New Jersey Hits Back at Sports Leagues by Questioning DFS Legality

Posted on: September 16, 2015, 11:37h. 

Last updated on: September 16, 2015, 12:08h.

Kevin Horridge Read More

US Representative Frank Pallone (D-NJ-6th District), has requested that the Committee on Energy and Commerce, on which he serves, hold a congressional hearing to analyze the legality of daily fantasy sports (DFS).

In a letter dated September 14, Pallone also demanded that the hearing examine the financial relationship between “fantasy sports and gambling and …[that] between the professional sports leagues, teams and players, and fantasy sports operators.”

New Jersey, whose efforts to legalize sports betting at its casinos and racetracks have been stymied by legal action from the major sports leagues, is fighting back, it seems, and is prepared to make life difficult for the leagues.

“Professional sports’ involvement with daily fantasy sports leaves many questioning whether fantasy sports are distinguishable from sports betting and other forms of gambling,” said Pallone in his letter.

Financial Interests

Pallone highlights the fact that within the last two years both the NBA and MLB have bought shares in fantasy sports operators and questions the myriad sponsorship deals that major league teams have inked with DFS operators.

Thanks to lobbying by the sports leagues fantasy sports was exempted from the Unlawful Internet Gaming Enforcement Act 2006 (UIGEA) and deemed to be a game of skill.

However, as Pallone points out, this related to the season-long version of fantasy sports, before the advent of DFS, where customers deposit funds to bet on teams or sports players during a given day, earning points, and cash, based on the performance of their picks.

“Fans are currently allowed to risk money on the performance of an individual player,” Pallone told the Las Vegas Review Journal. “How is that different than wagering money on the outcome of a game?”

Land-based sports betting is prohibited is by the Professional and Amateur Sports Protection Act of 1992 (PASPA), a law constantly evoked by the sports leagues in their efforts to stifle New Jersey’s attempts to legalize the practice.

Call it What it is

PASPA sought to define the legal status of sports betting (as opposed to pari-mutuel horse and dog racing), but provided exemptions for the four states had already legalized prior to 1992.

It provided a 12-month window to allow New Jersey to legalize and regulate sports betting, which would have gained it a PASPA exemption, but it chose not to do so.

Perhaps New Jersey is agitating against the sports leagues in an effort to force them into a compromise, or just to give them a nasty dose of their own medicine, but it’s clear Pallone’s efforts have wider support in casino industry, and not just in New Jersey.

If DFS is exempt from UIGEA and PASPA, why can’t we have sports books, casinos across America are asking.   

“Let’s just call it what it is. Americans love to bet on sports,” Joe Asher, chief executive of sports book William Hill’s US operations told the Associated Press this week. “They both drive interest in the games and they both should be legal, and taxed and regulated.”