New Jersey Congressman Wants Review Of Daily Fantasy Sports

Rep. Frank Pallone says "murky" legal landscape around the fast-growing industry merits scrutiny.
An employee at the Boston headquarters of DraftKings, one of the fastest-growing daily fantasy sports web sites.
An employee at the Boston headquarters of DraftKings, one of the fastest-growing daily fantasy sports web sites.

The opening weekend of NFL broadcasts were filled with advertisements for websites like DraftKings and FanDuel, the largest participants in the growing world of daily fantasy sports. 

Rep. Frank Pallone (D-N.J.) noticed the ubiquitous ads, and now wants Congress to review the legality of daily fantasy -- and the involvement of professional sports leagues and teams with the budding industry.

Pallone, the ranking Democrat on the House Energy and Commerce Committee, called on committee Chairman Fred Upton (R-Mich.) to hold hearings on daily fantasy sports, which have become lucrative outgrowth of traditional fantasy gaming.

“Despite how mainstream these sites have become, the legal landscape governing these activities remains murky and should be reviewed,” Pallone said Monday in a press release that accompanied a letter to Upton

The Energy and Commerce Committee holds jurisdiction over professional sports and gambling.

Gambling on professional sports is illegal under the 1992 Professional and Amateur Sports Protection Act, or PASPA, except in states that allowed it before the law passed. The Unlawful Internet Gaming Enforcement Act, or UIGEA, prohibits online sports gaming. But fantasy sports have remained legal through a carveout in UIGEA that protects so-called games of skill.

Daily fantasy, in which users draft new lineups of players each day, has thrived under that carveout, especially over the last two years, and has grown into a multimillion-dollar industry in part through partnerships with sports leagues and teams. MLB and the NBA have invested in DraftKings and FanDuel, respectively, and dozens of teams across the four major American leagues have marketing relationships with the two websites. The sites boast millions of users, have attracted huge investments, and tout that they can pay out seven-figure prizes. 

To Pallone, though, the games played on DraftKings and FanDuel look enough like traditional gambling to merit congressional inquiry.

“Fans are currently allowed to risk money on the performance of an individual player,” Pallone said in the release. “How is that different than wagering money on the outcome of a game?”

Pallone is not the only one who has raised concerns about daily fantasy. As the industry has grown, gambling experts and Jim Leach, the former Republican congressman from Iowa who authored the UIGEA, also have questioned its legality

Pallone is an advocate of legalized sports gambling, and was critical of a recent federal court decision saying that PASPA prohibited New Jersey from legalizing sports betting.

In addition to the legality of daily fantasy, Pallone wants to examine the changing attitudes within sports toward legalized gaming. His letter to Upton and Rep. Michael Burgess (R-Texas), chairman of the Subcommittee on Commerce, Manufacturing, and Trade, notes that NBA commissioner Adam Silver has advocated for legalized and regulated sports gambling, and that MLB commissioner Rob Manfred has hinted that his league may take a softer approach to the issue than in the past.

Those developments, Pallone wrote, should give Congress cause to question the relationship between leagues, teams, players, and the operators of fantasy sports sites, and whether players should be allowed to participate, as some have in the past.