Major League Baseball never expected state laws to be an issue for daily fantasy sports when it entered into a partnership with DraftKings, according to an interview with MLB Commissioner Rob Manfred with the Associated Press that came out on Thursday.
The statement from Manfred is the latest example that MLB’s legal analysis of the DFS industry prior to gaining an equity stake in DraftKings left something to be desired.
It also came on the same day as NBA Commissioner Adam Silver offered his support for DFS in public comments.
What Manfred said on DFS this time
The interview tackled a variety of subjects, and only briefly touched on DFS. From the AP, on the subject of the state attorneys general that have given negative opinions on DFS vis a vis state law:
“Our research was focused on the federal law which differentiated gambling based on whether or not something was a game of skill or a game of chance. … We did not expect individual states to intercede on this issue.”
At last count, 10 AGs have opined that DFS is gambling under state law.
In reality, the latest comment is actually not that much different from what Manfred has said in the past, other than the fact that he now expressed surprise at the reaction of some states. Here is what Manfred told ESPN last year:
“We did thoroughly investigate the games that were available on the site [DraftKings], and we were completely comfortable with the idea that those games were consistent with the existing federal law.
In sum, the comments lead to the realization that MLB never really considered state law in assessing the legality of DFS.
The states and DFS should not have been a surprise
While Manfred and MLB indicated they were taken by surprise about the reaction of some states, it’s not clear why anyone would have that opinion.
The deal between MLB and DraftKings came in April of last year, although the league and the DFS site already had a relationship before that.
But one year ago — before the legal morass that has enveloped the DFS space developed — even the most optimistic legal outlooks from DraftKings and FanDuel likely accounted for the idea that there could be pushback, at some point, at the state level. Consider:
- DFS was already considered illegal in five states when MLB partnered with DraftKings, so clearly state law was always in play.
- While DraftKings operated in 45 states at the time of the MLB deal, there had never been consensus on the legality of DFS in all of those states, as evidenced by different DFS operators’ risk tolerance.
- Some legal experts had long before identified state law as a possible problem for DFS.
- Any reading of federal law — notably the Unlawful Internet Gambling Enforcement Act — should have realized that it is far from the last word on the legality of DFS, even to a non-lawyer.
- Even before the spring of 2015, there were plenty of examples of people calling DFS gambling, even from just a casual standpoint. That included a former pro sports commissioner, the NBA’s David Stern.
Meanwhile, Adam Silver supporting DFS
Silver — whose league has equity in FanDuel — also spoke on the subject of DFS this week:
Adam Silver jabs attorneys general who say DFS is gambling then decry its ills, while offering casinos and lotteries on @MikeAndMike.
— David Payne Purdum (@DavidPurdum) April 21, 2016
Silver was actually the one who broached the subject of DFS on Mike and Mike; you can listen to his comments starting at around the 51-minute mark.
On the spectrum of the pro sports commissioners’ reactions to DFS in the past six months, Silver has remained a steadfast supporter of the industry, while also calling for regulation.
The leagues’ continued support of and partnership with DraftKings and FanDuel has arguably been one of the most important storylines as the industry has pushed bills for DFS legality in more than half the states this year.
