As Boston-based DraftKings faces heat from law enforcement officials across the country, Attorney General Maura Healey has now decided the fantasy sports industry “will need to be regulated.”
It’s the right call after an oddly passive approach from Massachusetts officials.
Healey tried to block Steve Wynn from building a proposed casino in Everett because of traffic concerns. But when it came to taking on DraftKings, her attitude was much more mellow, despite insider trading allegations and other matters of public interest — such as whether it’s really a casino-like gambling operation.
At DraftKings’ request, Healey said she was reviewing the matter, and was asking industry representatives what consumer protections they have in place. Meanwhile, Governor Charlie Baker told Boston Herald Radio he was awaiting Healey’s review, and the Massachusetts Gaming Commission was also happy to leave that job to the AG.
“The commission will coordinate as needed with the Legislature, members of the executive branch, and constitutional officers to protect the interests of the Commonwealth’s citizens,” a Gaming Commission spokeswoman said.
The fantasy sports industry routinely argues it’s pitching a game of skill, not chance. But the spin is wearing thin — especially after Nevada decided that, under its state law, pay-to-play fantasy sports is gambling and can’t be offered without proper licensing.
To make its case that fantasy sports is gambling, the Nevada attorney general’s office used words it said were stated by Jason Robins, the CEO and cofounder of Draft-
Kings, during a three-year-old discussion thread on Reddit.com. Although the thread doesn’t specifically name him, a memo from the AG’s office attributes these words (first reported by Deadspin.com) to Robins: “The concept is almost identical to a casino . . . specifically poker. We make money when people win pots.”
The Nevada AG’s memo also points out that DraftKings “applied for and received licenses to operate in the United Kingdom.” And, in Britain, the licenses are specifically for “pool betting” and “gambling software.”
Since Nevada’s ruling, the Illinois Gaming Board said it believes DraftKings and its New York-based rival, FanDuel, are probably illegal in that state, too. According to The Wall Street Journal, federal prosecutors in Tampa are investigating the industry; and according to The New York Times, so is the Boston office of the FBI.
The criminal investigations, according to the Times, are connected to allegations about the use of insider information used to build virtual player rosters. Forgetting that “public” means anyone can read it — including law enforcement officials — seems to be part of the DraftKings culture: Information under review, according to the Times, includes a public post by a DraftKings executive “informing players how to deposit funds and play in contests in states and countries where the games are prohibited.”
But as controversy swirled, Massachusetts officials seemed wildly unconcerned.
Healey said she’s not pursuing any criminal inquiries and that there are no federal or state laws that prohibit these sites from operating. In the meantime, Baker and the Gaming Commission seem to be taking their cues from her.
There’s big money involved, with the daily fantasy sites “worth billions on paper,” according to the Times. Big names are also involved. Investors include Major League Baseball, the National Basketball Association, NBC, Comcast, Fox, the Kraft Group (i.e., Robert Kraft of the New England Patriots), and Jerry Jones of the Dallas Cowboys.
These sites should be regulated — just like casinos. After all, casino operators who are competing for Massachusetts licenses are complying with exhaustive rules and will pay millions in revenue to the state. There shouldn’t be a double standard for sports fantasy sites.
Healey is proactive on many fronts. When she wants to take up a cause, she’s not shy. Neither is Baker. But no one seems anxious to take on this homegrown business.
Taking bets now on why.Joan Vennochi can be reached at email@example.com. Follow her on Twitter @Joan_Vennochi.