HARTFORD, Conn. (AP) – Legislation authorizing fantasy sports appeared unlikely Monday to pass this year after the Connecticut attorney general said it could jeopardize the state’s slot machine revenue-sharing agreement with two federally recognized Indian tribes.
Attorney General George Jepsen said in a written opinion requested by the top two Democratic leaders in the state Senate that there’s a “high degree of uncertainty” as to whether daily fantasy sports are games of skill or games of chance. If the latter, Jepsen said, authorizing daily fantasy sports could potentially violate the agreement if played on a device the tribes consider to be a video facsimile, or if the tribes consider fantasy sports to be a casino game.
The Mashantucket Pequot and Mohegan Tribal Nations have exclusive rights to operate video facsimile games in exchange for providing the state with 25 percent of the revenues. The state receives more than $250 million annually from the tribes’ two casinos, Mohegan Sun and Foxwoods Resorts Casino in southeastern Connecticut.
“There is a substantial risk that the passage of such legislation could jeopardize the state’s revenue-sharing arrangements with the tribes,” Jepsen said in the opinion released Monday.
Senate President Martin Looney, D-New Haven, said Jepsen’s opinion points to the potential, substantial risk that state regulation of daily fantasy sports could have on the agreement with the tribes.
“Due to the risk and uncertainty that would result from a potential legal challenge, the prospect of passing legislation this session is unlikely,” Looney said.
The General Assembly’s Democratic controlled Finance Revenue and Bonding Committee recently passed a proposed tax package that imposed fees on fantasy sports, including an 8.75 percent surcharge on total entry fees that operators collect.
Proponents of the bill, who contend fantasy sports is not a form of gambling, hoped the proposal would generate $9.5 million – money that’s needed to help cover a projected $922 million deficit in next fiscal year’s nearly $20 billion state budget.
The bill also required the state Department of Consumer Protection to adopt regulations for fantasy sports, including protections for players and registration fees for operators. The legislation specifically exempted daily fantasy sports from the state’s definition of gambling.
While the tribes did not testify at a public hearing on a fantasy sports bill this session, a spokesman for the Mohegans said the tribe’s chairman and tribal council have been watching the “emergence and evolution” of daily fantasy sports for some time and are interested in “fair and full understanding of this form of entertainment.” The tribe wants to be part of that discussion at the state and national levels.
Jepsen’s office has no jurisdiction over the state’s criminal gambling laws, which are enforced by the Office of the Chief State’s Attorney. But he noted that several other state attorneys general have concluded daily fantasy sports constitute illegal gambling under their states’ criminal laws. He highlighted how the memorandums of understanding between the state of Connecticut and the tribes require the tribes to continue making payments so long as the state does not allow another entity to operate video facsimile games or “other commercial casino games,” a term that has not been interpreted by a court.
If the tribes ultimately argue that daily fantasy sports contests are a commercial casino game, Jepsen warned, the courts have been sympathetic to tribe efforts to protect their rights under the Indian Gaming Regulatory Act and other federal statutes.
Copyright 2016 The Associated Press.
