Fantasy sports industry hires Obama veteran for self-regulation body

The Fantasy Sports Trade Association announced Tuesday it was forming the Fantasy Sports Control Agency to be led by former acting U.S. Labor Secretary Seth D. Harris who had returned to Cornell University as a distinguished scholar.

Last week, NCAA executive vice president Mark Lewis sent a letter to the two largest daily fantasy sports websites, informing them that they will not be allowed to advertise during championship events – notably the national men’s and women’s college basketball tournaments – stating its belief that daily fantasy sports “meet the definition of sports wagering within our bylaws”. The Unlawful Internet Gambling Act of 2006 established that fantasy sport leagues are skill-based games, not games of chance.

The $1.5 billion industry is banned in five states and has essentially been shut down in Nevada. Describing the bill as the first of its kind in the nation, it would create standards for auditing daily fantasy companies that want to do business in the state and prohibit their employees from playing in contests on other sites, among other restrictions, he added. They have allowed fans to bet with a frequency that a few critics argue is akin to sports betting or gambling.

The attempt to self-regulate comes as legal scrutiny of the daily fantasy sports industry led by DraftKings and FanDuel grows and questions are raised about consumer protections including what information employees have access to and when.

DraftKings and rival site FanDuel have been under fire recently after the New York Times reported that a DraftKings employee had won almost $350,000 on FanDuel.

Enforcement: Establishment of a system that provides incentives and public recognition for compliance with FSCA guidelines and penalties for failure to comply.

“We’re pleased that the FSTA is leading this effort for self-regulation and forming an independent agency for the entire fantasy industry”, said FanDuel CEO Nigel Eccles in a statement.

Attorney General Maura Healey, whose office is doing a review of the industry and its companies, said today she wasn’t aware of the move by the trade group, but she isn’t surprised by it.

Privately held DraftKings and FanDuel say they are producing revenue. “We look forward to working with the FSTA and all of their member organizations to ensure that our collective products adhere to a baseline of best practices”.

Harris said that the growing prevalence of fantasy sports meant it was more important for the industry to implement checks against wrongdoing.