By Paul Stinson
August 2, 2017
Arkansas has added its name to the roster of states collecting tax on fantasy sports platforms including DraftKings and FanDuel.
The new law ( Act 1075) legalizes paid fantasy sports games offered online and imposes an 8 percent privilege tax. It became effective July 30, following Gov. Asa Hutchinson’s (R) April 7 approval of the measure.
Operators of paid fantasy sports games “shall pay a tax for the privilege of conducting” those games “in an amount of eight percent (8%) of the game operator’s gross paid fantasy sports game revenues from the previous state fiscal year,” according to the law. Reporting and remittance of the tax to the Arkansas Department of Finance and Administration is required on a quarterly basis.
State legislatures have revved up efforts to legalize and tax fantasy sports this year as lawmakers look to bolster their state coffers. Arkansas is currently looking for ways to counterbalance income tax cuts that the governor has approved.
However, the revenue gain from the fantasy sports privilege tax is unknown, according to a March 16 Legislative Impact Statement on the original legislation ( H.B. 2250).
Follows Other States
Several states are choosing to legalize fantasy sports games while refraining from levying a tax. New Hampshire went that route with H.B. 580. The final measure, signed into law July 18 by Gov. Chris Sununu (R), excluded taxes and fees incorporated in earlier versions of the bill.
Next door, Vermont passed a law legalizing fantasy sports ( S. 136). Unlike New Hampshire, Vermont requires that all fantasy sports companies pay an annual $5,000 fee when they register with the Vermont Secretary of State. There is no provision to levy a tax in the Vermont law, but it orders the Legislature to convene a committee to study possible taxation and submit its recommendation by the end of the year.
According to the Fantasy Sports Trade Association, states that have legalized and tax daily fantasy sports are New York (15 percent of net annual revenue), Mississippi and Arkansas (8 percent), and Tennessee (6 percent). Other states that have legalized the industry but don’t impose a tax include Colorado, Indiana, Kansas, Maryland, Missouri, Rhode Island, and Virginia.
Read more here: https://www.bna.com/fantasy-sports-tax-n73014462660/