Lawmakers "are preparing to grill" daily fantasy sports execs next month in DC, where the industry "has little lobbying clout," according to Josh Kosman of the N.Y. POST. A source said that the House Committee on Oversight & Government Reform, led by U.S. Rep. Jason Chaffetz (R-Utah), "is expected to hold hearings on fantasy sports in November" (N.Y. POST, 10/19). U.S. Sen. Harry Reid (D-Nev.) on Saturday said that he "backs his home state's crackdown" on DFS sites. THE HILL's Sarah Ferris noted the state of Nevada on Thursday announced it would treat DFS sites "as gambling operations under the law." Reid said that the Nevada Gaming Commission "made the right call that the sports sites needed to follow the same standards as other gambling sites" (THEHILL.com, 10/17). Meanwhile, U.S. Sen. Robert Menendez (D-N.J.) said when lawmakers created the exception for fantasy sports, "We were thinking about friends getting together and playing fantasy sports where, at the end of the season, there would be a winner." Menedez: "No one envisioned a multibillion dollar industry, daily games, hundreds of thousands of people playing, billions of dollars at stake. And look, at the end of the day, we have poker, horse racing -- you can get better at skills by practicing and studying up, but they're regulated as gambling." He said the daily fantasy industry is "something Congress will have to look at" ("Outside The Lines," ESPN2, 10/18).
OTHER SHOES START DROPPING: In N.Y., Joe Drape reports DraftKings "accepted entries into its contests for the weekend, apparently defying an order from the Nevada Gaming Control Board to quit operating immediately within the state." FanDuel and "other smaller rivals" adhered to the order. But a DraftKings spokesperson acknowledged that it "made an exception for some of its customers in Nevada." The spokesperson: "We allowed players who had already entered games on Thursday to be able to continue their full experience with the product until games close and are paid out on Monday night, regardless of their location." Nevada Gaming Control Board Chair A.G. Burnett said that he "was aware of DraftKings’ stance and that his agency was monitoring the situation." He added, "Failure to disengage can constitute a crime" (N.Y. TIMES, 10/19). The AP reported Illinois' gaming board now "plans to seek a legal opinion on whether daily fantasy sports websites like those ordered shut down in Nevada violate state law" (AP, 10/17). The N.Y. TIMES' Drape cited sources as saying that a federal grand jury "has issued a subpoena" to the Fantasy Sports Trade Association as "part of an investigation into the practices and legality of the booming, unregulated daily fantasy sports industry." The grand jury investigation "is being conducted under the auspices of the United States attorney’s office in Tampa." The group, which lobbies on behalf of leading sites such as DraftKings and FanDuel, "was the target of the subpoena." The scope of the investigation "remained unclear." The subpoena "requested, among other materials, copies of the minutes from the organization’s board meetings" (N.Y. TIMES, 10/17). PRO FOOTBALL TALK's Mike Florio reported Yahoo "has pulled the plug on Nevada" with regard to its daily fantasy game. Yahoo also "has alerted customers that it will suspend operations in Florida, where a federal grand jury is exploring whether daily fantasy violates Florida law" (PROFOOTBALLTALK.com, 10/18).
DECREASE IN USAGE THIS WEEKEND: New data from DFS analytics outfit SuperLobby.com this morning said both DraftKings and FanDuel posted declines in guaranteed prize pool entries and fees this past weekend, representing their first slowdown since the beginning of unrest within the industry. Following the posting of NFL season-highs during the weekend of Oct. 10-11, DraftKings fell to 3.76 million in NFL entries and $22.9M entry fees from 4.14 million entries and $25M in fees the weekend before. FanDuel fell to 3.27 million entries and $19.9M in fees from 3.38 million entries and $20.1M in fees the weekend before. SuperLobby.com's report included the comment, "After last week's astonishing NFL GPP figures, the Daily Fantasy Sports industry experienced a reality check yesterday. For the first time this season, total entry numbers and total entry fees went into reverse." In the wake of the ebbing fan interest, the two leading operators plus Yahoo have each reduced guarantees of their headline NFL contests this coming weekend (Eric Fisher, Staff Writer).
POWER PLAYERS WEIGH IN: Patriots President Jonathan Kraft, whose Kraft Group owns a stake in DraftKings, said of it and FanDuel, "Both companies ... are both willing [to face some regulation], and I think they welcome the oversight. And what I’ve read of both companies’ CEOs, they’ve said everything should be transparent, and we’re open to regulation, which is probably the right next step." Kraft, speaking before yesterday's Patriots game on WBZ-FM, added, "Fantasy sports is pretty much a part of mainstream culture now in our country, and I think it’s a nice element of what we have, and I think it should be regulated as well" (BOSTON.com, 10/18). Kraft: "It only drives fan interest in the NFL from my perspective" (ESPN.com, 10/18). Mavericks Owner Mark Cuban said that if states "ever decide to classify DFS as a game of chance, 'they would be mistaken.'" He added, "The thing about DFS is that over the long run the smartest players win. Repeatedly. How is that a game of chance?" (N.Y. DAILY NEWS, 10/19).
