Business

March Madness reignites NCAA battle against fantasy sports

Plenty of people will toss a few bucks into the office pool when the NCAA basketball tournament tips off Thursday. On the websites of the country’s two largest fantasy sports companies, the action is a bit more intense.

DraftKings Inc. and FanDuel Inc. are offering thousands of players a shot at $900,000 in total prize money in several tournaments based on March Madness games. “One champion fan will cut down the nets $50,000 richer, and all 50 finalists escape the mayhem with serious cash,” FanDuel said on its site.

The NCAA is not so excited. The association, which represents the country’s biggest college athletic programs, has been trying for months to get fantasy sports companies to stop offering contests based on college games.

Advertisement

“We have made clear at every point in this national debate that daily fantasy sports competition should not be allowed to be conducted using college, high school, and youth sports programs,” NCAA chief legal officer Donald Remy said.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

But the companies have rebuffed the NCAA’s request, so the fight appears to be shifting to the political arena. In February the Legislature in the NCAA’s home state of Indiana approved a bill allowing for daily fantasy sports games, but specifically does not permit cash prizes for college sports contests.

In Massachusetts, Attorney General Maura Healey is expected within weeks to enact new rules governing fantasy games that also includes a ban on collegiate athletics.

DraftKings would say little about the NCAA’s objections. In a statement the company said, “We are actively engaged with lawmakers across the country to ensure thoughtful and appropriate consumer protections.”

The rift between the NCAA and the daily fantasy industry opened last fall, after the companies came under fire by federal and state authorities over whether their cash contests constituted illegal or unlicensed gambling.

Advertisement

In a pair of sternly worded letters, the NCAA asked Boston-based DraftKings and New York-based FanDuel to stop offering fantasy sports contests based on college sports, saying it considered the companies’ cash-prize games a form of gambling that might violate federal law.

“We believe that your product should not be offered in the college space,” NCAA vice president Mark Lewis wrote.

The NCAA also said it would block any advertising from fantasy companies during its championship events and bar officials who work its games from participating in paid fantasy contests. Athletes who play paid fantasy sports, the association has warned, could lose their athletic eligibility.

In a response, the legal chief for FanDuel, Christian Genetski, in October rejected the association’s request, saying that “the NCAA has no legal basis for requiring FanDuel to stop offering such contests.”

Less than a month later, FanDuel hosted its College Football Championship tournament at the Playboy Mansion, handing out $500,000 in cash prizes. DraftKings followed up with a total prize pool of $1 million at its Fantasy College Football World Championship in San Diego.

Advertisement

Daniel Wallach, a sports and gaming lawyer with Becker and Poliakoff of Fort Lauderdale, Fla., said the companies have nothing to fear from the NCAA. “The NCAA has no jurisdiction over FanDuel or DraftKings, and is essentially powerless to force them to comply with NCAA bylaws,” Wallach said.

Fantasy sports are a small slice of the overall money that changes hands during the NCAA basketball tournament.

The American Gaming Association, a trade group representing casinos, estimates that $9.2 billion will be wagered on the NCAA basketball tournament this year. Most of those bets are illegal. The AGA projects that just $262 million will come through sports books that are legal in Nevada.

But the relatively small stakes of fantasy games don’t much matter to the NCAA, which opposes “all forms of legal and illegal sports wagering.”

The tussle over college athletics is far from the only problem confronting daily fantasy companies. The industry has been fighting for its survival in recent months, the most serious challenge coming in New York, where Attorney General Eric Schneiderman has sued to ban DraftKings and FanDuel from the state. The companies are fighting that lawsuit, and the industry has mounted a multistate lobbying effort aimed at legalizing and regulating daily fantasy sports.

In Massachusetts the fantasy sports industry objected to Healey’s proposal to prohibit cash contests on college sports, but have embraced other measures in her long list of consumer protection regulations.

But the attorney general, who played college basketball at Harvard, seemed pretty firm about where to draw the line.

“This is college. These are student athletes,” she said last year. “Leave it to the pros.”

Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.