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Daily Fantasy Sports Scrutinized by Congress

Daily Fantasy Sports Scrutinized by CongressOn Wednesday, the U.S. Congress decided to study the legalities and the future of daily fantasy sports after months of individual legislative battles by several states.  This year, ten state attorney generals have ruled that daily fantasy sports that include fantasy football, fantasy baseball and such are in violation of state gambling laws.

In addition twelve other states like Missouri are actively considering regulatory legislation for fantasy football.  Yesterday’s meeting of the House Subcommittee on Commerce, Manufacturing and Trade became the first discussion regarding daily fantasy sports at a federal level.

Fantasy sports Games is a multibillion dollar business that is often advertised during the football, basketball and baseball season with DraftKings and FanDuel being the two largest Fantasy Sports companies leading the pact.  Oddly enough, their presence was not at the meeting.

Several members of the subcommittee did have a difficult time understanding daily fantasy sports which is a game that involves picking an imaginary roster of players from different teams which accumulate a score based on the players’ performance.  The performance then goes against other opponents in their perspective league.  In most cases, the contest is held over an entire sporting event season with the best team receiving a determined share of the jackpot.  The fantasy sports company in exchange receives a fee a percentage from the entry fee.

Due to the fast growth of the industry has placed fantasy sports under a microscope thanks  in part to the allegations of insider trading information giving players that work for DraftKing and FanDuel an advantage over other players.  In addition, one of the questions brought up was the discrepancy where 90% of the payouts are won by just 1% of the winners which include sports handicappers and professional players with a wide array of tools to help them win.

In short, Congress wants to also make sure that the consumer knows what it is getting into and that there is a risk of losing money when they participate.  

During the meeting, New Jersey Congressman Frank Pallone brought the sports betting agenda to the table and questioned the “hypocrisy” of the legal status of daily fantasy sports contests while online sports betting continues to be blocked by the federal government.

The Congressional meeting was not in any way a rush to talk about imposing federal regulation on the industry but rather to discuss in a friendly manner a way to protect consumers.

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