The Daily Fantasy Sports (DFS) market has exploded in the last few years, but just recently, the issue of legality has permeated into a thick fog surrounding the industry. Nevada outlawed unlicensed DFS sites, other states are considering the same, and federal investigations have been launched into the integrity of the games. Now, the Fantasy Sports Trade Association (FSTA) is combatting the growing obstacle by launching its own trade commission.
Earlier this week, the FTSA announced that launch of the Fantasy Sports Control Agency (FSCA). Heading up the agency is Commissioner Seth Harris, who was chosen for his background in legal and political matters. Harris is portrayed by the FSTA as the “Former Acting U.S. Secretary of Labor” under President Barrack Obama.
Under Harris’s guidance, the FSCA has been “charged with creating a strict, transparent and effective system of self-regulation for the businesses that comprise the fantasy sports industry.”
The independent agency will be required to develop an authoritative system to govern the responsibility of all members of the FSTA, which currently lists over 300 members that include leading DFS sites DraftKings and FanDuel.
The FSTA says the agency will develop its system based on four basic principles:
|Standards: Develop a system of standards for the fantasy sports industry founded on transparency, integrity and ethical behavior.
Company Controls, Processes, and Leadership: Every FSTA member company will be expected to respond to the FSCA’s standards by establishing a system of controls and processes to ensure compliance. In addition, every member company will be expected to appoint a senior leader reporting to top executives and overseeing compliance efforts.
Auditing Policies and Procedures: Implementation of a sound, regular auditing process to measure and report on company compliance.
Enforcement: Establishment of a system that provides incentives and public recognition for compliance with FSCA guidelines and penalties for failure to comply.
In a press release announcing the launch of the Fantasy Sports Control Agency, the FSTA said it has already conducted meetings that included Commissioner Harris, representatives of professional sports leagues and “other key industry stakeholders who are supportive of the FSCA’s initial plan”.
Fantasy Sports Leaders Scrambling for Self-Regulation
As the Fantasy Sports industry comes under heavy fire from state regulatory bodies and federal investigators, it’s clear that the FSTA is scrambling to resolve the issues on its own, without being forced to comply with external regulation.
“The issues and opportunities facing the fantasy sports industry can be best addressed through an independent agency supported by the industry and its members,” said Commissioner Harris. “The FSTA will continue to work closely with state and federal lawmakers and regulators as we develop and implement strong integrity programs.”
Harris iterated the agency’s confidence “that an independent control agency can prevent any unethical, dishonest, or unfair behavior. In the process, we can save lawmakers and regulators the cost and effort of intervening so that they can expend their limited resources on bigger and more societally important challenges.”
Not Everyone is as Confident as Harris, FSCA
Marc Edelman, a contributor for Forbes.com that specializes in the legalities of fantasy sports and online gaming, isn’t so sure. “Harris’s background in government provides an appearance of impartiality and external review for daily fantasy sports in the wake of recent federal investigations,” said Edelman.
He compared the new FSCA commissioner’s appointment to the farcical assignment of Kennesaw Mountain Landis as Major League Baseball’s first commissioner in 1921, “in wake of the 1919 Chicago White Sox gambling scandal.”
Edelman resolved that Harris will likely “be compensated by the FSTA and its membership”, just as Landis was from MLB team owners. He also pointed out that Harris “serves as an attorney at Dentons– the same law firm that has long served as lawyers and lobbyists for the Fantasy Sports Trade Association.”