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DelBianco: It’s high season for fantasy sports — unless FanDuel and DraftKings bring it down

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October may be the best month for fans who play daily fantasy sports. We have college football, the NFL, baseball playoffs and World Series, and the WNBA playoffs, with basketball and hockey coming up next. It all comes together to provide countless options for enhancing sports entertainment. Sports lovers are also engaging in new innovations, like fantasy sports.

My first foray into fantasy sports was in the 1980s when I wrote software to distribute baseball player stats among teams in a Rotisserie League. Fantasy leagues evolved with online tools and new daily contests in various sports. Then, DraftKings and FanDuel fully professionalized fantasy sports — and leveraged that to lock up 70% of today’s online sports betting market. It’s ironic and unfortunate that DraftKings and FanDuel are working in concert to get government regulators to kick out and keep out potential competitors.

“Entertainment amplification” has become the secret sauce of contemporary spectator sports. Instead of passively watching a game on a big screen, fantasy sports players grab their phone or tablet and match wits with other sports fans. These contests happen throughout the game, allowing fans to show off their knowledge of team tendencies and players’ personal circumstances, such as the passing yards put up by a quarterback or strikeouts tallied by a pitcher.

This evolution in gaming is an outcome of innovation, expanding a market with more creative and convenient services at lower costs. Such innovations spring from upstarts and from established businesses.

DraftKings and FanDuel were once upstarts when they began offering daily fantasy sports online. Sadly, they have now turned to protecting their market leadership by “rent-seeking” –— advocating for regulatory barriers that lock in positions of incumbent companies.

The apparent goal for DraftKings and FanDuel has been to amend years of laws and regulations so that fantasy sports can morph into gambling — a legal distinction that matters much. This transformation would force the fantasy sports industry to operate under far more onerous regulations designed to restrict gambling on sports games. While the most significant betting platforms have the resources to afford big regulatory burdens, smaller upstarts do not.

The government is always watching, especially the Federal Trade Commission, which seeks to break up businesses regardless of their value to consumers. In the eyes of the FTC, DraftKings and FanDuel's rent-seeking tactics may look like “collusion to restrain trade,” a violation of sprawling antitrust laws. 

This could attract the attention of state and federal antitrust regulators, bringing litigation and unwelcome publicity that would raise the risks of investing to fund innovation at new competitors. Long and complicated antitrust investigations will slow, if not stop, the evolution of daily fantasy sports and entertainment amplification. The real losers would be sports fans.  

The best response for the daily fantasy sports industry and sports fans is for DraftKings and FanDuel to get back to innovating and competing to attract new consumers and grow the market. By focusing on providing the best products rather than appearing to collude to limit competition, the industry can resume its mission of entertainment innovation.

Editor’s note: Steve DelBianco is the president and CEO of NetChoice. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.

fantasy sports, entertainment innovation, sports entertainment, sports lovers, sports, fantasy leagues, Federal Trade Commission, FTC