We are going to visit another new piece of legislation; this one is already effective as of April 27, 2016 when the governor signed it. However, it has important ramifications for those who love fantasy sports.
Some of you may remember all the controversy that ensured when officials began to question whether those fantasy sports games that are advertised relentlessly during important sports matches are actually legal under Tennessee law. The attorney general had issued an opinion that they were not legal under Tennessee’s existing and rather restrictive gambling laws, leading to a veritable panic among fans. The truth is that fantasy sports, operated over the internet, were readily available but there were no legal protections for consumers who participated in them.
In an effort to deal with what is obviously something very popular in Tennessee and many other states, the General Assembly responded by introducing legislation to regulate fantasy sports instead of just outlawing them. Instead of trying to stop what seemed like the inevitable, Tennessee decided to place certain limits on the operation of fantasy sports providers.
Under the new Act, all fantasy sports operators are required to be licensed by the Tennessee Secretary of State for a fee. Individual player deposits are limited to $2500 per player and the operators must keep records and be audited. In addition, fantasy sports operators must collect and remit a 6 percent tax on revenues that will be allocated to the general fund and to counties, as well as to a “fantasy sports fund.”
So, fantasy sports is now officially legal in Tennessee. It’s too early to tell how the state’s regulation of the industry will impact both the participants and the fantasy sports operators. However, Tennessee’s legislation was very “out-front” and is being used as a model for legislation in other states, so our law may become the norm for how the industry is regulated across the nation.