With all the excitement surrounding Daily Fantasy Sports (DFS) in New Jersey, we’re going to see a lot of changes this and the following years. Although, that’s expected considering the legislation isn’t six months old yet! However, as most of us would agree, if it isn’t broken, then there’s no need to fix it.
But, unfortunately, that’s not going to be the case here. In fact, New Jersey wants DFS operators to pay a fixed fee on generated income. Which, seems a little greedy since they already pay tax on it. So, let’s check out the details and the reasoning around the introduction of a new fee!
The plan that Nobody Likes
Well, the New Jersey Division of Consumer Affairs (DCA) is planning to establish a new rule. In fact, they want to charge DFS operators who generate less than $49,000 a month in revenue a fee of $5,000. Which, isn’t too bad, right?
However, we must ask ourselves, are there any DFS operators in New Jersey that generate so little? After doing a thorough research, it appears that there isn’t one. So at this point, that part of the rule means nothing, but here’s the part that does matter!
The fee will increase as revenue increases, so if you generate up to $250,000 then under the new rule you’ll pay a fee of $50,000! So in other words, DraftKings and FanDuel (a Betfair company) will see their operation cost increase since these casino operators generate around $3,000,000 a month in New Jersey alone!
A fee, not a tax
In conclusion, some say the plans drafted by DCA are a bit extreme especially since they’re planning to add an additional $500 permit fee! And remember, New Jersey already taxes all gambling. So, that’s why DCA has to call theirs a fee, not a tax.
The truth is, New Jersey sports betting and DFS are on the rise. So, everybody wants an extra slice of the pie! And without a doubt, that’s what we see today!