After a run of two-plus weeks of seemingly nothing but bad news, subtle shifts toward the positive can be seen for daily fantasy sports, even as new bills with an eye toward regulation continue to surface.
The Wall Street Journal reported that an Illinois lawmaker is introducing legislation Tuesday, while a state representative in Minnesota announced similar intentions. That these developments are viewed as encouraging signs is evidence of how much has changed for an industry that until recently was dogmatic in its assertion that it could police itself.
According to their authors, the prospective bills in Minnesota and Illinois would create a regulatory framework for daily fantasy sports operators, but importantly, leave them free to do business in both states. That’s especially significant as the business model’s legality is under investigation in various states and at the federal level.
Inquiries by the FBI, Department of Justice, federal grand juries and state Attorneys General are ongoing and the potential conclusions are ominous. But there are indicators that the future isn’t as bleak as it has seemed at times over the past month.
The tide seemingly began to turn when NBA commissioner Adam Silver said his league would not withdraw from its partnership with FanDuel or waver in its support of daily fantasy sports.
“Given the recent developments over the past few weeks, the importance of these public statements in support of the daily fantasy sports industry cannot be overstated,” said attorney Justin Fielkow. “When leaders, particularly those as forward-thinking and reflective as Commissioner Silver, speak, people tend to listen.”
Since then MLB commissioner Rob Manfred, Dallas Cowboys owner Jerry Jones and New England Patriots team president Jonathan Kraft have defended their investments in DraftKings.
Some of the timing is surely coincidental. Bills now seen as relatively favorable to the daily fantasy industry were not drafted based on the comments of investors. Nonetheless, the support from the NBA, MLB and daily fantasy’s other well-connected partners could prove critical for the industry’s long-term success.
Industry analysts have long speculated that daily fantasy’s relationships with powerful investors and the accompanying lobbying power would insulate DFS from a Black Friday-style shutdown or overly onerous regulation. It looks like that theory will be tested; significantly, US Attorney Preet Bharara, who helmed the investigation that led to online poker’s downfall in 2011, is now looking into DFS.
Serious legal battles remain on the horizon. The possibility that daily fantasy sports violated a federal law by operating in risky states could have dramatic and far-reaching implications, and if investigations find evidence of so-called insider trading—or worse—all bets are off. Literally.
But for the moment, at the state level, more lawmakers seem to be taking an approach akin to that shown in Illinois—one which a DraftKings spokesperson called “a reasonable and measured step toward oversight of fantasy sports,” in a statement to the Wall Street Journal.
Considering the events of the last month, operators and players alike can hope for nothing better.