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Indiana, all that is wrong with gambling legislation

In the rather unexpected state of Indiana,  Daily Fantasy Sports betting has emerged as a legal option for DFS enthusiasts.   With recently passed legislation, Indiana has set up the procedures by which Daily Fantasy operators are able to be licensed within the state.  But as always, politics and lobbying create problematic legislation, in the case of the Indiana DFS regulation, this includes a $50k licensing fee for applications.

While $50,000 for a state license to operate a gambling business does not sound like much, it must be remembered that by most calculations, there has not been a single instance of a DFS company being profitable in any year, ever.   The two biggest DFS operators Fan Duel and Draft King revealed in public filings that they are losing tens of millions of dollars every year.   But with the cash-flow they have, paying the $50k fee is a no-brainer, but it is very unlikely any other DFS operators will be able to step into the market.

But it appears that the high licensing fee was actually a product of lobbying by DraftKings and Fan Duel who knew that it would prevent other operators from entering the market.   This is a common tactic in lobbying where large companies try to create as high of a barrier to entry as possible to prevent small businesses from being able to enter or compete.

Overall this is a risky fee for an operator to pay since the added value of being a legal operator in a state is questionable.  Online Casinos have done a great job of allowing players even from restricted areas, so other than physical advertising opportunities, there is probably very little benefit to Draft Kings and Fan Duel.  Because legalized DFS betting is a new phenomenon, it is difficult to gauge how many new gamblers will come out of the woodwork now that it is legal, my guess is very few people didn´t gamble because it was technically illegal, but unenforced, so suddenly making it legal will not cause a great increase in customers.  Other states that have made DFS legal have done so only recently, so there is not a big history to draw from.