The Daily Fantasy Sports (DFS) industry in the United States has been shrouded in controversy as a number of states have banned DFS providers from offering cash games in their states on the basis that DFS games are similar to casino games and must have a gambling license to operate under state law.
Nevada, New York and Illinois are just few of the states that have banned FanDuel and DraftKings, two of the biggest DFS operators from offering DFS cash games. DFS operators have argued that DFS games do not constitute gambling as they operate on the basis of skill and not chance.
The House Subcommittee on Commerce, Manufacturing, and Trade decided to discuss the DFS industry on May 11th even though there was no legislation on the table for the DFS industry. The hearing was information and was attended by a number of key representatives including U.S. Rep. Frank Pallone (D-NJ), Peter Schoenke, chairman of the Fantasy Sports Trade Association and John McManus, executive VP and general counsel, MGM Resorts.
Pallone has been pushing for the DFS industry to be regulated since 2015 and came down hard on DFS operators during the hearing. He highlighted that DraftKings and FanDuel had applied for gambling licenses in the United Kingdom to offer DFS games but did not want to follow a similar process in the United States. Pallone believes that New Jersey and Atlantic City will benefit greatly if the DFS industry was regulated.
The American Gaming Association (AGA) stated that one of the main reasons for the confusion surrounding the DFS industry was due to the fact that the current laws on DFS games were not black and white. The AGA wanted lawmakers to put in a place a new bill that clearly outlined how DFS operators should function.
In a statement, AGA CEO Geoff Freeman said, “DFS currently operates in a legal gray zone. We think it should be black and white. The gaming industry wants to see clear rules of the road that lay out where DFS is going to be legal, how it is going to be regulated and how consumers are going to be protected.”
McManus, the executive VP for MGM Resorts stated that his company was very interested in entering the DFS industry but has so far refrained from doing so as there was a lack of legal clarity surrounding the industry, and MGM wasn’t sure how to profit from the industry. Analysts estimate that the combined U.S. and Canada DFS industry is around $26 billion.
