A checkup on daily fantasy sports

Long before we got to the Super Bowl ads this year, the Fall saw a whole set of commercials run signaling the arrival of a new industry – Daily Fantasy Sports (DFS). Nearly 60 million people participated in fantasy sports last year, with millions of dollars at stake at any time. Already it’s estimated to be a $26 billion industry that continues to grow with the explosion in popularity of DFS. Some might question why Congress should examine this, but when 60 million people spend $26 billion dollars and counting, some oversight is needed.

DFS has brought new excitement and energy to sports, and innovative new ways for fans to interact with their favorite teams, but questions about fairness have also been raised. We will hold a bipartisan congressional hearing on Wednesday this week to examine the current landscape of daily fantasy sports. We don’t want to stop people from playing, but we do want to know if appropriate consumer protections are in place.  

{mosads}We do not want children playing. We do not want people playing beyond their means.  And most importantly, we want a fair game. Last year, allegations of “insider trading” by employees of daily fantasy sports operators raised serious concerns about whether the games are fair to the players, especially the casual ones. Players should have confidence that the games they’re playing are operated fairly and that they have all the information to fully understand how the game works. There have been reports that 90 percent of payouts were won by just one percent of players, and 70 percent of players report losing money. We also want to understand how the industry is structured and what internal controls are in place to ensure the integrity of the games.

The hearing will also consider the current legal status of DFS. States across the country are creating a patchwork of differing and contradictory policies that could have negative consequences for consumers, as well as further growth and innovation.

Virginia has put in place a law to legalize and oversee DFS. Massachusetts has  established consumer protection regulations for DFS. Some states are differentiating between DFS, online gaming, and sports betting while others are not. With so many states taking such different approaches it is important to consider if there is a federal role. 

Finally, as with all online activities, the hearing will evaluate what, if anything, the industry is doing proactively to police itself. In other contexts, we have explored ways to verify that players are old enough to play, what state they are in, and how to identify and help players that may have a problem. We must continue that examination and also ensure player information is kept secure and private. We also must consider how the sites are monitored and how suspicious behavior is reported.

Millions of Americans are playing daily fantasy sports, which means that millions of families could be affected. Players deserve to know that the DFS industry operates fairly and transparently, and that states taking different and rushed approaches are not harming the overall consumer experience. It’s time we take a closer look at this industry to ensure that’s indeed the case. 

Rep. Fred Upton (R-Mi) is Chairman of the House Energy and Commerce Committee. Rep. Frank Pallone (D-NJ) is the committee’s Ranking Member.