Missouri-based Real Time Fantasy Sports doesn’t know if it can afford to continue offering games to Missourians much longer. Real Time Fantasy Sports Chief Operating Officer Tim Jenson says a law taking effect in August requires investigating all principal partners in the company and financial background checks on them, with a cost of up to $50,000.
The measure also requires an annual operating fee of 11.5% of its net revenue from Missouri participants for the previous year and an application fee of $10,000 or 10% of a company’s previous year’s net revenue.
“You need to be making a profit of a couple hundred thousand dollars in Missouri alone, not all fifty states, Missouri alone, to break even. Of the 70 companies that operate fantasy games, there’s probably only two or three that make enough money to make that business decision to operate in Missouri,” said Jenson.
“At the eleventh hour, the lobbyists for the two largest daily players, the Governor’s office and the two leading legislators, wholesale swapped out the language in the bill and replaced it with different language that most of the industry wouldn’t support,” said Jenson. “If the cost to get licensed is going to be higher than our profit margin in Missouri, then as a Missouri company, we’ll vacate Missouri, as we’ve vacated Virginia. We’ll then consider laying off our Missouri-based employees to make up the difference.”
Governor Jay Nixon (D), called on the legislature this year to tax and regulate the daily fantasy sports industry like gambling. Casinos are taxed 21%.
Jenson says it’s not specific to daily fantasy sports.
“That’s really one of the problems the industry has with that bill. It sweeps everybody up in an attempt to regulate Fan Duel and Draft Kings, it sweeps up the rest of the industry as well because it does not make that distinction between season long and daily,” says Jenson. “There are few major daily players and like 60 other players in the industry. Those 60 other players end up being collateral damage because that distinction was not made.”
Real Time Fantasy Sports, based in St. Louis, started in 1995. It operates in 44 states and has more than 600 Missouri players.