LIVIN’ IN A FANTASY
DFS hearings would have real value if leagues participated
THE NFL WOULD rather talk about concussions than testify about the legality of daily fantasy sports.
Exploring whether the federal government should have a role in regulating the fantasy sports industry, Congress is holding its first hearing on the topic this week and invited industry giants DraftKings, FanDuel and the professional sports leagues — the NFL, NBA, NHL and MLB — that have invested and/or partnered with them. All of them declined. In March, Jeff Miller, the NFL’s senior vice president for health and safety testified before the House Committee on Energy and Commerce that there is a direct link between football and CTE.
Guess who’s running Wednesday’s hearing on fantasy sports?
The House Committee on Energy and Commerce.
The league will be a no-show this week along with other critical fantasy sports figures, leaving a gaping hole in what lawmakers will actually learn about the industry. That looks weak. It looks like they are scared about congressional lawmakers entering the conversation about how the fantasy sports industry should be regulated.
“The league is neither an operator of nor equity investor in any daily fantasy company. It’s our understanding that the other leagues are not participating (in the hearing),” an NFL spokesman said.
While the NFL does not have a financial stake in DFS, Patriots owner Robert Kraft and Cowboys owner Jerry Jones each are investors in DraftKings.
“An invitation to participate in a congressional hearing is about as voluntary as an invitation to participate in an NFL mini-camp,” Daniel Wallach, a sports attorney and shareholder at Becker & Poliakoff, told the Daily News. “You’re not required to attend, but it’s not exactly good form to stay away. They’re not legally compelled to be there, but it does look bad.
“If you’re going to have a hearing on fantasy sports and sports betting, you absolutely have to have the four professional sports leagues, the NCAA, DraftKings and FanDuel present,” he said. “A hearing without one or two of those participants would be a head-scratcher. To have none of them there is unthinkable and appears to be designed to make this issue go away rather than to engage in a substantive conversation aimed at creating some momentum.”
DraftKings and FanDuel both said in statements to the Daily News they are content having the Fantasy Sports Trade Association speak for the industry Wednesday. They are both members of the organization, which has lobbied hard at the state level for DFS-friendly legislation.
At the federal level, the sites have not lobbied as aggressively. While they have reportedly spent upward of $10 million on state-level lobbying over the last year, the sites combined to spend just $130,000 on federal lobbying this year. DraftKings paid $80,000 to Morgan, Lewis & Bockius and FanDuel paid Steptoe & Johnson, another federal lobbying firm, $50,000 so far this year, according to funding watchdog OpenSecrets.com.
There’s a reason the sites want the DFS battle waged at the state level.
“The states that have proposed bills have essentially rubber stamped legislation that’s been championed by DraftKings and FanDuel and their lobbyists,” Wallach said. “Congress would not necessarily be as pliable.”
What seems to have scared away the leagues is the issue of sports gambling hanging over anything that has to do with fantasy sports. It’s impossible to separate DFS from traditional sports betting, though the DFS sites have tried by arguing their games are contests of skill, rather than games of luck. But anyone who’s ever played a fantasy game knows that once their lineups lock, the outcomes of the games are out of their hands.
Sports gambling will be discussed Wednesday. Rep. Frank Pallone, D-N.J., who is a member of the committee, wants to legalize sports betting in the Garden State and has been calling for this hearing since last year. He has been vocal in calling out leagues for their hypocritical position on fantasy games.
“What it has essentially done is carve out a way for the leagues and teams to do sports betting or gambling where they are the only ones that make any money,” Pallone said last year.
According to reports, the NFL has been trying to stop a congressional hearing on DFS since last year.
Pallone supports legalized sports gambling, but he’s called DFS operators’ desire to avoid being labeled gambling sites a “charade.”
“Let’s take this out of the shadows,” Pallone has said. “Because of the advertising — millions of dollars have been spent — you’re starting to get a light shined on it, and you’re starting to see the problems occurring because of the lack of regulation.”
With a chance to answer questions about their business models, DraftKings and FanDuel declined to appear before Pallone’s committee. With a chance to talk about their investments and partnerships with the sites, the leagues also declined.
“I do not think that Daily Fantasy is (gambling),” Roger Goodell said in an interview on ESPN radio in April. “I’ll let the states debate about whether it’s gambling or not,” he added. “From our standpoint, though, we do not see the same risk to the integrity of the game.”
Pallone wants to legalize it all. Yet the lead characters in the fantasy sports industry declined to have a dialogue about it.