Congressman Asks For Daily Fantasy Sports Hearing Because Of ‘Murky’ Legal Landscape

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Congress DFS Hearing

A U.S. representative has asked for a Congressional hearing to review the legal status of fantasy sports.

Who wants the DFS hearing?

The ranking member of the Energy and Commerce Committee, Frank Pallone, Jr. (D-NJ), made an official request via public letter to committee Chairman Fred Upton (R-MI) and Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess (R-TX).

The representative also issued a press release on his request, and offered the following:

“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,” said Pallone. “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result.  Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed.”

It appears that the ad blitz that DraftKings and FanDuel have undertaken before and during the start of NFL season is being used to push for the request.

Pallone also becomes the most prominent politician to equate DFS with gambling. More from the release:

“Fans are currently allowed to risk money on the performance of an individual player.  How is that different than wagering money on the outcome of a game?” noted Pallone.

The full text of the letter can be found here.

The rationale behind the DFS hearing request

Pallone touches on the relevant laws in play — including the famous carveout for fantasy sports in the Unlawful Internet Gambling Enforcement Act. But he also brought up the Professional and Amateur Sports Protection Act (PASPA) and the Wire Act, both of which deal with sports betting.

He stopped short of saying that fantasy sports runs afoul of either of the latter two laws, but it seems clear he is implying that those laws need to be considered in concert with the UIGEA to determine where DFS stands legally.

In addition to questioning DFS’ status as a non-gambling activity, Pallone goes into detail in his letter on the professional sports’ leagues relationships to DFS, and the fact that many teams have sponsorship deals with either FanDuel or DraftKings.

From the letter:

“Team involvement in daily fantasy sports also raises questions of whether players or league personnel, who may be able to affect the outcome of a game, should be allowed to participate in daily fantasy sports. Many NFL players are known to participate in fantasy sports.

Professional sports deep involvement with daily fantasy sports leaves many questioning whether fantasy sports are distinguishable from sports betting and other forms of gambling.”

FSTA reaction

Peter Schoenke, Chairman of the Fantasy Sports Trade Association, offered this in a statement to Legal Sports Report:

“Fantasy sports bring fans closer to the games they love and have been a major driver of fan interest and engagement for decades. These are skill-based games that match sports fans against each other in a contest of sports knowledge and strategy that is fundamentally different from wagering on the performance of an individual player or the outcome of a particular game. We look forward to having a constructive dialogue with Congressman Pallone.”

The big question: Will there be a hearing?

So far, this is just a request for a hearing. A hearing has not been scheduled, nor is there any legislation dealing with fantasy sports being crafted.

So, how likely is this to happen? With the growing profile of the daily fantasy sports industry, and the fact that DFS might not pass the smell test as “not gambling” for many lawmakers, this has a very real chance of getting a day in Congress.

The high-profile nature of the New Jersey sports betting case — and the recent revelation that a prohibition on sports betting isn’t stopping nearly $100 billion in illegal wagers in the U.S. — also makes a hearing, and a closer look at PASPA, seem more likely.

At the same time, attempting to mess with fantasy sports might not be a terribly popular thing for a legislator at the federal level to do.

Pallone is from New Jersey, and it’s at least conceivable that the state is trying to bring the issue of sports betting to a head. By potentially linking DFS to sports wagering, it could force the end game that many want — a repeal of PASPA, which would in turn allow states to legalize and regulate sports betting.

For now, we will wait to see if the Republicans in charge of the committee in question have a desire to grant Pallone’s request, and if they agree with his assessment that DFS merits a closer look.

Photo by Bjoertvedt used under license CC BY-SA 3.0