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“The cat is sleeping on the mat.”
Although daily fantasy sports contests have been played in Michigan for a while, it is only recently that the state has started to reap the benefits from them.
Starting this year, fantasy contests in Michigan will be subject to taxation. The inclusion of licensing for these contests comes as a result of the expansion of gambling laws, which were approved by Gov. Gretchen Whitmer in December after facing numerous challenges in Lansing over the course of several years.
In the first quarter, fantasy contest operators in Michigan generated $2.8 million in adjusted revenues, leading to a tax revenue of $240,547 for the state, as reported by the Michigan Gaming Control Board.
DraftKings and FanDuel, two major players in the industry and potential online sports betting operators in Michigan, are among the first Daily Fantasy Sports (DFS) companies to contribute to the state’s revenue, with more expected to follow suit.
While the numbers may seem insignificant compared to the state budget’s efforts to tackle the financial shortcomings caused by the COVID-19 pandemic, even the smallest contribution goes a long way in alleviating the strain on 2020 revenues.
Yahoo among four DFS operators soon to be taxed
According to an email from MGCB spokeswoman Mary Kay Bean to Playinmichigan, SportsHub Games Network has joined DraftKing and FanDuel as operators who are already paying the state’s 8.4% tax rate.
Fanball, CDM Sports, National Fantasy Championships, Whatif Sports, BestBall10s, and Leaguesafe are all operated by SportsHub Games Network, a company based in Minneapolis.
According to Bean, four additional operators have verified that they are conducting business in Michigan. These operators are currently in the midst of submitting their returns and taxes. The operators include Fantasy Football Players Championship, FullTime Fantasy Sports Network, Yahoo Fantasy Sports, and Fantasy Draft.
After being made available, those companies were given a 60-day deadline to submit a license application.
History of Michigan daily fantasy sports
After years of legal disputes from both parties, the decision to impose regulations on DFS was finally made.
The bill that aimed to legalize DFS by recognizing it as a game of skill ultimately failed to pass in 2015.
Michigan bills that contested the federal sports betting ban included DFS before the US Supreme Court abolished the Professional and Amateur Sports Protection Act in May 2018.
However, former Governor Rick Snyder decided to veto the expansion of gambling laws, which would have initiated the process one year earlier, by the end of 2018.
At the conclusion of her inaugural year in office, Whitmer affixed her signature to the revised bills in late 2019.
Daily fantasy sports funds MGCB expenses, schools
Fantasy contests have an age requirement of 18, whereas sports betting mandates an age of 21.
The proceeds generated from fantasy contests are allocated to the Fantasy Contest Fund, which is utilized by the MGCB to cover its regulatory and enforcement costs. Any remaining funds will be directed towards the state’s School Aid Fund.
The Michigan Fantasy Contests Consumer Protection Act stipulates that a $10,000 fee is required for the initial license, while a $5,000 fee needs to be paid annually for license renewal.
Sports shutdown cut into March DFS revenue
In Michigan, the revenue for DFS took a significant hit in March due to the shutdown of sports events, occurring halfway through the month.
During the months of January and February, the NFL playoffs and Super Bowl LIV generated a total revenue of $2.4 million, resulting in $204,291 paid in taxes. In March, the adjusted revenue amounted to $431,620, with a state tax payment of $36,256.
The DFS world is taking advantage of the gradual return to a normal sports calendar.
DraftKings is providing a $50,000 free-to-play popularity pool for the upcoming Champions for Charity golf event on Sunday, which will showcase renowned athletes Tiger Woods, Phil Mickelson, Peyton Manning, and Tom Brady.
Participants will choose their responses to questions by considering the choices preferred by the majority of voters. The individuals with the highest scores will share the prizes in proportion to their performance.
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