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tv   Key Capitol Hill Hearings  CSPAN  May 11, 2016 8:01pm-9:54pm EDT

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officials from the fantasy sports industry law professors and trade associations testified about that business. congressman michael burgess of texas chairs the house energy and commerce subcommittee hearing. >> i want to thank all of our witnesses for being here today and i would ask everyone to take their seats.
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the subcommittee will now come to order. the chair recognizes himself for five minutes for the purpose of an opening statement once again i wish each of you good morning and welcome to our hearing on daily fantasy sports. at the outset i would like to thank the ranking member of the full committee representative for loan -- pallone for his letter last fall requesting a hearing. the panel of witnesses here today will discuss the issues facing daily fantasy sports, the industry as well as consumer protection features that are available in the marketplace. there have been headlines. there have been advertisements over the last year we have all seen the introduction of these contests to fans through some of these contests can be played for money while others are for substantial amounts of money but just as the proliferation of the internet and mobile devices have even consumers access to personalize entertainment on the
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go like netflix, friends and candy crush have supported these sports contest. between 199094 in 2003 the number of fantasy sports players increase from around 2 million players to 50 million players. in 2015 auma 60 million people play fantasy sports. as fun and easy as the games are advertised to be the issues involved are actually complicated, more complicated than they might first appear. this hearing is an opportunity for the stakeholders to discuss the many aspects of this complicated issue. consumer protection is a critical component of this commerce edition and indeed it is a critical component the work of the subcommittee does they in a day up it not only could shoot should consumers have a clear understanding of the rules and the risks or a particular contest but the integrity of the game depends upon consumers getting what they are paying for.
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there is a significant amount of state activity in this area in the last few months. i'm interested in hearing from eyewitnesses house debris liquori responses have impacted their industry and their marketplace. from the states that require the daily sports sites to meet on line gamman requirements to the state senate passed legislation explicitly legalizing fantasy games it is critical to understand the role of the states in one impact their actions have on interstate commerce. consistently during his term of the subcommittee i focused on the struggles of small businesses in the regulatory environment. i believe small businesses are vital to our economy and understanding how they fit into this industry that is reportedly dominated by a few large actors is a critical piece of this puzzle. once again thank you to our witnesses for participating this morning and i would yield back my time and recognize the ranking member of the subcommittee the schakowsky for
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five minutes. smit thank you chairman burgess are holding today's hearing on daily fantasy sports. want to welcome all of our witnesses today. today's hearing comes down to one question, what should be the future of this multibillion dollar gaming industry? fantasy sports games pics fantasy teams of real sports players have taken off in recent years and according to fantasy sports trade association 56.8 million people in the united states and canada participated in some form of fantasy sports in 2015. while this includes traditional fantasy that spans the entire football season four baseball season a rapidly expanding share goes to daily fantasy sports are between 2012 and 25th 16 daily fantasy grew from less than 10% of all fantasy sports spending
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now more than half and there is big money in this industry. daily fantasy companies generate $3.7 billion in entry fees alone when we talk about the daily fantasy industry we are mainly talking about two companies, draftkings and fanduel represent 95% of the daily market. i would not however that neither of those companies are testifying today raid neither are the sports leagues and teams that have partnered with these sites. daily fantasy has gotten big fast but how should we think of daily fantasy x. companies that operate these web sites called daily fantasy a game of skill. i will admit it takes skill. yet the big players as part of your fantasy team. i doubt i would be very good at that. i know i wouldn't but even if some skill is required daily fantasy is at its core involves
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betting on sports. hall of fame quarterback joe namath put it when asked by cmb p. do you have anything, this is what joe said. he said you have to pay anything to play and do they win something? it's gambling unquote. several states have come to the same conclusion. last year in my home state of alumni attorney general lisa maddock declared daily fantasy to be illegal gambling under state law. the lanai state legislatures considering legislation to make daily fantasy they regulated and taxed form of gaming under the oversight of the illinois gaming board. the federal level it almost seems like an accident that daily fantasy sites are allowed to exist in the first place. sports betting is illegal in the grandfathered states under professional and amateur sports protection act and the unlawful internal -- and the unlawful
