half-percent tax up to $50,000 a year paid to the state.

The state Gaming Commission also will assess actual costs necessary to regulate the industry. All taxes, interest and penalties will be sent to the state Lottery Fund for education, according to the bill.

The bill also states players will be limited to one active account, must be 18 years old or older and be provided a clear understanding of their chances of winning. Players also will be allowed to “exclude themselves from contests and permanently close their accounts at any time.”

The vote came in a marathon session on the second after the 2016 session was scheduled to end.

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