A key Democrat on the House Energy and Commerce Committee called Monday for the panel to investigate the legality of fantasy sports as sites like FanDuel and DraftKings become more popular.
“I am writing to request that the Energy and Commerce Committee hold a hearing examining the relationship between professional sports and fantasy sports to review the legal status of fantasy sports and sports betting,” Ranking Member Frank Pallone (D-N.J.) said in a letter to committee Chair Fred Upton (R-Mich.) and Commerce, Manufacturing, and Trade Subcommittee Chair Michael C. Burgess (R-Texas).
{mosads}Pallone’s interest in the topic comes at the start of the National Football League’s season and amid an explosion in the popularity of “daily fantasy” sites. Those services allow players to build their virtual teams every day or week instead of only once at the beginning of the season.
Both FanDuel and DraftKings have inked partnerships with individual professional teams in several leagues and have partnered directly with some leagues themselves. DraftKings also sponsored Sunday’s broadcast of NFL RedZone, a channel owned and operated by the NFL.
The explosion of daily fantasy sites has led to a rush among investors to stake a claim in the industry. Both FanDuel and DraftKings are reportedly valued at over $1 billion, putting them in a select but growing class of tech startups.
“Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the NFL season,” Pallone said in a statement. “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result.
But some have speculated that the websites should be viewed as platforms for sports betting, which is illegal under federal law except in certain states. A second law prohibits online gambling, but shields fantasy sports from enforcement under certain conditions.
“The interplay between these federal laws has made the national landscape murky and public policy unclear, making them ripe for Congressional review,” Pallone said, calling for the committee to look at the divide between fantasy sports and gambling.
He also expressed wariness about the the relationship between the websites and professional teams and leagues.
“Team involvement in daily fantasy sports also raises questions of whether players or league personnel, who may be able to affect the outcome of a game, should be allowed to participate in daily fantasy sports,” he said.