Fantasy’s reality is debated in state

There are 25 to 30 fantasy sports operators, most of which are small, in Ohio, Steve Brubaker, the executive director of the Small Businesses of Fantasy Sports Trade Association, said at the recent state Senate hearing.

Al Ross owns one in Akron — fanDaction, a DFS company that in 2016 struck an endorsement deal with Pete Rose. But Ross shut down fanDaction a few months ago, and said he’s “talked to a couple people” about selling it.

“There’s just no money in the industry,” said Ross, who founded fanDaction in 2014 with his son, Brian, and nephew Michael BenShimon.

At one point, DraftKings and FanDuel were swimming in cash, each valued at more than $1 billion, but even the industry leaders have faced plenty of challenges as DFS came under scrutiny from legislators. A proposed merger of the two was called off in July, after drawing federal antitrust concerns.

Still, interest in fantasy sports remains strong, with an estimated 59.3 million players in the U.S. and Canada, according to the FSTA. The number has gone up in each of the last six years, and is 17.8 million ahead of the 2014 figure.

Ohio has one of the most robust tallies, with an estimated 1.9 million fantasy players, the FSTA said.

The legislation, if enacted, wouldn’t affect those who play in fantasy contests with family and friends on free sites such as ESPN and Yahoo.

And Dever, one of the bill’s proponents, said it wouldn’t be a money-maker for the state — though the fantasy operators would be expected to pay all applicable federal and state taxes.

The registration and renewal fees are designed to pay for the regulators to “implement the statute and nothing more,” Dever said.

That’s likely encouraging news for Brubaker, who represents the FSTA’s small businesses.

In his testimony before the Senate Finance Committee, Brubaker recommended that the Ohio Casino Control Commission “use a percentage of gross income — entry fees less winnings paid” — to set the licensing fees.

Included in the minutes from the hearing were letters from Robert Castellini, the CEO of the Reds, and Andy Loughnane, the Crew’s president of business operations.

“The future of fantasy sports is important to Major League Baseball and the Cincinnati Reds,” Castellini wrote.

MLB has an exclusive partnership with DraftKings, plus an equity stake, and the NBA in 2014 agreed to a four-year deal with FanDuel that included an equity stake.

The Browns, Cavs and Indians haven’t taken a public stance on Ohio’s proposed fantasy sports legislation, though the Browns and Cavs have sponsorship deals with FanDuel.

On the other end of the fantasy sports spectrum is Day, who is a vice president of engineering at an Akron startup.

“People sometimes mistakenly think that the fantasy sports industry consists of only the two big companies that everyone’s heard of,” he wrote in his letter to the Ohio Senate. “There are many small businesses like mine that don’t provide contests, but contribute to the industry just the same.”

This fight, however, has brought both big and small operators together.

The industry has quite a few major backers in the state, and one, Dever, doesn’t even play fantasy sports.

“This is a bill that strikes a balance between defining it and providing those protections,” the Republican from suburban Cincinnati said.

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