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Illinois, Kentucky, and Virginia have each passed 2026 laws that give daily fantasy sports a clearer regulatory framework, with licensing, tax rules, and a key requirement that contests be peer-to-peer rather than against the house.
The measures took effect this month in all three states. In Illinois, budget bill SB 3019 took effect July 1 and set a 15% tax on adjusted DFS gross gaming revenue while directing the Illinois Gaming Board to create licensing and other requirements. Virginia’s HB 145 also took effect July 1 and calls for a licensed DFS market overseen by the Virginia Lottery, with a 10% tax on GGR plus a 2.6% revenue-based fee. Kentucky’s HB 904 took effect July 15 and placed DFS under the Kentucky Horse Racing and Gaming Corporation.
A common thread in all three laws is that they define fantasy sports separately from sports betting and recognize peer-to-peer fantasy contests, not against-the-house products.
That distinction is one reason the legislation is drawing attention beyond those states. PrizePicks Chief Legal Officer and Head of Public Policy Jason Barclay told SBC Americas that Illinois and Kentucky are "two terrific examples" and said, "We think Illinois and Kentucky immediately become models for the rest of the country."
Barclay also said the laws "ended up coming out very fair and reasonable" for both operators and regulators, pointing to consumer protections, licensing requirements, and tax rates as part of the framework.
For readers in California, the significance is less about an immediate rule change and more about the model other states are testing. SBC Americas noted that California, Texas, and Georgia could be among the larger states watching these approaches. That matters because California Attorney General Rob Bonta declared all forms of paid-entry DFS illegal in 2025, leaving the state in a very different position from the three jurisdictions now building licensed markets.
What comes next is still unclear. Open questions include whether more states will adopt the same peer-to-peer-only structure, how regulators will enforce that distinction, and whether licensing and tax rules will change the products operators offer.
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Source: As reported by sbcamericas.com.
