US Congress Begins Examination of Daily Fantasy Sports Games

Congress began a "a fact-finding mission into the loosely regulated world of fantasy sports games" Wednesday, according to Andrew Taylor of the Associated Press. 

"It is crucial that consumers know what they are purchasing when they sign up for (daily fantasy games) and that they understand the risk of losing money in the process," said Democrat Rep. Frank Pallone of New Jersey, who asked the House Energy and Commerce subcommittee for a hearing, per Taylor. "For example, there are reports that 90 percent of payouts were won by just one percent of winners."

Taylor reported lawmakers were "generally supportive" of the industry as they began to investigate whether government intervention is necessary to protect fantasy players.

The crux of the issue is whether sites like FanDuel and DraftKings are considered games of skill—which is the contention of the sites themselves—or gambling, which is regulated by states. Several states have questioned the legality of the sites, and New York already considers FanDuel and DraftKings illegal gambling sites.

According to David Purdum of ESPN.com, "Nine state attorneys general have joined [New York Attorney General Eric Schneiderman] in declaring that daily fantasy sports violate state gambling statutes."

But four other states "explicitly legalized the games this year, with varying degrees of consumer protection," per Taylor. Purdum reported that up to 20 states are considering bills to legalize daily fantasy games.

That varying regulations from state to state are among of the committee's concerns.

"We must keep in mind that a patchwork of differing and contradictory state laws has the potential to negatively impact consumers, and harm further growth and innovation in the process," said committee chairman and Republican Rep. Fred Upton of Michigan, according to Taylor.

All four major United States sports leagues have a vested interest in the result of the hearing and the future of FanDuel and DraftKings. The NBA has equity in FanDuel, while the NHL and MLB have equity in DraftKings, as Purdum reported.

Meanwhile, 28 of the NFL's 32 teams have "sponsorship or marketing agreements with the companies."

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