Having worked in heavily regulated fiscal environments most of my life I am apt to take a pragmatic and quantitative approach to problems. I have also headed organizations that employ lobbyists and have drafted legislation that has been formed into law.
I am not a DFS pro nor do I ever want to be one. I am, however, a supporter of the industry and an avid market participant. As such I cringe at the current grassroots efforts that have begun and frankly find it irresponsible on the parts of Fanduel and DraftKings to suggest these efforts as viable.
I do not believe that constituencies’ voices do not matter, I believe just the opposite, organized individual political movements have shaped history. The error in the case of the FanDuel petition is that it was drafted and is being propagated by FanDuel, a group with plenty of skin in the game. A company leveraging a user base to get signatures on a self-serving document is not worth the digital paper it was written on. Such an effort will prove counterproductive as it further proves that the fiduciaries are naive and ill equipped to manage regulatory reform.
When you really look at it, all the current petition serves to accomplish is a lengthening of FanDuel’s email marketing list. They’ve asked for your name and email address, on the assumption that you believe legislative bodies will put any stock into the list. Do you think Goldman Sachs sends out a mass email petition when a capital product is disallowed? The idea is laughable, they handle their own affairs and certainly do not call more attention to the issue the way the DFS companies have.
Elected officials generally frown upon being called to task or challenged publicly and they certainly don’t like having their noses rubbed in it. Flaunting a loop hole and running advertisements ad nauseam is like throwing a steak to the lion. Politicians love attention and pulling a product as visible and popular as this off the shelf would be a great way to get it.
In an effort to give the DFS community a modified approach to protecting the market to #SaveDailyFantasy I have prepared a balance sheet analysis. When analyzing a balance sheet the simplest way to approach it is to look at current assets over current liabilities.
I will start with the assets, answering the question “What assets does the industry provide the decision makers?” The fact that you like it and it is your hobby is irrelevant to any real discussion regarding how to protect the product, which is an important point to remember when crafting your message.
It is a budding industry and potential economic driver.
It is a growing employer with future expansion on the horizon.
A cottage industry has been slowly building around it with further potential for growth.
All winnings are taxed both at the Federal and State levels.
If properly regulated, it is a direct competitor of illegal offshore bookmakers which have recently been targeted by the FBI.
The operators have been offering private equity stakes to the likes of Robert Kraft, ESPN and many others in an effort to grow capital with an IPO planned in the future.
The DFS operators have partnerships with all major sports leagues.
I am sure some of the above is debatable, however, if I were discussing the benefits of the industry the above bullets are where I would begin.
Potential for fraud and insider trading.
Potential for mismanagement of customer’s funds.
Customer’s playing irresponsibly and potential gambling addiction.
Syndicate activity including efforts to circumvent paying taxes on winnings and multi-accounting.
The list of liabilities could go on, the important thing is to be forward with the potential risks so that preventative measures can be taken.
Email Your State Representative
If you really want to protect the DFS market call or email your State or Federal representative and request a meeting. Prepare a short list of advantages and disadvantages and send an email prior. You may be surprised how easy it is to get a 5 minute sit down, believe it or not, they like talking. Shocking, I know. They particularly like talking to constituents that go home and say nice things about them. This is how grassroots effort are done.
Please do not think that signing a petition and ranting on Twitter are viable solutions to what really could be the end of the games we all love.
If you do send an email, here is a suggested opening to use:
Dear Representative XXX,
My name is XXX. I would like to let you know about an issue that is important to me and many others within our great State. As you may be aware, the Daily Fantasy Sports industry has come under fire, with the legality of the entire industry being questioned. While I certainly respect the elected officials involved, I believe some of the information being provided through various media outlets is a bit sensationalized and unwarranted. I don’t think anyone would argue that the industry as a whole has flaws and requires a greater level of regulation, what is concerning is the idea of banning it altogether.
Finish as you see fit. It is important to offer a unified front and not a cookie cutter response. If you want your voice heard, speak up and be original.