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internet gambling enforcement act generally prohibited on line gambling. an exception for fantasy sports. keep in mind in 2006 what a past fantasy sports was almost all season long fantasy not the daily fantasy sports we are focusing on today brady been get daily fantasy companies claim to be legal under the letter of the law that doesn't seem like the lawmakers intend. former congressman jim leach and today's it said last year he had no idea the fantasy exception would quote morph today's cauldron of daily betting unquote. he continued cote it is sheer chutzpah fantasy sports companies to cite the law and the legal basis for assisting unquote. as long as the federal law on daily fantasy is ambiguous the legality of daily fantasy will be determined at the state
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level. daily fantasy fantasy companies that there's lots ability to comply with state regulations were daily fantasy has been determined to be illegal gambling. the sizer clinton operate daily fantasy companies need to take robust steps to prevent use by minors are those struggling with gambling addictions ensuring they take the steps that will require appropriate regulations so what should be the future of daily fantasy fantasy collection of the allowed click several states have decided the answer is no. if that is going to take place what regulations need to be put in place to protect consumers with a disappointed the company most central to this discussion are not here today to answer these questions. that said i welcome our witnesses and look forward to hearing your perspective on this industry and i yield back. >> the chair thinks the gentlelady and recognize the chairman of the full committee mr. upton for five minutes for
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an opening statement. >> we will hear from stakeholders that the daily sports that has attracted so much attention and excitement in the last couple of years. most folks exposure consists of a group of friends co-workers getting together for a season-long pool. the games are fun way to bring communities together including republicans and democrats for sure around some of our favorite pastimes. what we have seen the last couple of years is the explosive growth of a new segment of the fantasy world daily fantasy sports. about 60 million folks are playing fantasy sports and reported 14 million are playing daily fantasy sports with sometimes millions of dollars at stake. as we explore the current landscape of daily fantasy sports and new innovations that they offer for fans, consumer protections have to be in place for players on the web sites. it's clear that adult players
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understand clear rules with a look forward to hearing from witnesses about what internal controls are in place to ensure game integrity on fantasy sports web sites particularly if different operators use different controls. i may just have to hear about the cell for an attractive industries put in place the technological tools available to implement consumer protections including age limits. states across the country are looking at these issues which are going to help inform whether federal rule is worded or not. my state of michigan, there's a bill pending in the legislature to expressly legalize daily gambling sports. we must keep in mind a patchwork of differing and contradictory state laws have the potential to negatively impact consumers and prompt further growth and innovation. thank you all for being here today. i look forward to your testimony and i yield back. >> the chair thinks it someone in the tillman yields back.
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the chair recognizes -- recognizes the gentleman from new jersey mr. pallone. >> what started as fallen warmer bedding pools over the course of the season is now a sophisticated on line platform where millions of dollars are exchanged every day. entry fees for daily fantasy sports range from a few cents to several thousand dollars in the major daily fantasy sports operators have posted revenues of more than $1 billion in recent years. casual fans and diehards alike embrace daily fantasy sports is a would interact with the game and players they enjoyed in the leagues have taken no's for the myth that past few years major league baseball the nba the nhl and major league soccer have purchased ownership stakes were invested in daily fantasy sports operators. individual teams across professional sports have formed lucrative partnerships the tsf
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operas including nearly all nfl and ml beat teams and half of the nba teams. these teams and their leagues of the daily sports participants watch more games than the average fan and will even watch a one-sided contest until the end of the player's performance could include stats and earn money so the leagues advertising opportunities. despite his growing popularity daily fantasy sports are currently operating in a legal framework in an industry that's mostly in regulated. it's crucial that consumers know what they're purchasing when they sign up for daily fantasy sports and they understand the risk of losing money in the process. for example there are reports of 90% of payouts are won by just 1% of winners. allegations of insider trading at two major daily fantasy sports operators the potential harm to consumers is real and today we looks were not how it
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stops people from playing but how to bring fairness and transparency to the industry. i must also mention the hypocrisy of those are going to daily fantasy sports is readily distinguishable. while quietly applying for and receiving gambling licenses in the united kingdom daily fantasy sports r. bruce continued to operate in the united states but unlike sports betting daily sports betting is not gambling. speaking of the professional sports league they have made -- reap huge profits with daily bit bebis exports are pretty straight the same time most for me to post a sports the grounds of their players could be involved in gathering and organized crime if her were legalized. yet an estimated oronda billion dollars is spent annually in the united states on sports betting and 99% is legal and functions
