Congressman Wants to Take Serious Look at Daily Fantasy Sports

on September 15, 2015
daily fantasy sports Congress committee

Frank Pallone wants a Congressional committee to take a closer look at the daily fantasy sports industry. (Image: Andrew Mills/The Star-Ledger)

Daily fantasy sports sites have faced relatively little scrutiny in most states, thanks to the fact that they seem to be perfectly legal under the Unlawful Internet Gambling Enforcement Act.

But at least one Congressman wants to make sure that these games haven’t crossed the line into an area that should be considered illegal gambling instead.

Congressman Frank Pallone (D-New Jersey) sent a letter to Fred Upton (R-Michigan) and Michael Burgess (R-Texas), the Chairmen of the Committee on Energy and Commerce and the Subcommittee on Commerce, Manufacturing, and Trade respectively, expressing his concerns and asking the committee to hold a hearing on “the legal status of fantasy sports and sports betting.”

Connections Growing Between Leagues, Teams, and DFS Operators

In the letter, Pallone also expresses interest in the growing connections between professional sports leagues, which until recently had been more or less universally opposed to legalized sports betting, and daily fantasy sports sites such as FanDuel and DraftKings.

“Within the past two years, both the NBA and the MLB have each purchased ownership stakes in daily fantasy sports operators, which include exclusive sponsorship deals,” Pallone wrote. “The NHL and Major League Soccer have also invested in daily fantasy sports operators. And even without direct investment in the fantasy sports operators, sports leagues profit from fantasy users’ more active engagement with the sport.”

Pallone pointed out that a majority of teams in the NBA, MLB and NFL have sponsorship deals with major daily fantasy sports operators, and that some of these deals include investments by teams or leagues into the sites.

“Given the professional sports leagues professional players deep involvement with fantasy sports, this Committee, as the Committee with jurisdiction over professional sports and gambling, should examine the relationship between fantasy sports and gambling and the relationships between professional sports leagues, teams, and players and fantasy sports operators,” Pallone concluded.

Week 1 Ad Blitz Leaves Many Sports Fans Stunned

Pallone isn’t the only person who has decided to take an interest in daily fantasy sports in recent days.

For many sports fans, it has gotten to the point where FanDuel and DraftKings seem impossible to avoid.

Viewers watching the first week of NFL games on Sunday and Monday night were inundated with advertisements for the two sites, much to the annoyance of many fans who have no interest in playing their games.

The ads were so ubiquitous that sports websites like Deadspin were openly mocking the frequency of the commercials for the sites.

In fact, while the ads are likely to bring in more players, they may also bring more unwanted scrutiny to the industry, as Pallone noted the commercials when talking about his request for a hearing.

“Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the NFL season,” Pallone said.

The news of increased scrutiny comes at the same time as a Bloomberg report on the daily fantasy sports industry which found that only a small percentage of players tend to be winners on the sites.

According to the report, a small pool of sharks are responsible for most of the winnings at daily fantasy sites, while the vast majority lose to some extent.

“We don’t make any apologies that it’s a game of skill, and you might go up against the best in the industry,” FanDuel CEO Nigel Eccles said. “Some of the people are really good.”