Congressional committee briefed on daily fantasy sports

Wednesday’s much-anticipated Congressional hearing on daily fantasy sports failed to deliver any new developments or fireworks, prompting some political observers to suggest that the underlying motive of the New Jersey introducers may have been to prepare the ground for a campaign for the liberalisation of sports betting in the USA – currently tightly restricted by the federal Professional and Amateur Sports Protection Act (PASPA).

The hearing by the House Subcommittee on Commerce, Manufacturing, and Trade was at the request of New Jersey Rep. Frank Pallone, a high profile supporter of his state’s attempts to find a way around PASPA that will allow it to legalise intrastate sports betting (see previous reports).

Pallone contends that PASPA is discriminatory and non-constitutional, and that individual states should be making decisions on sports betting and not the federal government. He also believes that daily fantasy sports is gambling, contesting industry claims that the vertical is a skill game and therefore falls outside gambling laws.

Wednesday’s hearing was interesting in that DFS market leaders FanDuel and DraftKings, along with national sports leagues that have stubbornly defended PASPA, but have happily done business with DFS operators, did not attend and could not be directly questioned.

Given the apparent hypocrisy of the NFL, NBA, NHL and MLB positions in regard to DFS vs. sports betting that is perhaps understandable…and Pallone made sure he drove the point home.

The DFS perspective was instead presented by the industry body Fantasy Sports Trade Association, whose chairman Peter Schoenke hewed to the industry line by staying out of the legalised sports betting argument, saying that PASPA does not impact his industry at all because it is skill-based, and that it remains neutral on the sports betting liberalisation debate.

Geocomply provided its now customary factual and informative presentation on geo-location, but Pallone in general tended to dominate the proceedings with his sports betting legalisation arguments, flaying the national sports leagues for their commercial support of DFS and juxta positioning this against their opposition to individual states making their own decisions regarding sports betting.

Nevertheless, one or two committee members who displayed surprising ignorance on DFS will probably have benefitted in an educational sense from the presentations during the two-hour hearing.

Pallone’s statements to reporters after the hearing illustrated his main motive remains the decriminalisation of sports gambling nationwide.

“The biggest thing for me is that I would like us to legalize sports betting,” he said. “I am hoping this panel and the statements that were made about why it doesn’t make sense to allow (sports betting) to go underground and run by organized crime would lead us to some kind of legislation.

“The point is allowing sports betting to be legal in states like New Jersey who want it. That’s what I was hoping this would contribute to, primarily.”

Sports and gambling law expert Daniel Wallach noted Pallone’s real motives in holding the hearing, saying:

“He wanted to show the hypocrisy in how leagues treat gambling versus their support of daily fantasy sports. Unfortunately, there was no patient to examine since all the key stakeholders stayed away. At worst, this hearing was a colossal waste of time. Maybe (Pallone) elicited enough support for another hearing.”

Pallone seemed to confirm that view, saying that more hearings and legislation to protect consumers were possibilities.

The consensus appears to be that little was achieved by the hearing other than to rehash well established positions and perspectives.