Speaking Tuesday outside of MetLife Stadium in East Rutherford, NJ, Senator Bob Menendez laid out the case for federal regulation of daily fantasy sports.
Menendez and New Jersey Congressman Frank Pallone, who also spoke at the press conference, have asked the Federal Trade Commission to investigate daily fantasy sports in the wake of a recent controversy that has raised numerous questions about the policies, procedures and policing mechanisms at industry leaders FanDuel and DraftKings.
“In light of what we have all learned this past week, and given the enormous financial interest, I have serious questions about whether these online fantasy sports leagues can police themselves,” Menendez said. “That’s why Congressman Pallone and I have asked the FTC to look into this.”
Menendez spent the early portions of his address re-hashing a broad overview of the scandal, which began when DraftKings employee Ethan Haskell inadvertently leaked ownership information early and subsequently won $350,000 on FanDuel in the same weekend.
Menendez echoed the “insider trading” allegations some media outlets have used to tag the controversy, despite the fact that nonpublic DraftKings ownership information would likely be less helpful to fantasy players in FanDuel’s Sunday contests than the widely available ownership percentages from FanDuel’s own contests that begin with the Thursday night NFL game.
Nonetheless, the incident has raised serious concerns—as illustrated in a recent Reddit post that was picked up by the New York Times—about what data employees at daily fantasy sites have access to and how that data might be used unfairly.
Last week, FanDuel, DraftKings and other daily fantasy sites announced that their employees would no longer be allowed to compete in real-money DFS contests on any site.
“But damage has already been done, and I think fans who play on these daily fantasy sites deserve some answers,” Menendez said. “I think we deserve to know how we got here, how the major players in the industry thought this conduct was fine, and that this was acceptable. And I think we deserve to know what else has been going on. This only came to light because an employee leaked information. So what else has been going on behind the scenes?”
The FTC has declined to comment on the request for an investigation.
Pallone, who has called for a congressional hearing into the legal status of daily fantasy sports, reiterated Tuesday his belief that both daily fantasy sports and sports betting should be legal and regulated.
“Daily fantasy sports is an industry crying for consumer protection,” Pallone said. “Despite its explosion in popularity and the allegation of ‘insider trading’ by employees of daily fantasy sports operators, the industry is operating in a void within the legal structure—without any regulation or the necessary transparency.”