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exclusively through organized crime a new jersey voters approved a 2-1 referendum in 2011 to allow sports betting casinos and racetracks in response to every sports league joined together to stop the plan's implementation and stifle the will of the voters. how can a professional sports league oppose sports betting at casinos and racetracks but support the betting taking place everyday a daily fantasy fantasy sports. to date the leagues are not sufficiently explain the difference between fantasy sports, sports betting and other forms of gambling and i look forward to hang from the witnesses on this topic. i just want to conclude by thanking chairman upton kim burgess for holding this hearing while i'm disappointed some of the beloved actors like fanduel and draftkings refused to participate i believe this hearing will be a good beginning our efforts to level playing field between daily fantasy sports traditional
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sports betting and gaming and iq about the balance of my time. >> the gentleman yields back. this includes members opening statement. the chair would like to remind members pursuant to committee rules all members opening statements will be part of the record. the chair also wants to acknowledge the presence of our college from nevada mr. titus on the dice is a member of the committee monitoring activities this morning to ensure that we behave ourselves. we do want to thank her witnesses for being here this morning and taking their time to testify before the subcommittee to today's witnesses will have the opportunity to summarize their opening statements followed by a round of questions from members. our witness panel for today's hearing includes mr. schoenke, mr. john mcmanus of vice president general counsel and secretary of the mgm resorts international, mr. steve
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brubaker executive director of small business of fantasy sports association, dr. ryan rodenberg assistant professor at florida state university within their department sports management. mr. mark locke chief executive officer of genius sports group. lindsay slader. mr. jordan gnat senior vice president of strategic assist development of scientific games, mr. curt eggert professor of law at chapman university's fowler school of law. we do appreciate all of you being here this morning and we will begin our panel with mr. mr. schoenke and you are now recognized for five minutes for your opening statement. thank you. >> german birches ranking member schakowsky members of the 70 thank you for the opportunity to testify today.
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chairman burgess, -- [inaudible] i will try to work through peer chairman burgess ranked member schakowsky members of the subcommittee thank you for the opportunity to testify before you today. my name is schoenke. the fs d.a. has over three and members including major companies such as cbs yahoo! nbc and fox sports three continent date writers like "usa today" and staff thank and real-time fantasy sports my fantasy league fanduel and draftkings. fantasy sports has become a new pastime with over 50 million americans participating in some form of fantasy sports last year. merrick enjoyed fantasy sports as a hobby and a form of entertainment that gives them an enhanced experience in a deeper appreciation for the sports they
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love. i'm also the founder president of rode rota wired.com the leading information web site for fans who enjoy playing fantasy sports. i found the web site 20s ago for fantasy sports just begin to be played on the internet. i'm a small-business owner and i chose a career in industry because i'm passionate about playing fantasy sports and helping millions of others enjoy the hobby. i'd like to give a short introduction to fantasy sports. but me seemed to some seemed to sum as it started last fall with a barrage of ads during football season truth is fantasy sports have been played for over 35 years. while there've been innovations like head-to-head contest live scoring and most recently the daily or weekly format the basic concept has remained the same. the objective is for player to select a team of real world that they think a bit against opponents based on the scoring system that uses statistical measures of individual updates performances. take a seat football as an example. players drafted team of ed real
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world football players to play positions that quarterback running back wide receiver and so forth to the goal is to assemble a fantasy team that will learn the most point, not to pick the winner of any particular particular game better running running back for example earns one point for every 10 rushing yards and six points for a touchdown. this format is typical for both fantasy contests as well as daily. somehow the impression that the daily format is dramatically different than season-long fantasy sports but it's virtually identical and later science points for performance per dollar for same basic principles apply and owners assemble a team of real-world players for multiple positions and those players earn points for the same scoring system is in the season-long league. the only difference is the duration of the contest. rather than taking place over 17 weeks of football season before crowning a champion these contest take place over a single single tear weekend in essence every week of the playoff round is a season long round.
