DraftKings, FanDuel Go On The Offensive To Win Over Lawmakers

Transcript

RENEE MONTAGNE, HOST:

There are sports and there are fantasy sports. Millions of people play fantasy sports, drafting virtual teams that can win or lose real money. Players pay to enter a contest and win or lose money depending on how their team performs. This might sound a lot like gambling, but companies that offer daily fantasy sports are operating legally under federal law. A loophole defines fantasy matches as games of skill, not games of chance.

STEVE INSKEEP, HOST:

Yesterday, though, regulators in Nevada decided they think otherwise. They say that fantasy sports are indeed gambling. And they say fantasy league websites, like DraftKings and FanDuel, can no longer operate in Nevada without gaming licenses.

MONTAGNE: New York's attorney general is also scrutinizing the multibillion-dollar industry. The Wall Street Journal and The New York Times report that the FBI's investigating as well. And Congressman Frank Pallone of New Jersey, who believes online betting on real sports should be legal, wants to hold hearings on the fantasy operations.

FRANK PALLONE: We've see fantasy leagues, which started out as an exception to sports betting and online gaming, you know, with just some free prizes. Now it's gotten to the point where they have million-dollar jackpots, all-day advertising.

MONTAGNE: For more on the legal developments and how companies are responding, we called Tony Romm, who's covering this story for Politico. He joined us by Skype.

TONY ROMM: Right now, New York is taking a closer look at these companies on allegations of insider trading - employees who get access to data before it's made public and then use that to succeed and win big on the rivals daily fantasy sports offerings. And if Congress takes a look with a hearing, you're going to see the CEOs of these major companies dragged up to Capitol Hill to have to answer questions from lawmakers.

But as we've seen time and time again in D.C., not a whole lot goes very far. So it's pretty unlikely to see some sort of major overhaul of the industry coming from Washington anytime soon. But that doesn't mean these companies aren't concerned about a vast number of threats, both in D.C. and elsewhere.

MONTAGNE: Why is Washington suddenly paying attention?

ROMM: It probably has a lot to do with the aggressive advertising on the part of these two major companies. And FanDuel and DraftKings have a pretty close relationship not just with major NFL teams, but with some of the broadcast networks as well.

MONTAGNE: Now, you have written that the companies are going on the offensive to win over lawmakers. What are they doing?

ROMM: They're bulking up. They're hiring lobbyists. They're getting involved not just in D.C., but in major state capitals. The big news this week is that FanDuel hired its first-ever lobbyist here in D.C. And that comes months after it joined a group called the Internet Association, a lobbying trade group that represents major tech companies like Google and Facebook and a dozen others.

And FanDuel and DraftKings have long been involved in major state capitals, places where they've either been threatened with regulation or in one of five states where those services are currently banned. So these companies really have sensed the regulatory pressure - if we do get a congressional hearing - and all signs point to the fact that we might, perhaps even early next year - these companies are going have to stay on the offensive here in D.C. to ensure that they aren't brought into the sort of regulatory umbrella that they've long tried to avoid.

MONTAGNE: Tony Romm is technology reporter with Politico. Thanks very much for joining us.

ROMM: Thanks for having me. Transcript provided by NPR, Copyright NPR.