Daily fantasy sports land in gambling industry crosshairs

Mon Aug 3, 2015 10:58am EDT
 
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By Liana B. Baker

NEW YORK (Reuters) - Mike Petta played Internet poker until 2011, when most U.S. poker websites were shut down. Last year, the 31-year-old father of two quit his job as an accountant to play fantasy sports full time, spending thousands of dollars a night entering fantasy sports contests. Now, the gambling industry wants him back.

Playing from home in Livonia, Michigan, Petta is one of millions of Americans who draft virtual sports teams online and enter real-money competitions that last only a few hours. Investors have followed suit, making daily fantasy sports a multi-billion-dollar business.

The two fantasy sports startups which lead the industry, FanDuel and DraftKings, have both raised hundreds of millions of dollars in funding in the past few weeks, scoring valuations of about $1 billion each.

That's sparked some frustration at major gaming companies such as MGM Resorts International and Boyd Gaming Corp, as well as sports book companies such as William Hill Plc, which have told Reuters they want to see daily fantasy sports regulated like gambling.

"I make my living in the gambling industry, so I'm hardly opposed to gambling," said Joe Asher, CEO of William Hill US. "I think daily fantasy sports betting should be legal, just like I think traditional sports betting should be legal. But let's not pretend one is OK and the other is not. Drawing some artificial line between the two makes no sense as a matter of law or policy."

Daily fantasy sports companies now operate in at least 45 U.S. states, though some are mulling reviews on whether the activity should be treated as gambling rather than games of skill. Nevada's Gaming Control Board, the regulatory body that oversees gambling in the state, has started to analyze the legality of daily fantasy sports.

Companies that offer traditional sports betting, legal to some degree in only four states, are heavily regulated by gaming boards, need to follow anti-money laundering guidelines, follow strict rules on protecting player funds and pay special gaming taxes.

Proponents of the daily fantasy sports industry say that the Federal Unlawful Internet Gambling Enforcement Act of 2006, a law meant to crack down on online poker, included a carve-out that exempted fantasy sports.   Continued...