DraftKings expressed support for a “reasoned and measured approach” to formal regulation of daily fantasy sports amid growing concern about the industry’s business practices. The company Thursday addressed calls for oversight hours after Nigel Eccles, chief executive at rival operator FanDuel, publicly called for state-by-state regulation and presented a rough plan for how it should be implemented.
The FBI, the U.S. Department of Justice and officials in several states are investigating the legality of the daily fantasy sports industry, which has largely escaped regulation while operating under a 2006 federal statute that excluded fantasy sports from bans on online gambling. The investigations began earlier this month after the news that a DraftKings employee accidentally leaked confidential user data about fantasy lineups the same week he won $350,000 in one of FanDuel’s paid NFL contests.
The Fantasy Sports Trade Association created a self-regulatory panel this week to ensure industrywide guidelines for business practices and protections against consumer fraud. DraftKings reiterated its commitment to self-regulation and support for formal oversight, but stopped short of providing specific recommendations for consumer safeguards.
“As we’ve said in the past, we are committed to working with the Fantasy Sports Control Agency, the FSTA and our partners in the industry, as well as all relevant government authorities, to ensure that our industry operates in a manner that is completely transparent and fair for all consumers,” a DraftKings representative said in a statement to International Business Times. “We are seeing a number of state regulators and other authorities taking a reasoned and measured approach to the daily fantasy sports business and hope that trend continues along with due consideration for the interests of sports fans across the country who love to play these games.”
FanDuel and DraftKings are two leading operators in the daily fantasy sports industry. Both companies are privately owned and valued at more than $1 billion apiece, and each is expected to dole out more than $1 billion in prizes in 2015.
Eccles, FanDuel’s founder and CEO, called Thursday for state-by-state regulation that would include age and location verification for customers, a separation of user funds from company operating cash and standardized protections for consumer data to prevent leaks, among other methods of oversight. The self-regulatory panel, while a positive development, is not enough solve the industry’s issues, Eccles added.
“Consumers want a higher level of protection,” Eccles told the Wall Street Journal. “They need to know it’s fair, that the information is protected. If the consumer doesn’t trust the industry, then the business doesn’t exist.”
Discussions on regulation are underway in several states. Illinois lawmakers introduced a bill this week called the Fantasy Contests Act that would establish guidelines such as age verification and bans on employee participation in paid contests, according to Legal Sports Report, a leading industry analysis blog. In Nevada, state regulators formally classified daily fantasy contests as a form of gambling this month and banned companies from operating without a gaming license.