The daily fantasy sports industry is still not in the crosshairs of a bill that aims to shut down several forms of online gambling in the United States, according to a recent article in “The Hill.”
DFS, not on the radar
Either because of lack of interest, or a lack of knowledge, the forces behind the Restoration of America’s Wire Act are still not trying to change language in federal law that allows fantasy sports to be played for real money online.
A story in “The Hill,” a publication that covers the happenings and issues in front Congress, took a basic look at the DFS landscape. At the end of the story, though, it takes a look at DFS through the lens of RAWA, a bill that seeks to ban online gaming and poker in the United States. The bill is trying to alter the Wire Act — originally passed in 1961 — which basically only covers sports betting, according to a 2011 opinion from the Department of Justice.
Despite daily fantasy sports’ similarities to sports betting, it has not been made the target of anti-gambling forces, such as RAWA sponsors Sen. Lindsey Graham (R-S.C.) and Rep. Jason Chaffetz (R-Utah). From “The Hill”:
When asked if fantasy sports business models, like FanDuel‘s, could be affected by the legislation, a spokesperson for Graham said he had never heard of the site. Other sponsors of the bill did not respond for comment.
RAWA, which is spearheaded by casino mogul Sheldon Adelson, may only end up adding online poker to the list of things Americans are prohibited from doing in the iGaming space, if an exemption for online lotteries is added.
Where DFS stands in the law, and in RAWA
Daily fantasy sports rely upon an exemption in the Unlawful Internet Gambling Enforcement Act – a federal law — for the industry’s legality. That law then leaves it up to individual states whether DFS is allowed or not; today, most DFS sites operate in 45 states. (You can also track the status of current DFS legislation here.)
RAWA — HR 707 in the U.S. House of Representatives — exempts “any activities set forth in section 5362(1)(E) of title 16 31.” That section of the U.S. code — a part of the UIGEA — defines a “bet or wager” and excludes fantasy sports.
Interestingly, one witness in the initial hearing about RAWA actually asked for the UIGEA carveout for fantasy sports to be closed.
At this point, the aim of Adelson and the politicians siding with him in Congress seems pretty to be clear: to end any online competition for brick and mortar casinos in the U.S., including state-regulated online poker and casino games. As mentioned earlier, sports betting is already covered by the Wire Act. (A current court case in New Jersey seeks to allow sports betting in casinos; but that would just allow bets to be taken in person, not by the phone or internet.)
So, why not DFS?
So why is DFS getting a pass? Here are some theories, although some of them we don’t view as very likely:
- Adelson et al don’t view DFS as a competitor for revenue. That’s certainly possible. Despite huge growth, no DFS site has turned a profit, yet. However, some projections see DFS revenue outpacing Nevada sportsbook handle as soon as next year. Is it possible Adelson’s people might not think DFS revenue is taking away from the casinos’ bottom line? It’s a theory, but not necessarily a strong one.
- The pro-RAWA forces don’t want to anger the fantasy sports crowd. Not terribly likely. The current version of the bill would still ban any sort of online lottery sales, and lotteries are more of a sacred cow than fantasy sports. And the way the bill has been going, it appears its sponsors are willing to exempt anything that is not traditionally associated with casinos. DFS isn’t a casino-based activity, so perhaps that is why it gets a free pass.
- Adelson doesn’t want to mess with the UIGEA. Even though RAWA would leave the UIGEA intact, RAWA is basically attempting to rewrite a law already on the books. There’s really no reason why the UIGEA would be considered off limits; it would be easy enough to add a passage to RAWA to take away fantasy sports’ exemption.
- Adelson and company just aren’t aware of how big the DFS industry is becoming. It doesn’t seem likely that DFS isn’t on the radar for a billionaire casino mogul. But, it seems hard to believe that a spokesperson for a U.S. senator responsible for talking about RAWA would have no idea what FanDuel or daily fantasy sports are. But the latter is apparently the case. It leads one to believe that there could just be ambivalence or a lack of awareness of what exactly DFS is on the part of the Adelson camp.
Status quo, for now
In the end, it’s actually kind of befuddling that DFS isn’t targeted by RAWA. And, for now, it doesn’t seem like that is going to change. Of course, many don’t give the bill much of a chance to become a law, so the point might very well be moot.
But could DFS’ treatment in RAWA change? Absolutely. All it would take is someone who thinks DFS is akin to sports betting getting in the ear or Adelson, Chaffetz or Graham; in that scenario, it’s not difficult to see RAWA being amended to end the DFS carveout.
It’s not like there aren’t people out there equating DFS with gambling, including some state legislators (see Iowa and Washington). As recently as this year, former NBA commissioner David Stern called DFS gambling (before backtracking later to mesh with the current commissioner, Adam Silver, a supporter of DFS).
DFS continues to enjoy its status as a “skill game” under federal law. And so far, it has avoided being lumped in with sports betting or other forms of gambling outside of a proposed bill in Texas. Could something as seemingly innocuous as a request for comment from a senator’s spokesman on the subject of fantasy sports change that?