Missouri fantasy sports bill will create duopoly

NEW YORK, May 13, 2016 /PRNewswire/ -- Small fantasy sports businesses today denounced legislation that is on Governor Nixon's desk saying that it will wipe out competition by decimating dozens of small fantasy sports businesses working in Missouri and create an unintended duopoly. The only fantasy sports businesses able to operate if H1941 is signed into law will be FanDuel and DraftKings.

The two behemoths of the industry, FanDuel and DrafKings are using H1941 as a Trojan Horse to ensure that they are the only fantasy sports businesses left in Missouri.

"We appreciate that the legislature wants to address this issue but this bill will kill us," said small business owner and co-founder of the Small Businesses of Fantasy Sports Trade Association (SBFSTA) Alex Kaganovsky. "Indiana and Virgina have already given FanDuel and DraftKings carte blanche to operate without competition. Currently, small businesses cannot operate in those states."

"From what we can tell, the FSTA (Fantasy Sports Trade Association) tells legislators that they are representing small businesses but in reality they are representing the interests of the two Goliaths in the industry, FanDuel and DraftKings," said Kaganovsky. "Time and time again, the FSTA says that they are fighting for small businesses. The reality is that they are puppets controlled by FanDuel and DraftKings and their army of lobbyists."

"We're talking about several hundred mom and pop businesses that serve several thousand players each, not millions of players like the gigantic companies," said SBFSTA co-founder Dave Gerczak. "Season-long fantasy sports is a hobby. The taxes and fees proposed in Missouri are unbearable."

The SBFSTA said that DraftKings and FanDuel have worked secretively behind the scenes with the FSTA and lead legislators to believe that small businesses would not be affected.

"Season long fantasy sports game operators have been lawfully doing business in Missouri for almost two decades," said Kaganovsky. "Then FanDuel & DraftKings, with the support of the FSTA, entered the scene to help pass legislation that legalized their companies while kicking all existing small businesses out of the state. We can only ask, how is it possible that this can happen in the United States of America?"

House Bill 1941 would impose an annual licensing fee of $10,000 or 10 percent of the applicant's net revenue, whichever is less. Companies would be required to submit to a $50,000 background check and the bill would also impose an 11.5 percent tax on net revenue and require an annual third party audit.

Audits came up in a recent Congressional hearing in Washington DC where the SBFSTA testified. The SBFSTA told Congressional lawmakers that state by state audits require huge sums of money and are not remotely affordable for small fantasy sports businesses. A single audit that is good in all 50 states would make more sense.

Gerczak called on Governor Nixon to veto the bill until reasonable legislation that takes small fantasy sports businesses into account can be drafted. "We don't mind regulation but it must be fair and reflect the size of the company being regulated. Season-long fantasy sports is different than daily fantasy sports and big companies are different than small ones. The industry is nuanced and legislation needs to reflect those nuances."

 "Ninety five percent of the industry is mom and pop shops," said Kaganovsky. "Our small businesses only make a small fraction of the billions of dollars that FanDuel and DraftKings make but that doesn't mean that we should be squeezed out of existence."

SOURCE Small Businesses of Fantasy Sports Trade Association