Connecticut’s attorney general has warned state legislators that their plans to tax daily fantasy sports contests could violate gaming compacts with the state’s tribal casino operators.
On Monday, Connecticut AG George Jepsen (pictured) responded to a request from state Senate leaders for a formal legal opinion on the state’s plan to slap an 8.75% tax on DFS contest entry fees.
The state’s compacts restrict slot operations to the two tribes that operate the Foxwoods Resorts Casino and Mohegan Sun gaming venues. The compacts’ broad definition of ‘slots’ includes the category of “video facsimile machines.” The compacts also restrict the state from authorizing “other commercial casino games” outside of the two tribal venues.
Given that DFS contests are conducted via computer and mobile devices, Jensen’s legal opinion says it’s entirely possible that a court could conclude that the contests fall under the category of “video facsimile machines.”
Jensen says there are “sound legal arguments” for why a court might conclude that DFS doesn’t conflict with tribal compacts, but Jensen notes that “no one can predict with any level of certainty” which way those legal dominoes might fall.
Moreover, Jepsen’s opinion says there is a “high degree of uncertainty” as to whether DFS contests “constitute games of skill or games of chance.” Jepsen cited the number of AGs in other states that have recently declared DFS to be illegal gambling under their respective state laws.
Given the uncertainty, it’s questionable whether Connecticut legislators would be willing to gamble the $263m the two casinos contributed to state coffers last year from their slots revenue, while the state expects to earn only around $9.5m from taxing DFS.
The Associated Press quoted Senate President Martin Looney saying Jepsen’s opinion made it “unlikely” that legislators would get behind approving a DFS bill in the current session.
Neither tribe has openly opposed DFS legislation but have insisted that they be included in discussions regarding its potential legalization. Connecticut’s casinos are already struggling with increased regional competition that has taken a bite out of gaming revenues.
Case in point: on Friday, the Mashantucket Pequot Tribal Nation reported that Foxwoods’ slots revenue fell 7.3% in March to $37.5m, while slots handle was off 10.3% to $455.3m. Things were slightly less depressing at Mohegan Sun, where slots revenue was down 1.4% to $50.5m.
