Testimony of Marianne McGettigan, Esq. (3/23/99)

Mr. Chairman, members of the Subcommittee, my name is Marianne McGettigan. I represent the Major League Baseball Players Association (MLBPA). I am here today to address the affect of Senator Kyl's Proposed Legislation to prohibit internet gambling on what is commonly referred to as fantasy or rotisserie sports leagues. For reasons I will explain below, unlike the case with previous proposals, the major league baseball players association has no objection to Senator Kyl's most recent draft bill dealing with internet gambling. This change in position is based on our understanding that: (1) This new language applies the sanctions of the bill only to those in the "Business of Gambling," not to individual participants; (2) fantasy sports games and contests that are currently legal in a state will continue to be legal both as a matter of state law and federal law; and (3) stated another way , because this will be a federal law, this proposal nonetheless is not intended to make unlawful under federal law, activities that are currently lawful under the law of certain states. The proposal retains the status quo. The following testimony, and our support for this proposal, is premised under this understanding . And, if this understanding is correct, we are confident that the National Football Players Association and the National Hockey League Players Association will join us in removing our previous objections to Senator kyl's legislation.

The MLBPA understands the concerns of congress with respect to the growth of gambling on the internet and the frustration of the state attorneys general in attempting to enforce state law when the internet is involved. The internet is a truly remarkable medium and we all have much to learn about how best to use it as well as what social ills it may foster. But in attempting to address what some states believe to be a problem, i.e., gambling, the bills that were under consideration by the 105th congress, S. 474 as reported by this committee and H.R. 2380, went too far. Both were overly broad and criminalized conduct that should not be ciminalized, including fantasy sports leagues, and in the case of S. 474, even some laudable educational found on the internet. The Players Association opposed both of those bill, at least in the form that they were introduced, because the bills threatened the existence of many fantasy baseball games or contests on the internet.

The interest in the association in fantasy or rotisserie baseball is twofold. First, we currently license eight providers and are in negotiation with others. Although the licensing revenue generated by these games is appreciated, it is only a very modest part of our licensing program and not our principal concern with this legislation. Rather, our secondary and primary concern is that a prohibition of otherwise lawful fantasy baseball games would be a disservice to many of baseball's most avid fans. We encourage the devotion of these fans to the game and would hate to see that interest threatened, particularly when we see no countervailing public purpose being served.

The Evolution of Fantasy Sports Leagues

Let me briefly explain the evolution of fantasy sports leagues and how they operate on the internet. As most sports fans know, fantasy sports leagues are not a commercial invention but are instead the product of the ingenuity of fans. Long before the internet, these fans chose to test their baseball managerial skills by putting together an otherwise nonexistent team, one that played no games, but was nonetheless compromised of active players ( at least on paper). The fan would manage this team over the course of a season and have a simulated, but nonetheless somewhat realistic, means by which to measure his or her managerial skill against the others in the fantasy league and against big league managers.¹ The only dreaded aspect of a fantasy baseball league was the statistical one. Because of the need for ongoing and timely statistical analysis, the onerous job of daily and weekly number crunching was routinely among the players in a league.

After these leagues had been in existence for some time, the Internet became available to the general public. Soon web sites began offering to do the number crunching for a modest fee, promising greater accuracy, a greater range of information, and also providing the opportunity for individuals who might want to play, but who are not in a position to be part of a league, to join with other individuals through the unique ability of the internet to link people together from all different locations. In other words whereas before the internet, my fantasy sports league might be comprised only of my friends who work inside the beltway, my Internet fantasy sports may link me with friends from Montana, Canada and the UK, or, if I had no one to play with, the Internet would link me with enough other interested fans (formerly unknown to me) to form a league.

If that were all the Internet web site sponsors provided, however, there would be no need for me to be here today, for all that would be involved would be purchase of statistical and communications services on the Internet. What was triggered the casting of the gambling net over this harmless hobby of fantasy sports leagues is the provision of a prize by some of these web sites for the participant demonstrating the most skill over the course of the sport season.

The willingness on the part of some individuals and public officials to subject fantasy sports leagues to the same prohibition as on-line casino gambling is, we believe, misplaced. The rationale for prohibiting this hobby has never been explained to us in terms of any principle of public policy that would be served by doing so. To date, the only explanation offered has been that some are willing to label this activity gambling without further review and to conclude that if it is gambling it must be banned. But labels, without more, are not an acceptable basis for making public policy.

Fantasy Sports Leagues and Public Policy Principles

In our view, the government has two principal and legitimate concerns that would justify the prohibition of certain gaming activities in the area of sports. The first is the need to protect those who cannot, or will not protect themselves from risking more than money, or other valuables than they can afford to, the so-called problem or pathological gamblers. While it is true that playing in a fantasy league takes a considerable investment, it is not one of money, but of time and interest. Over the course of the season the actual monetary investment is de minimis. The chairman has been quoted, accurately or not, on this aspect of public policy. His quote reduces this prong of this public policy discussion to a succinct, easily understood and easily applied concept of governmental concern: : "Click the Mouse, Bet the House."

Applying this fitting shorthand of the policy to fantasy sports, while participants may "Click the Mouse," they do not "Bet the House." There are two reasons for this. First, no bet is made in fantasy sports. Rather, consideration is rendered for the statistical services and analysis provided by the sponsoring website and any prize awarded is done so on the basis of skill, not chance. Second, even if one considers the entry fee and transactions fees to be a bet, which we do not, the amount anted by the participant can be likened more appropriately to "Bet a Lunch," or at worst a lunch for two. Hardly a danger of the kind or magnitude that has prompted the Subcommittee's review.