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many sports observers recognize fantasy sports are having a transformative effect on how fans enjoy sports. innovation can enhance fans overall experience to benefit. my second today as point today states are actively regulating our industry. we support common sense state regulation to ensure transparency and fairness and to maintain consumer confidence wants of us as we are committed to consumer protection not just because it's the right thing to do but because it's vital to the health of our industry. states have traditionally taken the leading role in regulating these issues and states have taken varying approaches in the context of fantasy sports for the majority sports paid fantasy sports operate under the existing legal framework without separation separate legislation or regulation but state laws unfair commercial practices some states including virginia indiana and tennessee have enacted legislation to clarify the legality of these fantasy sports contests and to ensure consumer protection. other states are chronic crafting legislation tailored to
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their own states needs and interests. we stand ready to work with any state interest in developing a commonsense religion mark that would allow residents to play fantasy sports while assuring appropriate protections without dampening innovation or denying consumer choice. by and let the federal level congress has impaired the up d.c. two protect from -- we as an industry appreciate it businesses must comply with the standards just as all internet businesses do. we stand ready to work with the ftc and the subcommittee to ensure fairness and transparency are taken as well as daily and season-long and to ensure any damage as incompetent as the fans to choose to play fantasy sports. also hope in doing so we preserve the ability of states to regulate this activity and they do so without killing the innovative spirit in new and exciting choices for many fans to thank you again for the opportunity to testify today and i look forward to answering any
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questions you have. he. >> the chair thanks the gentleman. the chair recognizes mr. mcmanus for five minutes or your opening statement paid to nick thank you chairman burgess members of the subcommittee. abuershaid beyond -- the opportunity to be your testify today been executive vice president general counsel or mgm resorts. we operate land-based casinos brought the united states and many of the members of the subcommittee are from the states where we either operate a casino or maybe developing one so i will try to be alive as they are today. i've submitted written testimony. i'm going to summarize it as we have many more knowledgeable panelists on the subject today and i want to allow additional time for your questions. i don't speak for the land-based casino industry generally. there are different points of view with respect to daily fantasy sports. my company has its point of view and i will speak on behalf of my
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company but where there are differences i can address that through questions if you would like. really, like most other people i first became aware of daily fantasy sports through the barrage of television advertisements and the first impression i have is what is this and it sort of feels like gambling to me was my initial reaction. over the last year and a half or so i've tried to study it and learn more about it. we are a gambling company, gaming company and we are make or nevada, the one state that has full scale sports betting permitted under pass the so it's of great interest to us in our first reaction was baby this is something we want to get involved with. we looked into it and concluded it's a regulated company. there is a lot of risk because
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there wasn't clarity where there was legal, exactly what it was and frankly we didn't know how to make money doing it as well. so through our study of the subject we concluded what we really need is to know whether or not it's legal because whether we choose to engage in direct aid marketing partnerships with the companies that do engage in it are any other association as a licensed gaming company we need to associate ourselves with businesses that are legal and avoid falling into situations where we are associated with an illegal operation. we really want clarity and that is one point i think the industry is unified on, that having legal clarity on the subject of daily fantasy is critical and gaming and gambling issues have historically
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inappropriate than regulated at the state level and legislated at the state level. many states are represented a subcommittee where there is no legal casino gaming and there are others where it's an important industry and part of the economy. we think that is where these decisions ought to lie on gaming anyway, that ought to be an issue decided by the states to preserve the differences of the citizens of the states and let them decide what type of activity will be permissible. however to the extent the daily fantasy is or is not gambling, it ought to be run fairly with appropriate consumer protections and appropriate levels of regulation with its gaming regulation or otherwise. we fully support the consumers being able to engage in this activity in a lawful and safe manner and with the appropriate protections and whether it's at the federal level or at the state level appropriate actions
