DraftKings Inc. and FanDuel Inc. are one step closer to returning to one of the largest daily fantasy sports markets in the country, after lawmakers in the New York Assembly Friday overwhelmingly passed a bill to legalize, tax, and regulate the contests.
The bill would tighten oversight of fantasy games and establish consumer protections while clarifying that they are not considered illegal gambling under state law. The New York Senate must still approve its version of the legislation, but had not brought it to the floor by late Friday; lawmakers were expected to continue deliberating Monday. If passed, it would need to be signed by Governor Andrew Cuomo.
Lawmakers approved the daily fantasy sports measure by a wide margin, 91 to 22, after an Assembly floor debate rife with cringe-worthy sports metaphors.
Proponents called the legislation “a touchdown’’ that would allow New York sports fans to resume playing the popular contests, in which users assemble imaginary rosters of real-world athletes from different teams and win cash based on how that group performs collectively in actual sports games.
“This is a win for the millions of fans in New York that play and enjoy fantasy sports,’’ said assemblyman Dean Murray. “It’s also a win for the state in that we’ll be generating millions of dollars that will go to education.’’
But opponents called for “a flag on the play,’’ arguing that the games are little more than a thinly veiled form of sports gambling, which is generally prohibited by the state’s constitution.
“Those who want to make fantasy sports legal in New York should be presenting to us a constitutional amendment,’’ said assemblyman Thomas Abinanti. “You’ve got to tie yourself into a pretzel to somehow say this is not gambling.’’
The measure passed Friday calls for:
¦ Oversight of daily fantasy sports by the state gaming commission.
¦ A 15 percent tax on operators’ gross revenues, plus an additional tax of 0.5 percent of revenues with a $50,000 annual cap. The revenue would be deposited in the state’s lottery fund, which is used to fund public education.
¦ FBI criminal background checks for officers or directors of fantasy sports companies.
¦ Consumer protections, including identification of highly experienced players and limits on the number of entries each player can make in a contest.
¦ A ban on contests based on college or high school sports or horse racing.
Those provisions go beyond daily fantasy sports regulations recently adopted in Massachusetts. Those rules focused mostly on consumer protections.
Elsewhere around the country, the fantasy sports industry is running a multimillion-dollar lobbying campaign to pass favorable laws. It has succeeded in six states so far: Colorado, Indiana, Mississippi, Missouri, Tennessee, and Virginia.
Both DraftKings and FanDuel stopped accepting entries from New York earlier this year following an aggressive legal attack by New York Attorney General Eric Schneiderman, who sued the companies for running what he called illegal gambling operations. In return, Schneiderman agreed to pause his case against the companies while the legislature considered explicitly legalizing the games.
Still, it was a painful concession for the companies: New York is the second-largest daily fantasy sports market in the United States, producing an estimated $267 million in entry fees in 2015, according to industry analyst firm Eilers & Krejcik Gaming. The rival operators have banded together to lobby heavily for their return to New York, where FanDuel is based.
DraftKings declined to comment. A spokeswoman for FanDuel said “overwhelming support in the Assembly demonstrates that the voices of 3 million fantasy sports players in New York were heard.’’
Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.
