Federal DFS hearing leaves little hope of regulatory action

12 May 2016
An uneventful hearing Wednesday afternoon in front of the House Subcommittee on Commerce, Manufacturing, and Trade left little to no hope for federal regulation of either daily fantasy sports (DFS) or sports betting.

The hearing marked the first time that federal regulators have formally examined the DFS industry — and it showed in the level of ignorance displayed by committee members. Rep. Markwayne Mullin (R-Oklahoma), for instance, asked if a regulatory body currently existed to oversee the DFS industry, failing to realize that the point of the hearing was to discuss the possibility of regulatory oversight in the first place.

If nothing else, the result of Wednesday's hearing was the opportunity to educate Congress on the current legal state of DFS in the U.S., and for "stakeholders to discuss the many aspects of this complicated issue," according to Rep. Michael Burgess (R-Texas), the chairman of the subcommittee. Fantasy Sports Trade Association Chairman Peter Schoenke was there to represent FanDuel, DraftKings and the industry at large, along with Small Business of Fantasy Sports Executive Director Steve Brubaker.

There were no representatives from DraftKings or FanDuel in attendance, nor were there any professional or recreational DFS players.

The hearing was first requested last fall by Rep. Frank Pallone (D-New Jersey), who was eager to point out the hypocrisy of the U.S. in the way it treats sports betting and DFS. While DFS legality is currently left up to the states thanks to a loophole in the Unlawful Internet Gambling Enforcement Act of 2006, sports betting has been illegal in all but four states since the Professional and Amateur Sports Protection Act was passed in 1992.

Pallone also called out the DFS industry for its own hypocrisy.

"I must also mention the hypocrisy of those arguing that daily fantasy sports is readily distinguishable from traditional sports betting," Pallone said. "While quietly applying for and receiving gambling licenses in the United Kingdom, DFS operators continue to argue to interested states in the U.S. that — unlike sports betting — DFS is not gambling."

It's unlikely that any change in legislation will come out of this hearing, and the committee did not indicate whether it will revisit the issue at all. That leaves the DFS industry in the same place it's been since last fall — subject to interpretations of state law by each state's attorney general.

DFS legislation has so far been signed into law in two states — Virginia and Indiana — and the industry exists as a quasi-legal entity in several others.