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are taken to make sure that this is a safe playing field for those who enjoy it. we think it's a really interesting innovation and it's something that is activated fan bases for a variety of sports and increasing age men. i know that the leagues with the exception of the ncaa have embraced it and it's something that we would like to see done in a safe and responsible manner and with that i will be happy to answer any questions. the chair thanks the drummon to the germany of that. mr. brubaker you're recognized for five minutes or your opening statement please. to me good morning chairman burgess ranking member schakowsky. my name is steve brubaker and i am here representing a small businesses of fantasy sports. i think like many of you i didn't know there were small businesses of fantasy sports until six weeks ago. i was contacted by a mutual friend that had some fantasy
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football clients that were disappointed in some legislative activity that happened in virginia and indiana. i got in touch with these folks and we decided we need to educate legislators and now we have an opportunity to educate members of congress about the needs of small businesses in this industry and how they differ from the large companies. we are concerned and i think you mentioned chairman burgess this patchwork of laws across the country. we are concerned about this patchwork. it is hard work for a small group of companies to band together and try to work on legislation and 50 states at the same time. we are trying. we are making an effort and we are going to continue on as long as we can do that. in the states we have proms with early on virginia and indiana
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the issues for the small companies or financial and regulatory so we have a 50,000-dollar annual fee and both of those states. none of the small companies make a $2000 in those states so if you are not making $50,000 you are barred from entry into that state so financially we can't operate there. mr. schoenke mention tennessee pretends he has a tax on net revenues. higher than we want to see it in that state but the undefined portion of that is the regulatory fees. we don't know what they are going to be and we have to negotiate those. we are looking for clarity in the laws. we would like to have low fees everywhere we go, low taxes if they're going to be taxes so regulatory burden that is really troublesome. what i mean by that is many the state laws we have seen on the looks aren't to do so far talk about annual audits by a third party within the state if we had
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an annual audit for our companies one other for the company it would be strictly accepted across all 50 states that would certainly be acceptable. here are our audit financials and they go to all 50 states. but if we have to have financially on it's in every single state 50 states for a fee that's a prohibitive thing for us on the regulatory side. on scale, we talk about draftkings and fanduel, huge, huge companies. some of these companies that are in the small is this fantasy sports groups may only have four or 5000 players all across the country so it's a different thing. it's like mcdonald's compared to the local job of it to go to get your morning coffee or starbucks or something like that. i think critically what we want to try to get across is we want
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to work with you. if you're interested in doing more research on this we will come here and talk to you at length about the needs of small businesses. certainly we are going to keep plugging away in the states. we are working in ellen i really hard on that ill. how were summoned schakowsky is coming along in we will see -- new york has a 500,000-dollar legislation the nsa. i don't even know if draftkings could afford that fee although i think they supported that bill. so there's a lot of work we have to do to educate people about the number is this is, the types of businesses. a lot of our members are -- there's a drastic difference between season-long and daily and most of that difference comes down to the active management that you have to have when you are season-long fantasy sports player. you have to readjust your lineup every week for 16 weeks in the
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football season, thousands of transactions we go back and forth improving your team so you can beat your buddy who's also in the same league with you. you don't have that. you pick up -- you pick your lineup is selected preview might enter one or 100 different teams for the day and then you are done. season season-long you are constantly working on that team because as i said you want to beat your friends that are playing those games with you. i am running out of time. i want to thank you for the opportunity to be here today. >> the chair thanks the gentleman and the gentleman yields back. chairman rodenberg for five minutes please. >> my name is ryan rodenberg. i work as a professor -- good morning chairman burgess and honorable members of the subcommittee on commerce manufacture and trade.
