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Daily Tax Report: State

Alabama Joins Other States Regulating Fantasy Sports

June 3, 2019, 2:23 PM

Alabama has become the latest state to tax and regulate fantasy sports contests.

Sports fantasy operators must register with the state Office of Attorney General and pay a 10.5% tax on entry fees they get from state residents that play the games, under a bill (H.B. 361) Gov. Kay Ivey (R) signed into law May 31. Rep. Kyle South (R), the bill’s sponsor, said the fees and taxes will generate about $4 million in annual revenue.

  • In fantasy sports, players make their own teams of pro athletes to compete against other players’ lineups.
  • Large operators with more than $10 million in nationwide revenue must pay an annual registration fee of $85,000 to the attorney general, while smaller operators are subject to a $1,000 annual fee. Fantasy players have to be at least 19 years old.
  • Fantasy sports operators DraftKings and FanDuel have been blocked from doing business in Alabama since 2016, when Attorney General Luther Strange ordered them to halt operations. He deemed fantasy sports betting to be illegal gambling under Alabama law, a move that was in line with attorney general decisions in several states that year, including neighboring Tennessee.

To contact the reporter on this story: Andrew M. Ballard in Raleigh, N.C. at aballard@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com