Following the September 2015 daily fantasy sports (DFS) scandal, U.S. Senator Robert Menendez (D-NJ) and House Representative Frank Pallone, Jr. (D-NJ) sent a letter to the Federal Trade Commission requesting an investigation of DFS industry leaders DraftKings, Inc. and FanDuel, Inc. The FTC’s response letter stated that the Commission believed no new regulations or legislation were necessary.
On Tuesday November 10, 2015, Menendez and Pallone sent the FTC an additional letter renewing their request for federal action. The date of the letter was most likely no coincidence. That same day, New York Attorney General Eric Schneiderman announced his decision to ban DFS wagering in New York State. Schneiderman concluded that DFS games are illegal under New York law, which defines gambling as staking or risking “something of value upon the outcome of a contest of chance . . . .” Historically, with respect to consumer protection, decisions of the N.Y. Attorney General’s Office often create national precedent.
The November 10th letter asks the FTC to reconsider its prior decision. In support of their request, Menendez and Pallone stated:
It is clear . . . that new proactive consumer protections should be considered. [T]he industry’s attempt to establish a self-regulatory scheme through the recently announced Fantasy Sports Control Agency is simply not enough. In fact, just days after that announcement, FanDuel CEO Nigel Eccles sent a letter to customers . . . asserting that fantasy sports “needs strong, common sense, enforceable consumer protection requirements” for its own success as well as for the welfare of consumers. And the commissioners of the National Football League, Major League Baseball, and the National Basketball Association, have agreed that daily fantasy sports games need regulations. While traditional gambling establishments are highly regulated through both state and federal law and online gambling and sports betting is severely restricted, daily fantasy sports remains completely uncontrolled.
Menendez and Pallone requested congressional hearings on the matter, which they believe may “lead to a determination that additional regulation is needed.”