The fantasy sports industry is launching the Fantasy Sports Control Agency, an attempt to kickstart self-directed oversight in the face of mounting political and legal pressure on daily fantasy sports.
What we know about the FSCA so far
The formation of the organization was was first reported by the Wall Street Journal. Details were provided in an email to members of the Fantasy Sports Trade Association, and later in a press release.
Seth Harris, Former Acting U.S. Secretary of Labor, will head the organization, according to the FSTA.
Harris practices with Dentons US LLP, a firm the FSTA has used for lobbying in the past. Reporting in The Hill characterized Dentons as the “outside lobbyist” for the FSTA.
The organization is being privately created and is not under the auspices of a government.
The body will seek to develop a “system of standards” based on “transparency, integrity and ethical behavior.” Every FSTA member will be expected to establish a “system of controls and processes to ensure compliance.” The FSCA will also create incentives for compliance and penalties for non-compliance.
FanDuel CEO Nigel Eccles had this to say about the creation of the FSCA in a statement to Legal Sports Report:
We’re pleased that the FSTA is leading this effort for self-regulation and forming an independent agency for the entire fantasy industry. We look forward to working with the FSTA and all of their member organizations to ensure that our collective products adhere to a baseline of best practices.
DraftKings CEO Jason Robins offered similar support:
We are committed to working with the Fantasy Sports Control Agency, the FSTA and all relevant government authorities to ensure that our industry operates in a manner that is completely transparent and fair for all consumers. At DraftKings, we recognize our responsibility to the millions of fans who are captivated by the excitement and interactive nature of daily fantasy sports, and ensuring a level and fair playing field for all players is a fundamental tenet of our company. We believe the Fantasy Sports Control Agency will help our industry establish best practices that further this important goal.
How effective will self regulation be?
The effort comes as multiple federal and state probes are exploring the legality of daily fantasy sports, and as several states consider how to deal with DFS through new legislation or gaming laws already on the books.
The FSCA’s end goal is likely to maintain a relative status quo, without onerous state regulations, licensing fees and taxes. The new regulatory body might also be used to dovetail into any new legislation considered at the state level.
Whether public officials at the state and federal level believe the FSCA is the answer to regulatory oversight will likely be a key part of the discussion for the industry moving forward.
Also of note is that there are some — albeit few — DFS sites that are not members of the FSTA, and thus would not be beholden to the FSCA, either. Presumably, the industry will find ways to encourage all operators to come under the FSCA umbrella, but there is currently no legal reason why a site would have to do so.
In talking with Sports Business Journal’s Eric Fisher, Harris indicated that the FSCA is possibly a way to avoid direct state regulation:
Harris: “We can save lawmakers and regulators the cost and effort of intervening…” 1/2
— Eric Fisher (@EricFisherSBG) October 27, 2015
Harris: “…so that they can expend their limited resources on bigger and more societally important challenges.” 2/2
— Eric Fisher (@EricFisherSBG) October 27, 2015
Seth Harris on new Fantasy Sports Control Agency he will run: “If this was just a PR stunt, I wouldn’t be involved.”
— Eric Fisher (@EricFisherSBG) October 27, 2015
FSTA information on FSCA creation
Here is the email that the FSTA sent, in full:
FSTA Members,
We are at a pivotal moment in the history of fantasy sports. For our paid contest operators, the necessity for some form of regulation is upon us. Our players and government authorities alike are likely to insist that our industry has mechanisms in place that ensure strict and effective regulatory oversight.
We can establish and enforce these systems ourselves, or we can put our industry in the hands of outside entities who do not understand the industry as we do – outside entities who are not as able nor as committed to establishing rules and regulations that ensure integrity and transparency while allowing the industry to continue to thrive.
Simply put, the leadership of the FSTA believes that we cannot and should not allow the future of our industry to rest in the hands of others.
To that end, I’m very pleased to announce the creation of the Fantasy Sports Control Agency (FSCA), a group formed by the Fantasy Sports Trade Association for the purpose of bringing enhanced transparency, ethics and integrity to the industry.
The FSCA will provide mandatory guidelines in four key areas:
- Standards
- Company Controls, Processes and Leadership
- Auditing Policies and Procedures
- Enforcement
I’m also pleased to announce that the Chairman of the FSCA is Seth D. Harris, the Former Acting U.S. Secretary of Labor for the Obama Administration. At the U.S. Labor Department, Secretary Harris spent five years overseeing the work of a half-dozen civil regulatory and enforcement agencies addressing complex legal and ethical issues, and working with a wide array of stakeholders. His goal at the Labor Department was compliance with the law. At the FSCA, his goals will be honesty, integrity, and fairness in all fantasy sports games.
The FSCA will be an independent authority, beholden to no company within the FSTA nor the FSTA itself – providing the framework necessary to provide clear, operable direction to our paid contest operators. Many details will be ironed out in the coming weeks and months, and I will keep you informed each step of the way.
Secretary Harris and FSTA Board member Rob Pythian have already met with industry stakeholders, who have been supportive of our initial plans.
We will be announcing Secretary Harris’ appointment and the creation of the FSCA shortly via a national press release, and we will have the opportunity to reinforce our plans at the Sports Business Journal Sports Media & Technology conference in New York tomorrow.
This is a decisive first step in our industry’s path toward meaningful self-regulation. Thank you for your ongoing support for the FSTA and your future support of the FSCA.
Paul Charchian
President, FSTA
The FSTA later issued a press release:
The Fantasy Sports Trade Association (FSTA), which has represented the industry since 1998, announced today that it will form the Fantasy Sports Control Agency (FSCA) and appoint Former Acting U.S. Secretary of Labor Seth D. Harris to chair the independent agency charged with creating a strict, transparent and effective system of self-regulation for the businesses that comprise the fantasy sports industry.
As an independent authority, the FSCA will be empowered by the FSTA to create a system consisting of four principal parts:
- Standards: Develop a system of standards for the fantasy sports industry founded on transparency, integrity and ethical behavior.
- Company Controls, Processes, and Leadership: Every FSTA member company will be expected to respond to the FSCA’s standards by establishing a system of controls and processes to ensure compliance. In addition, every member company will be expected to appoint a senior leader reporting to top executives and overseeing compliance efforts.
- Auditing Policies and Procedures: Implementation of a sound, regular auditing process to measure and report on company compliance.
- Enforcement: Establishment of a system that provides incentives and public recognition for compliance with FSCA guidelines and penalties for failure to comply.
Secretary Harris and representatives of the FSTA Board have held initial meetings with professional sports leagues and other key industry stakeholders who are supportive of the FSCA’s initial plan. The FSTA also announced it will retain a major accounting firm to monitor and audit the initiative.
“The issues and opportunities facing the fantasy sports industry can be best addressed through an independent agency supported by the industry and its members,” said Secretary Harris. “The FSTA will continue to work closely with state and federal lawmakers and regulators as we develop and implement strong integrity programs. We are confident that an independent control agency can prevent any unethical, dishonest, or unfair behavior. In the process, we can save lawmakers and regulators the cost and effort of intervening so that they can expend their limited resources on bigger and more societally important challenges.”
“Secretary Harris is an independent expert of unimpeachable credibility who has dedicated his career to ensuring fairness and a level playing field,” said FSTA President Paul Charchian. “The FSTA Board of Directors, which represents our 300 member companies, will give Secretary Harris and the FSCA the autonomy and control to evaluate our industry and create an effective and transparent monitoring and enforcement program. Fantasy sports are enjoyed by more than 50 million Americans, and our industry is committed to serving each of them with integrity.”
