Two New Jersey Democrats said Tuesday that the Federal Trade Commission, tasked with protecting American consumers, would be the best agency to regulate the growing and controversial daily fantasy sports industry.
The push comes as New York’s Attorney General ordered two daily fantasy sites in his state to stop accpeting wagers.
Sen. Bob Menendez and Rep. Frank Pallone in a letter to FTC Chair Edith Ramirez said her organziaiton was best positioned “to promulgate common sense regulation” on daily fantasy sports websites.
Pallone and Menendez also said the agency should consider examining the relationships between professional sports leagues and daily fantasy sites.
{mosads}Pallone and Menendez first contacted Ramirez last month to inquire about whether the commission had the authority to investigate fantasy sports. The letter came after it was revealed that an employee at DraftKings had access to proprietary data in the same weekend he won $350,000 on rival site FanDuel.
Ramirez told them that the commission was able to investigate the industry under its authority to police deceptive behavior.
“As a general matter and under appropriate facts, the Commission could investigate whether individuals or entities that use nonpublic information to their advantage while participating in fantasy sports contests might be an unfair or deceptive commercial practice through its Section 5 authority,” she said in a letter dated October 26.
She added that “the Commission cannot comment on the existence or non-existence of an investigation.”
The websites allow players to draft virtual teams for real life sporting events and win big money if their picks do well. Player can draft new teams every day, a twist on traditional season-long fantasy games.
The services claim that they are subject to an exemption in a 2006 law that blocked financial transactions associated with online sports betting but excluded fantasy sports that were games of skill. Some have disputed that legal reasoning.
In Ramirez’s letter, she acknowledged that the industry had changed significantly since the passage of the law.
“The sophistication of online fantasy sports contests, the number of participants, and the amount of monies at stake have all increased exponentially since the passage of the UIGEA,” she said.
“I understand your concern about the recent reports of use of nonpublic information in online fantasy sports contests by employees of DraftKings and FanDuel, and was pleased to see that they have announced new policies that prohibit their employees from playing online daily fantasy sports contests that are open to the public,” she said.
Pallone has also called for congressional hearings into the industry and the Department of Justice is reportedly looking at the websites.