Officials Call on Congress to Reexamine Unlawful Internet Gambling Enforcement Act

NJ Spotlight News | October 13, 2015 | Politics, Sports
Menendez and Pallone want Congress to reexamine internet gambling act.

By Erin Delmore

“This unregulated. It’s the wild west,” said Rep. Frank Pallone

Pallone is talking about the multi-billion dollar industry surrounding fantasy sports. It’s booming, with leading sites FanDuel and DraftKings raking in millions in entry fees. And thanks to a loophole in a 2006 anti-gambling law, none of it is unregulated.

“We didn’t want to burden groups of friends that get together to have friendly contests and see who knows most about the sport,” said Sen. Bob Menendez.

They’re calling on Congress to reexamine the Unlawful Internet Gambling Enforcement Act, which cracks down on online sports betting, but counts fantasy sports as legal.

DraftKings says that’s because “The U.S. Government and 45 of the 50 states consider fantasy sports a game of skill.” New Jersey is among them.

“When you have such a large industry with little federal or other oversight, there is nothing to guarantee that the level playing field that is so central to our society is i fact leveled, and we’re seeing the results of that,” said Menendez.

Earlier this month, a DraftKings employee released NFL data before the start of that week’s games, then went on to win $350,000 on his company’s rival site, FanDuel.

DraftKings sent a letter to players, saying its investigation “reflected absolutely no wrongdoing” on the employee’s part. FanDuel says “There is no evidence indicating the contest was compromised or that non-public information was used for unfair advantage.” They’ve since barred their employees from competing on rival sites.

Lawmakers say it’s not enough.

“It’s like an employee from one corporation using inside non-public information about his corporation to make stock trade with another financial institution,” said Menendez.

Menendez and Pallone wrote a letter urging the FTC to look into claims of fraud and deception. The New York State Attorney General launched an inquiry into whether employees of the two companies used inside information to the detriment of players. And a class action suit was filed in federal court.

Pallone sits on the House Energy and Commerce Committee, which holds jurisdiction over sports competition.

“If a consumer goes to the racetrack and makes a bet, that’s a highly regulated bet. In other words they have the confidence of knowing that the racing commission or the state in some fashion are watching what goes on, they know what the handle is, they can research it,” said Pallone.

The controversy doesn’t look like its stopping players. This weekend’s NFL games set an all-time record for FanDuel and DraftKings’ guaranteed prize pool tournaments. The two sites got more than 7 million entries, totaling more than $40 million in entry fees.

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