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Missouri lays down emergency rules as legalized DFS begins operation in September

TAGs: daily fantasy sports, Leonard Postrado, Missouri

Missouri is starting to unfurl the red carpet for daily fantasy sports (DFS) with a set of emergency rules on how it will work in the state.

Missouri lays down emergency rules as legalized DFS begins operation in SeptemberSt. Louis Post-Dispatch reported that the Missouri Gaming Commission have come up with a set of emergency rules with more than a month before DFS operators could resume their businesses in the state.

As a safety net, state regulators unanimously approved a betting ban on college, high school or youth sports. They also want a tax and fee structure designed to raise money for education.

The Missouri Gaming Commission also reminded DFS operators that they will pay an annual registration fee of $10,000 or 10 percent of entry fees to the state, as well as an annual administration fee of 11.5 percent of revenue.

Companies that are already doing business in the state can begin registering on Sept. 8.

Ed Grewach, general counsel for the gaming commission, said the emergency rules will be in place while the state works to adopt permanent rules by March.

He said the rules were crafted in part by talking with others states, including Tennessee, which also has legalized fantasy sports.

“We were able to use some of their ideas,” Grewach said.

Missouri is among seven states in the U.S. where there are laws on the books making it legal for operators such as FanDuel and DraftKings to offer online fantasy sports games, in which players pick teams of real players and compete against others based on the statistics of their mock teams.

Gov. Jay Nixon earlier announced that the tax collected from the DFS will be used to maintain the state’s schools. Exactly how much cash might roll into the state’s coffers, however, remains a mystery as revenue estimates fluctuated from less than $1 million to more than $10 million.

Grewach on the other hand, estimated that there were more or less 200,000 fantasy sports in Missouri.

“We don’t really have a firm number,” Grewach said. “We are regulating an activity that is totally new to us.”

Even before the legalize DFS starts in Missouri, smaller fantasy sports businesses are already feeling the pinch of the tax structure in the state.

Unlike DFS giants DraftKings and FanDuel, smaller companies, such as Real Time Fantasy Sports in St. Louis, typically serve hundreds of thousands of customers.

“The high tax rate will create challenges for small operators,” Fantasy Sports Trade Association said in a statement, according to the report.

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