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Daily Fantasy Sports Hearing to Determine If There is a Federal Role

May 7, 2016
Fantasy Sports

The daily fantasy sports industry has been emerging within the US over the last several years. Though deemed controversial by some, the general consensus has been that DFS is not sports betting because the results are not based on an actual game or sporting event. This industry is worth in excess of $25 billion and has secured major advertising campaigns that have attracted close to sixty million online participants.

The last year in particular has seen a spike in the controversy and attention that the industry is receiving. Individuals who believe that DFS undermines efforts to garner support for genuine legal sports betting expansion fuel some of the opposition. Many sports fans and online gambling industry professionals believe that there is significant hypocrisy at play when it comes to daily fantasy sports. Most of the individuals who feel this way view DFS as a form of sports betting, and find it frustrating that it is embraced by the major professional sports leagues who simultaneously oppose the expansion of genuine sportsbook gambling in the US.

Nearly every pro league has partnered with the big DFS brands, and enjoy a significant and specific revenue stream because of it. These same leagues spend millions of dollars opposing any legislation presented to change the sports betting laws in the United States. You can see why sportsbook gambling supporters would be resentful of this situation.

With the industry being under the microscope, especially for the last year, Congress has decided to get involved to determine whether or not there is a federal role to play in the regulation of the industry. Up until now, it has been up to each individual state whether or not they would allow for legal daily fantasy sports entertainment. The House Subcommittee on Commerce, Manufacturing, and Trade has decided to look into the matter officially. They have scheduled a congressional hearing to determine if the federal government has any obligation or responsibility to be involved.

The hearing will take place on Wednesday, May 11, 2016 at 10:15 am Eastern Time. Michael Burgess, M.D. is the chair of the subcommittee. He is a republican from Texas. The press release that he issued indicated that the hearing will take place at the Rayburn House Office Building, and is officially titled ‘Daily Fantasy Sports: Issues and Perspectives’. The objective is to evaluate the inner workings of the DFS industry as it relates to fairness, integrity of the offerings, and consumer protections.

There will be a handful of witness that testify at the hearing, and while list has been released with names, it is expected that DraftKings CEO Jason Robins and FanDuel CEO Nigel Eccles will be among those participating. It is also possible that several professional league commissioners could be present as well, including Adam Silver of the NBA and Roger Goodell of the NFL. These names are speculation only, but logical to assume.

Rumors are circulating that online gambling and sports betting are also on the table for discussion at the hearing, but this is unconfirmed at this time. If that is the case, then the scope of the hearing has changed following the press release issued by Congressman Burgess. Should the federal government determine they want to regulate fantasy sports, it will undermine state’s rights when it comes to their will on the matter. If they don’t at least make a statement concerning the official status of daily fantasy sports, the controversy may be never ending. The general perception is that it is unlikely that the feds will opt for any type of immediate action as a result of what they learn at the hearing. We would like to believe that state by state regulation of the gambling industry will not be commandeered by the federal government, but we are quite clear that it is not outside of the realm of possibility based on the power grabs they are known for.

The main objective for the hearing as we understand it is to determine whether or not the federal government should be involved, not necessarily to make immediate changes to any part of the industry as it currently exists and operates. We will have to wait until the hearing has taken place to learn precisely what will come of this. There are many interests represented, and many aspects that could shape how fantasy sports and sports betting move forward in the nation.