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my name is ryan rodenberg for their workers a a professor affords a university. one of my research lines pertains to sports gaming for them please may bite to testify and appreciate the opportunity to be on this panel. i written statement and oral testimony and my personal views and do not reflect the views of my employer or any of the media outlets. as i detail in my written statement daily fantasy sports current legal status lies at the intersection of three overlapping radio tour circles in a vin diagram federal gaming law, state gaming law and general notions of consumer protection. given the overlap and recognizing the daily fantasy sports represents only a small portion of the american sports gaming market i believe any substantive discussion of daily fantasy sports must take place in the context of the simultaneous examination of traditional sports wagering. in this brief oral testimony of focus on the most important federal statute in this round the professional and amateur
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sports protection act of 1992 or pasco for short. justice john paul stevens writing for a unanimous supreme court in the 1999 decision quote it includes a variety of exemption some with a secured congressional purpose and quote. similarly the department just as race number concerns about the letter to senator joe biden. the paradoxical nature of the grandfathering scheme has serious applications for regulation of daily fantasy sports as well as additional sports gambling. over the course of nearly five years of litigation three federal lawsuits against two different sitting state governors and three court of appeals decisions with a poor decision and that here's what we know about pasca. first for grandfather states such as nevada delaware montana oregon and perhaps a few others
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pasca freezes in time circa 1992 those states abilities to enact sports gaming related regulations. second, for non-grandfathered state pasca provides states the option of retaining their sports gambling prohibitions as his are repealing their prohibitions entirely. to do otherwise would apparently render pasca unconstitutional under the 10th amendment. whether any middle ground is permitted or made the subject of ongoing litigation filed by the ncaa, nba nfl nhl and the governor of new jersey. third, for all states but the grandfathered under pasca the plain language constrains the ability of government to enact commonsense consumer protection legislation for both daily fantasy sports and traditional sports wagering. no federal court cases squarely decide whether daily sports constitute illegal gambling.
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an attorney testified before congress in 2000 cybill there is considerable debate be found in our research over whether or not fantasy sports leagues constitute gambling or whether they are simply a contest. for all these reasons i think it would be difficult for congress to address specific issues pertaining to daily fantasy sports absent the contemporaneous evaluation of traditional sports wagering. thank you chairman burgess and members of the subcommittee for the opportunity to appear before you today. i'm happy to answer any questions you may have. >> the chair thanks the gentleman. mr. locke you are recognize. >> thanks to the committee for giving me me the opportunity to speak today. my name is marcus locke. we are u.k. based technology company specialized in providing education services to sports to help and protect the integrity of their offense and understand the markets in which they
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operate. my role here today is to share my experience that can influence the integrity of sports. at no point during today's session will any n.a.b. is i happy those other than my own and i'm certain we not speaking on behalf up or representing in any way our partners or clients here or in the u.s. or internationally. jeanie sports is a technology company with an operating under the sports and lottery markets providing technical position to collect data model how events should proceed and monitor markets and live an automated basis. as a result of this work in technology we are able to help sports recognize anomalies that could indicate problems within the integrity of their offense. as sports become widely appreciated there have been increasing need to have education technology research
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available to provide federations with the necessary knowledge and expertise nor to help them to manage in a safe and responsible fashion the growth of their desperate work across all sports and technology to education helping sports to achieve those goals. i hope my experience will be helpful today and once again many thanks for giving me the honor of being here. the chair recognizes mr. slader for five minutes for your opening statement please. >> thank you chairman burgess and members of the subcommittee for having me here today. my name is lindsay slader on the operations manager of geo-complied it was a geolocation provider. we have all heard of the internet of things. the term used to describe how the internet has gone from a desktop computer at home or the office to the big's network of connected devices today.
