Two weeks after Nevada gaming regulators barred daily fantasy sports sites like FanDuel and DraftKings from operating in the state, claiming they were unlicensed forms of sports betting, the CEO of FanDuel has acknowledged that maybe his virtually unregulated industry could do with a tiny bit of oversight.
Fantasy sports contests are currently exempted from federal laws that restrict most online gambling. The rationale behind the exemption was that fantasy sports betting is more of a game of skill than a game of chance.
However, a number of things have come up in recent months questioning that position. First there was the report of a DraftKings employee who had access to potentially useful inside information and made $350,000 in a single weekend by entering a FanDuel contest.
While both sites said the employee did nothing wrong, it didn’t quiet concerns about behavior that, to some, reeked of the sort of insider trading that is illegal on Wall Street.
It also raised questions about why employees of these companies are allowed to take part in these contests at all. Both FanDuel and DraftKings have subsequently barred staff from entering tournaments on fantasy sites, but a DraftKings co-founder had previously stated they couldn’t enact such a policy because the company’s employees — many of them pulled from the elite of fantasy sports betting — were making too much money on their competing sites.
These reports led to investigations by various attorneys general, including New York AG Eric Schneiderman, who questioned the policies and practices at these two sites.
The FBI is also reportedly looking into the business models of fantasy sports businesses.
“In any disruptive fast-growing industry, important questions are often raised about how the industry should operate – fantasy sports is no different,” writes FanDuel CEO Nigel Eccles. “Real questions have emerged.”
Eccles explains that the fantasy sports business has “grown to a size where a more formal, industry-wide approach is needed,” and that these sites need “strong, common sense, enforceable consumer protection requirements.”
The CEO says there are state-level laws in the works that would cover things like age/location verification, protection of user info and of proprietary contest data, independent auditing requirements, and other facets of the business.
These, he believes, “can serve as the basis for the sensible regulation of the fantasy sports industry.”
FanDuel and DraftKings have soared to prominence this year thanks to a huge influx of capital investment, along with prominent partnerships with broadcasters and professional sports leagues.
Eccles claims that the heads of those pro leagues “share support for sensible regulation of fantasy sports that protects consumers, without sacrificing their enjoyment of the game.”
by Chris Morran via Consumerist
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