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House Committee meets to review legality of Daily Fantasy Sports

A House Energy and Commerce subcommittee will meet today in the US capital to look at the legality of daily fantasy sports (DFS).

The hearing was requested last September by New Jersey Congressman Frank Pallone, a ranking member of the committee, to investigate what he sees as the “blurring of the lines” between fantasy sports and online betting.

Pallone has been a prominent supporter of legalised and regulated sports betting in New Jersey and has questioned the involvement of major US sports leagues in the DFS industry, which is in stark contrast to their opposition to legalised sports betting.

“Fans are currently allowed to risk money on the performance of an individual player. How is that different than wagering money on the outcome of a game?” asked Pallone when he announced his call for a congressional hearing.

None of the major DFS operators will be present at the hearing, although they will be represented by Peter Schoenke of the Fantasy Sports Trade Association.

The committee will also hear testimony from rival trade association the Small Business of Fantasy Sports Trade Association, represented by executive director Steve Brubaker.

Brubaker is appearing before the committee to speak on behalf of “the fantasy sports businesses that are not DraftKings and FanDuel”. He will argue that the actions of the two market leaders, which brought about this scrutiny, has resulted in states enacting legislation that makes it impossible for the small fantasy sports operators to remain in business.

“After two states [Virginia and Indiana] passed bills that became law, small fantasy sports companies found out that they had a big problem. The fee for participation in those two states had been set at a level far too high for small companies to continue operation,” Brubaker will tell the committee. “A state-legislated duopoly was essentially created because small companies had become financially barred from participation. This included all the traditional season-long companies that had never offered daily fantasy sports, yet by definition, they became captured by these new laws.”

Other witnesses appearing before the committee are Kurt Eggert, professor of law at Chapman University Fowler School of Law; Jordan Gnat, SVP of strategic business development at Scientific Games; Mark Locke, chief executive of Genius Sports Group; John M. McManus, general counsel at MGM Resorts International; Ryan Rodenberg, assistant professor at Florida State University’s Department of Sport Management; and Lindsay Slader, operations manager at GeoComply.

Gnat’s testimony will focus on the effective regulation of sports betting in North America and Europe, setting out the role that lotteries can play in helping to achieve a stable and well regulated market, while Locke of Genius Sports will explain how his company’s technology can help to protect the integrity of sporting competitions.

Professor Rodenberg’s testimony will highlight the scope of the Professional and Amateur Sports Protection Act (PASPA), which he says limits the ability of governments to regulate both daily fantasy sports and traditional sports wagering. He will also argue that nothing in the Unlawful Internet Gambling Enforcement Act (UIGEA) appears to authorise daily fantasy contests.

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