Phil Ammann
Daily fantasy operators, despite several outside investigations, continue to face serious questions about legality of industry trade practices under federal and state gambling laws.
Steve Fainaru and Mark Fainaru-Wada of ESPN are reporting that NBA Commissioner Adam Silver has called for federal regulation of fantasy operators, even though he insists the league will continue its relationship with FanDuel, one of the organizations under scrutiny.
Silver’s remarks, made on ESPN’s “Outside the Lines” show, is the first from a major sports league leader since a scandal involving daily fantasy occurred earlier this month. Despite admitting he was “nervous” about recent developments, Silver welcomed examination of the business, adding that it would be the first steps toward regulation that ultimately protects all players of daily fantasy games.
“There should be a regulatory framework; there should be increased transparency for consumers,” Silver told ESPN in a telephone interview. “I think it would ultimately aid the industry. In fact, I think we’re seeing the marketplace impacted because there’s not a clear regulatory framework right now.”
In a statement, FanDuel echoed Silver’s comments:
“FanDuel and our partners believe some regulation may be warranted and want to work with lawmakers to ensure fans continue to have access to all the fantasy games they love.”
A statement from DraftKings, continued to assert the games on its site, and fantasy sports leagues in general, are entirely legal:
“We are seeing a number of state regulators and other authorities taking a reasoned and measured approach to the daily fantasy sports business and hope that trend continues along with due consideration for the interests of sports fans across the country who love to play these games.”
Controversy arose when a DraftKings employee inadvertently released information, later winning $350,000 on the rival FanDuel. The NBA, along with other sports organizations involved in the leagues, found itself facing questions over the integrity of daily fantasy sports. Investigations are currently underway in New York State over whether daily fantasy games have violated federal gambling laws.
A grand jury in Florida grand jury is also reportedly investigating similar concerns, looking into accusations of possible insider trading, as is the FBI.
However, a recent investigation by an outside law firm found DraftKings content manager Ethan Haskell, the employee who accidentally released the sensitive information, did not have the internal data until after locking up his picks.
In his interview, Silver said he did not think daily fantasy is gambling, calling it “clearly a game of skill.” But he did express concern over the lack of regulation in the sports gambling industry.
“Are we nervous about daily fantasy and the varying states’ reactions to it right now? Sure,” Silver told reporters. ”But am I nervous about a $400 billion underground industry of sports betting right now? Absolutely. In terms of the very public positions I have taken on sports betting, my foremost concern is with the integrity of our game.”
Fantasy sports has become so prevalent in the industry, the NBA had little choice but to get involved, Silver said.
“My reaction is to engage directly,” Silver said. “To the extent that federal or state regulators are stepping in, my reaction is: That’s very positive, and we’d like to be part of those conversations. Because it’s ultimately our game, our intellectual property and most importantly, what’s at stake is the integrity of our game.”
