Congress seems poised to do little regarding daily fantasy sports in the wake of a hearing regarding the industry on Wednesday.
The top-level takeaways on Congress and DFS
The hearing in front of the House Subcommittee on Commerce, Manufacturing, and Trade took a look at daily fantasy sports and sports betting. It was the first serious discussion of the former at the federal level, and one of the first times the latter has been addressed in years.
Most of the testimony didn’t break much new ground, at least with people who already follow the industry, so it was mostly interesting to see where Congress fell on the issue.
The hearing indicated a few things:
- There is a lot of education about both the DFS and sports betting industries that needs to be done for Congressmen at the federal level. Representatives were generally woefully uninformed about the DFS industry as it is currently situated.
- There is almost certainly no federal action coming out of this hearing, either on the regulation/consumer protection front or revisiting current laws (the Unlawful Internet Gambling Enforcement Act and the Professional and Amateur Sports Protection Act).
You can watch the hearing here.
Pallone: Stumping for sports betting
The hearing seemed largely to be a vehicle for Rep. Frank Pallone (D-NJ) to point out the hypocrisy of the United States, where DFS exists as a legal or quasi-legal product in most jurisdictions while sports betting is banned in most states uner PASPA. His state, New Jersey, is in the middle of a court battle to allow sports betting in the state.
He requested the hearing last fall, and he continued to beat the drum that sports betting would be better off as a regulated product in the country.
“I must also mention the hypocrisy of those arguing that daily fantasy sports is readily distinguishable from traditional sports betting,” Pallone said. “While quietly applying for and receiving gambling licenses in the United Kingdom, DFS operators continue to argue to interested states in the U.S. that — unlike sports betting — DFS is not gambling.
“Their reliance on the arbitrary distinction of skill and chance is also unconvincing, especially since both the Department of Justice and the NFL have asserted that sports betting also is a game of skill,” Pallone added.
Janice Schakowsky (D-Illinois), the ranking member of the subcommittee, echoed Pallone, saying “At the federal level, it almost seems like an accident that daily fantasy sites are allowed to exist in the first place.”
Was this for DFS stakeholders?
“This hearing is an opportunity for the stakeholders to discuss the many aspects of this complicated issue,” Rep. Michael Burgess (R-Texas), the chairman of the subcommittee, said in his opening statement. “Consumer protection is a critical component of this conversation.”
However, the panel was mostly made up of experts who could speak to the legality of DFS and who could offer insight into sports betting and DFS issues. There were only two real “stakeholders” at the hearing:
- Fantasy Sports Trade Association Chairman Peter Schoenke, representing FanDuel, DraftKings and the industry at large.
- Small Businesses of Fantasy Sports Executive Director Steve Brubaker.
If this really were about getting stakeholders more engaged, it’s curious more weren’t put on the panel. (FanDuel, DraftKings and representatives of the professional sports leagues were reportedly invited, but declined to appear.)
Several members, in their comments or questions, wondered aloud where DraftKings and FanDuel were, including Pallone and Schakowsky. But there are plenty of other “stakeholders” that could have been called, from fantasy content providers, to recreational or professional DFS players.
Schoenke expressed the industry’s willingness to work with both the federal government and individual states. He was chided at points by Pallone for not having answers to questions posed in regards to DraftKings and FanDuel, when he was put forth as representing their interests.
The latter, while representing the interests of small fantasy operators, has only been involved in the industry for the past several weeks, since the creation of the SBFSTA. He also expressed a willingness of his group to work with the federal government, or with any jurisdiction willing to reduce the regulatory burden for smaller ops.
If the federal government wanted to be a “stakeholder” in the DFS conversation, any such momentum — outside of having the hearing itself — did not manifest itself on Wednesday.
What members of Congress don’t know about DFS
It’s definitely good that Wednesday’s hearing was informational in nature, and that no policy decisions were made. Here are some of the things put forward by representatives:
- Rep. Fred Upton said 14 million people play DFS, a number far removed from reality.
- Rep. Markwayne Mullin asked a witness whether a regulatory body oversees the daily fantasy sports industry. That’s a fairly ridiculous question, since the vacuum of regulatory oversight was why the hearing was called in the first place.
- Burgess, even after listening to all the witness testimony, indicated he was still confused about the differences between DFS and season-long fantasy.
All in all, it was clear most members in attendance, outside of the statements provided for them by staff, had little idea of what was going on in the fantasy sports industry as it is currently situated.
So, what’s next, if anything, for DFS?
While the members in attendance did at least seem to be interested in the subject of daily fantasy sports and sports betting, it’s not clear that interest will turn into any sort of tangible action.
No representatives hinted at any sort of legislation or movement from this subcommittee. Will the subcommittee revisit the issue later this year or in 2017? It’s at least possible; or this hearing could just be a one-off.
Schoenke, for his part, mentioned the Federal Trade Commission — which the subcommittee oversees — in his testimony. But getting the FTC more involved in DFS did not really come up, and it’s been a dead-end in the past.
The most likely scenario is that regulation and legalization of DFS will remain a matter for the states, and Congress and the federal government will remain on the sidelines for the foreseeable future.
Other testimony
Beyond the witnesses called by Congress, testimony was submitted by other groups:
- The American Gaming Association
- Stop Predatory Gambling
- National Conference of State Legislatures
All written testimony from witnesses that appeared can be seen here.
