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Howard Stutz
 

Daily fantasy sports group forms regulatory agency

29 October 2015

Daily fantasy sports operators, facing increased scrutiny from state officials and gaming authorities, announced plans to form an industry regulatory agency headed by a former secretary of the U.S. Department of Labor.

The Fantasy Sports Trade Association announced the formation of the Fantasy Sports Control Agency. In a statement, the trade association's president said the major fantasy sports operators and professional sports leagues expressed support for the regulatory body following initial meetings. Two companies, DraftKings and FanDuel, control more than 90% of the daily fantasy sports market.

The trade association also said a major accounting firm will be hired to monitor and audit the initiative.

Former Acting U.S. Secretary of Labor Seth Harris was named to chair the agency, which the trade association would be "independent" and charged with "creating a strict, transparent and effective system of self-regulation" for the fantasy sports industry.

The move comes after the Nevada Gaming Control Board issued a "cease and desist" order two weeks ago to the daily fantasy sports sites, saying the activity was the definition of sports wagering under state law. Until they are licensed by the state and face regulation, the sites are no longer allowed to accept wagers from customers located in Nevada.

Also, lawmakers and gaming regulators from New York, Michigan, Illinois, Georgia, Massachusetts and Minnesota have expressed concern that daily fantasy sports may constitute sports gambling.

"The issues and opportunities facing the fantasy sports industry can be best addressed through an independent agency supported by the industry and its members," Harris said in a statement.

In an interview with Bloomberg News, Harris said his hiring was to ensure the regulatory agency was "not a sham, that it's not a fake, that it's not just a publicity stunt." He said the staff will be independent from the companies and the trade association.

DraftKings CEO Jason Robins said in an e-mailed statement the company was committed to working with the new regulatory agency and other government authorities "to ensure that our industry operates in a manner that is completely transparent and fair for all consumers."

Robins, who spoke last month in Las Vegas at the Global Gaming Expo, said the new agency would help the industry establish best practices.

"We recognize our responsibility to the millions of fans who are captivated by the excitement and interactive nature of daily fantasy sports, and ensuring a level and fair playing field for all players is a fundamental tenet of our company," Robins said.

Harris was the deputy labor secretary for five years before becoming acting secretary under President Barack Obama. He is currently a law school professor at Cornell University.

Trade association president Paul Charchian said Harris and the agency would be given "the autonomy and control to evaluate our industry and create an effective and transparent monitoring and enforcement program."

Questions about daily fantasy sports arose this month after reports that a DraftKings employee used inside information to win money as a player on FanDuel. DraftKings has said the employee did nothing wrong.

The companies brought in outside law firms and former prosecutors to investigate and review internal controls. The companies also barred employees from participating in online fantasy-sports contests for money.
Daily fantasy sports group forms regulatory agency is republished from GamingMeets.com.