The second legitimate governmental concern is to protect the integrity of the game or contest itself. But, because of the structure of fantasy sports leagues, no individual baseball player's performance or team's performance can ever be influenced by the existence of a fantasy sports league. There is absolutely no incentive for any participant to attempt to influence the out come of a game, or a baseball player's performance.

If these principles of public policy are reviewed in context or rotisserie sports leagues I believe the Subcommittee will agree with the players association that fantasy or rotisserie sports leagues are not within the scope of activity that ought to concern the government. After reviewing the proposal of Senator Kyl for introduction in the 106th congress, it appears that the Senator has reached the same conclusion.

Senator Kyl's 1999 Draft Legislation

As we understand it, both the prior bills and Senator Kyl's current proposal are attempts to solve the enforcement problem raised by the states attorneys general, namely that certain gambling activities that would be illegal under state law, or under federal law by virtue of 18 USC 1084, are avoiding enforcement because of the use of the internet. In particular, the borderless nature of the internet has created significant jurisdictional problems for the state attorneys general.² We have no opposition to the enactment of legislation to facilitate the enforcement of state law for activities, including gambling, that are having an affect within a state's borders and which are unlawful within that state. The Major League Baseball Players Association does not condone gambling. Sports gambling is a threat to the very sport that employs our members.

But in the past, we have opposed these bills for two reasons. First, the Association does not consider participation in fantasy baseball leagues to be gambling. Some prior bills have cast a net of prohibition too broadly and have, in fact, made illegal some currently legal activity for no apparent public policy reason. For that reason, we have been greatly troubled by the language in prior bills which we thought created a chilling effect on what are today legal Internet fantasy sports leagues in many states in order to assist certain other states in prohibiting online gambling by individuals within their borders. We saw no public policy being served by purposefully, or inadvertently, prohibiting such leagues where they are currently permitted. Indeed, we see no public policy being served by the prohibition of such leagues in those states that currently prohibit fantasy sports leagues. As stated above, participation in fantasy sports leagues neither threatens the fiscal well-being of the participant nor the integrity of any player of the sport or the outcome of any game or series of games. What, therefor, is the good that is served in prohibiting them?

We have reviewed Senator Kyl's proposed bill for introduction in this Congress. Unlike prior bills, it has been written so as to remove the vagueness and doubt about its application to fantasy sports leagues on the internet. It neither legalizes games nor contests that may be considered to be illegal under the law of some states, nor does it criminalize fantasy games or contests that are otherwise legal. In other words, it appears to preserve the status quo. It creates no omnibus federal law prohibiting fantasy sports leagues, but provides necessary enforcement tools for state attorneys general to enforce the public policy of their states with respect to activities that would otherwise be within their jurisdiction in the normal course, but for this new technology.

That is how it should be. The internet should not be safe haven for otherwise unlawful activity. Neither should the use of the Internet alone, make illegal otherwise lawful activity. Based on this reading of Senator Kyl's bill, we have no objection to the legislation and will not oppose it. Having said that, it would be inappropriate for the association to comment on the other aspects of the bill that may continue to be disputed. But with respect to the interests of the association, our prior objections have been addressed.

Conclusion

The Major League baseball Players Association is strongly opposed to gambling on sporting events, and we support efforts to protect problem and pathological gamblers. We neither seek nor suggest that any gambling prohibited by current law should be permitted because of the use on the internet. Although the MLBPA does not believe that participation in fantasy sports leagues - over the internet or otherwise - constitutes gambling, we understand the resolve and authority of state attorneys general to enforce the laws of their states. Nonetheless we will continue to oppose any effort to criminalize what is currently legal activity in other states.

Senator Kyl's most recent legislative proposal both recognizes our position and clearly addresses it. It preserves the status quo. It nether legalizes activity on the Internet that would be illegal under state law, nor does it make illegal otherwise legal conduct under state law simply because Internet is medium used.

Moreover, because it applies only to those in the business of gambling it would relieve our fans of the threat prosecution. This is a very significant point. And, those businesses providing services to our fans, although not in the business of gambling as far as we are concerned, can nonetheless protect themselves, as many already do, by prohibiting participants from being from being eligible for a prize in those states which consider such games to be illegal gambling. If we understand this construction correctly, we have no objection to this legislation and support it insofar as it protects the integrity of the game of baseball and the performances of baseball players, while preserving the rights of fans to continue a popular hobby in those states which now permit it.

We greatly appreciate the Chairman's willingness to listen to our concerns and address them in his current proposal and thank him for the opportunity to present our views to the Subcommittee.

¹ It should not surprise the Subcommittee that numerous fantasy sports leagues have been developed and sustained by staff members on Capitol Hill for many years.

² It should be noted that the Internet creates new and untested challenges for merchants as well. Whereas legal concepts involving commerce have always been based on a choice by the merchant of geographical locations in which to conduct business, that premise is no longer a valid one that the Internet is involved. The customer now controls where business is conducted and the challenge to the merchant is to identify those customers it chooses not to do business with notwithstanding the mobility of computer and the fact that anywhere thee is a phone line there is a potential violation of state law.