Crony Capitalism Targets Latest Victim – Fantasy Sports Players

by lgadmin


As former New York Yankees icon Yogi Berra is said to have opined, “it’s like déjà vu all over again.” So it is with the U.S. Congress repeatedly abusing its power over “interstate commerce” to play favorites and distort the free market. One of the latest targets of such regulatory overreach is fantasy sports betting.

This is a swimming pool in which Members of Congress have played previously. In fact, some of the same gaming companies I sought to help escape unfair government regulations when I represented Georgia in Congress back in the late 1990s are now trying to weaponize similar regulations against their competitors. It reflects the tired story of Crony Capitalism.

After I began my eight years of service on the House Judiciary Committee, I became dismayed at how federal legislation and regulations aimed at online gaming companies came at the behest of wealthy brick- and-mortar casino interests. In fact, in 1992, shortly before I began my congressional career, President George H.W. Bush signed into law the Professional and Amateur Sports Protection Act (PASPA), which imposed a federal ban on sports betting throughout the United States. In a significant victory for consumer choice, states’ rights, and the marketplace, the Supreme Court in 2018 overturned PASPA, thereby reaffirming that sports betting deserves freedom from government overreach.

Now, however, FanDuel and DraftKings, two of the largest and most successful companies that were helped most by the High Court’s lifting of that anti-free market law, are looking to use Uncle Sam’s regulatory powers to kill some of their competitors in the same way that the brick- and-mortar casinos tried to stop FanDuel and DraftKings’ operations in the 1990s.

The Sports Betting Alliance, the trade association representing these two companies and other major online gaming interests, is working to convince government regulators across the country to unfairly categorize certain fantasy sports contests that compete with their products as “illegal sports betting.”

This most recent chapter in the saga of crony capitalism started early last year, when a lobbyist for Sports Betting Alliance emailed the Wyoming Gaming Commission asking it to reclassify their competitors’ operations as “proposition parlay bets” by regulatory fiat. Shortly thereafter, a representative from the Commission responded that his office would soon send cease-and-desist letters to those companies – which was done in an unusually expeditious manner.

Anyone familiar with government regulatory processes know how unusual it is for legal offices and regulators to make decisions quickly on matters such as the one brought to the Wyoming Gaming Commission, especially in the absence of authorizing legislation and without initiating any rulemaking process. Significant, publicized investigations and analyses (which would involve contacting the purported problem operators in question) would generally occur first. None of that appears to have taken place in this case — public officials seem to have acted on the lobbyist’s concerns without receiving input from anyone else.

Since this occurred in Wyoming, several other states, including Michigan, New York, and Florida, have either taken or have begun considering similar action against “pick ’em” fantasy sports, and the Sports Betting Alliance reportedly is approaching Congress for similar help.

The upshot of this is that the very same companies that felt the heat and stress of abusive government regulations years ago are now going after their competitors in a similarly unfair way. Sadly, what we are witnessing is nothing new. All too often, smaller or upstart companies cry foul about the broken system of backroom political dealmaking by the big boys, but only until they become sufficiently successful and established to run those backrooms themselves. It is Crony Capitalism at its finest.

In 2017, the Federal Trade Commission blocked a proposed merger of DraftKings and FanDuel because it feared that this very same anti- competitive activity would occur. While the merger never moved forward, these two companies now appear to be operating as an exploitative duopoly instead of a monopoly.

The time now appears ripe for Rep. Jim Jordan (R-OH) and Sen. Dick Durbin’s (D-IL), chairmen of the respective House and Senate Judiciary Committees, to launch hearings into the online gaming sector to investigate these regulatory proposals and the behavior of these conglomerates more closely. The fate of the fair and free online fantasy sports markets and gaming that I and other former colleagues worked so hard to restore a quarter century ago, behooves them to do so.

Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He served as the United States Attorney in Atlanta from 1986 to 1990 and was an official with the CIA in the 1970s. He currently practices law in Atlanta, Georgia.

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