The trade organization that represents more than 300 companies in the fantasy sports industry announced Tuesday that it has appointed former acting U.S. Secretary of Labor Seth D. Harris to create the Fantasy Sports Control Agency.
The Fantasy Sports Trade Association (FTSA) said that Harris will be in charge of creating "a strict, transparent and effective system of self-regulation" made up of expected ethical and financial standards. Financial standards would be audited by a major accounting firm, with the promise of penalties for institutional failures, according to the FTSA.
"The issues and opportunities facing the fantasy sports industry can be best addressed through an independent agency supported by the industry and its members," Harris said in a statement. "The FSTA will continue to work closely with state and federal lawmakers and regulators as we develop and implement strong integrity programs. We are confident that an independent control agency can prevent any unethical, dishonest, or unfair behavior. In the process, we can save lawmakers and regulators the cost and effort of intervening so that they can expend their limited resources on bigger and more societally important challenges."
Whether state legislative bodies and the federal government will agree that self-regulation is a sufficient control remains unknown. At least 24 lawsuits have been filed in the last 20 days, many alleging that DraftKings and FanDuel employees had advantages over average players by having access to inside information. Those suits were filed after it was revealed that DraftKings employee Ethan Haskell won $350,000 in a FanDuel NFL contest.
DraftKings said that its investigation and a third-party investigation found no wrongdoing, but New York Attorney General Eric Schneiderman and U.S. Attorney Preet Bharara continue to look into practices by these companies.
Outside regulation is already a reality in Nevada. Earlier this month, the Nevada Gaming Control Board said it considered daily fantasy gambling, and therefore companies such as DraftKings and FanDuel would need licenses if they wanted to continue to do business in the state. Both companies reacted by pulling out.
A bill to regulate fantasy sports was introduced Tuesday by Illinois Rep. Mike Zalewski.