By Paul Nicholson
October 16 – The fantasy sports scandal in the US where an employee of DraftKings won $350,000 on rival site FanDuel using insider information, has sparked a wave of calls for regulation of a business that is based on betting real money on imaginary sporting outcomes.
First to react has been the Nevada Gaming Control Board which has banned fantasy sports websites operating in the state, arguing that the games are unlicensed sports betting.
In the US DraftKings and FanDuel have about 90% of a market that has become a multi-million dollar gaming business where fee paying entrants can potentially win millions. Until now unregulated, the daily fantasy sports (DFS) industry is facing a wave of regulation from lawmakers across the US in the face widespread condemnation of its practices.
While the DFS business in the US is based around US sports, there has been a growing move in Europe for fantasy football companies to adopt the game principles that have driven the huge growth in the US.
Currently the marketplace is largely unregulated and even those engaged in the business say that this is a problem, and the DFS business has been hard hit by the scandal in the US
Valéry Bollier, CEO of Oulala, a fantasy gaming company that has just launched its pay product into the UK market and is planning its global expansion, says that the business must be regulated.
“I’m afraid the current crisis in the USA was inevitable. As soon as a game is monetised a legal authority is needed. It’s simply in the best interests of the whole ecosystem – it is good for the clients, of course, but also for the operators because the clients’ interests are secure so they play more,” said Bollier.
“The main problem is that because our industry is so young, legislators have not had the time to adapt to the market reality. For example, Oulala has a pools betting licence in the UK even though we are not a sports betting activity,” he continued.
“European actors need to work hand in hand with the European legislators to quickly build a tailor-made frame for fantasy sports. We, Oulala, have been closely working with the Maltese Authority for a couple of months and we hope that Malta will soon be the first European country to offer a specific licence for skill games.”
Chris Eaton, Executive Director of Sport Integrity for the International Centre for Sport Security (ICSS), has been a leading voice in the push for regulation of the fantasy sports business.
The ICSS reiterated their standpoint to Insideworldfootball saying: “DFS must be considered the same as sport betting and be properly regulated by national government like any other industry.
“As we have seen with the explosion of the sport betting industry over the last couple of decades, the Daily Fantasy Sports industry is a market that is now worth hundreds of millions of dollars each year, which at the moment is under-regulated and operates largely under its own codes of ethics and business standards.
“If this industry continues to go unchecked by governments, this operating environment has the potential to be infiltrated by organised crime which could also lead to issues like insider-trading and potentially even more serious cases of corruption or even match-fixing in the future.”
The US has moved to plug the regulation gap in Nevada and other states are expected to follow suit. Europe will need to move swiftly to get regulation of fantasy sports gaming on to the agenda to prevent the same breaches of integrity the US market is currently witnessing.
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