By Paul Nicholson
March 9 – Regulation of the runaway Daily Fantasy Sports (DFS) business in the US took a step closer in Virginia this week, but a ruling is still awaited in New York over whether DFS games operated by DraftKings and FanDuel are illegal or not.
The dispute is over whether DFS games are gambling – and as such illegal until regulated – or whether they are a game of skill relying on the gamers’ knowledge to pick winning teams.
In Virginia Governor Terry McAuliffe signed into law the ‘Fantasy Contests Act’ which establishes a legal framework for fantasy sports operating in the state. This is the first US state to regulate DFS and provide a number consumer protections for fantasy sports players as well as additional oversight by the Virginia Department of Agriculture and Consumer Services. DFS operators now have to register with the state and pay a license fee.
Chris Eaton, executive director sport integrity at the ICSS, and a critic of the US’s slow response to gambling regulation, said: “This decision by the USA’s Virginian legislature finally brings at least partial sanity into recognising so-called Fantasy Sports simply as another form of sport betting requiring rules, regulation and oversight. Let’s hope for the sake of saving sport from knock-on corruption that other USA jurisdictions follow suit and soon.
“The USA is a seriously mixed-bag in sport betting. Mostly it is illegal, and most of that is sited in safe-havens off-shore. But in trying to get around the prohibition of sport betting in the USA, Fantasy Sports have been playing their own legal pea and thimble trick. Ultimately this playing of legal hide and seek is merely because there is just so much money in all forms of sport betting that it’s worth all the cost and trouble to milk the system.”
For their part the DFS operators have welcomed the move. Griffin Finan, Director of Public Affairs for DraftKings, said: “Today, Virginia became the first state in the nation this year to put in place a thoughtful and appropriate regulatory framework to protect the rights of fantasy players. We thank Governor McAuliffe for his leadership and advocacy and are hopeful that other states across the country will follow Virginia’s lead. We will continue to work actively to replicate this success with dozens of legislatures and are excited to continue these efforts.”
Eaton emphasises that the Virginia regulation is just a small step in the US towards taking on the much bigger gambling evil and threat to sport integrity and gamblers posed by organised crime.
“The USA simply must recognise that by proliferating an unregulated illegal sport betting sub-culture through its pointless prohibition, the second biggest vulnerable and unprotected cash-pool for organised crime is unintentionally created (with the biggest being China). It is precisely because of this failure to require rules, regulations and oversight in sport betting that organised crime is fixing sport competitions to cheat gamblers,” said Eaton.
“The legislators in USA, China and India hold the key to fencing sport betting from crime and thereby taking most of the money out of match fixing.”
The protections in the Virgina bill include:
Requirement by DFS sites to to verify that all participants are 18 years or older,
Prevents sharing of confidential information that could affect fantasy contest play with third parties until the information is made publicly available,
Requires player funds to be held separately from a company’s operational funds,
Bans employees of fantasy sports site (as well as relatives living in the same household) from competing in public fantasy sports contests for cash prizes
Requires fantasy sports companies to undergo two independent yearly audits of their operations to ensure compliance with all regulations.
While the regulation provides some much-needed protections, in New York the public prosecutor appears to have a view more in line with Eaton’s in terms of the wider scale of the issues at stake.
New York attorney general Eric Schneiderman argues that the games are gambling and are subject to manipulation by the operators. Before Christmas Schneiderman filed a lawsuit that saw the games suspended before a stay was granted by a New York judge to allow them to continue operating while they appealed against the decision.
Schneiderman came back again on New Year’s Eve adjusting his suit and asking for FanDuel and DraftKings to return all profits made in New York, repay customers who lost money and pay up to $5,000 in fines to every customer. It is estimated the two companies have earned more than $200 million in entry fees last year from around 600,000 customers.
The US Justice Department has shown a huge appetite to chase football’s corrupt officials in its own region, and worldwide, and has been widely supported in those efforts that were instrumental in bringing the first steps of major reform to FIFA. But the suspicion is that while pursuing football officials for what at times has looked like political objectives, it is in turn overlooking serious organised crime activity in its own country that is now a much bigger threat to the integrity of football, and sport generally.
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