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from phones to our cars to her tv everything is connected. with the internet thinks his company for internet of places. these raise concerns as well as the requirements for national sovereignty over what can be accessed on a territorial basis of given rise to the need to j-term of the high degree of certainty whether the internet connected consumer is governed by. historically the notion that you could indeed try geographic boundaries on the internet would have been laughable. such was the weakness of the original technology and availability of methods to fake your location. however with the advent of the regulated by gaming in the u.s. in 2134 of the five u.s. based participating and i gaming today has taken the initiative and transient geolocation and protocols solely within their boundaries. by doing so they act with a clear letter and spirit of the federal law which requires such
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geolocation tools operating within a particular jurisdiction. given the more recent rise of daily fantasy sports the need to define physical location on the internet has only become more significant. no matter how barwick manner such an industry may be regulated there is no advance of geolocation technology available to powerfully filter consumer access in any shape or form that may be required. it's the to promote or restrict on-line access technology is no longer an impediment to a chosen business or legislative model. can be an indispensable tool and enabler. geo-compliance technology is currently an action that the u.s. processing of the 1 million transactions per day. our technology ensure state laws are respected and business operators or quit -- equipped with compliance requirements. for internet gaming and lotteries we are currently working with license operators to a pulled state-level regulations and the geographic
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borders of new jersey and nevada delaware and georgia. this also means not only enabling eligible traffic from the states but also blocking traffic from states outlawed internet gaming such as utah california new york and so on. for dsl burgio locations versions are designed to be adapted to the constantly changing landscape of the dfs industry. given the volume and speed at which state legislation is currently evolving our systems are designed to turn on or off access at the drop of a hat for any particular state or region. i believe last week for example legislative changes were seen in about three states where is tomorrow there could be a whole host of others. by providing the means to respect sovereignty and a jurisdictional powers of a given physical territory the internet geolocation technology therefore provides the teufel unction. one, to pull the preferences and rights of any given jurisdiction seeking to enable you contain
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user access within their borders and two to respect the wishes of any jurisdiction that choose to not participate for license such activity or may than it altogether. neither can achieve without robust and adaptive geolocation tools of the state doesn't wanted they don't have to have it. to perform a geolocation geocomplied is able together pinpointed the location data from the number data sources to determine the whereabouts of who use them. and we confirm the integrity of that data to ensure its security and hasn't been tampered with by any host of tools such as proxies, vpn, remote desktop software mock location settings anonymize her's, the list goes on. time we approve or deny transaction that data may have gone through a tube. 50 checks that are compliant algorithm seeks to verify. these settings can be set in just about regular zen operators
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depending on the market needs and requirements. therefore should be well noted the technology that's it art which may be necessary of state or federal parties choose to become more involved in some shape or form are capable and quite robust to a pulled standards. she'll comply believes all legislative and rigged. issues can easily be addressed with effective geosensing technology. i can point your attention towards the map on the screen, as you can see on the map here these are live geolocation queries and happening in real time in the u.s.. in particular this demonstrates the importance of an point actor location data given the significant population sect errs in america that line your state and federal borders. this technology is used, or can be configured and adapted accordingly to any given use
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case be at internet gaming or any other industry. and just a quick video clip. this is a zoom in on the new jersey, new york order which is really a significant area for the people they're speaking here today via it gaming or dfs. this shows that not only can we accurately pinpoint someone's location but also defend any given border from the banks of the hudson river in a densely populated area. that concludes my testimony. thank you having me. >> the chair thanks the gentlelady. the chair recognizes mr. gnat for five minutes for your opening statement. then i thank you chairman burgess and members of the subcommittee for the opportunity to testify before today. my name is jordan's is jordan's supper in them as senior vice president of strategic business
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development for scientific games were prescient. scientific games as a leading innovator in arabia to global lottery gaming and interactive industries offering a range of products technologies and services to more than the customers on six continents for the last 40 years. scientific games as a service provider for the delaware lottery of its regulated sports betting offering a 100 retailers at three racetracks. i'm honored to share my observations from my 12 plus years in the international gaming industry but i'd like to offer feedback regarding the means by which other countries have successfully implemented regulated sports wagering systems. my testimony while lying to case studies from ontario canada and the e.u. to illustrate how these best practices from geolocation verification to betting limits real-time global monitoring and education have enabled effective and transparent sports wagering and international jurisdiction. additionally in almost all cases these revelatory systems have enabled governmental lotteries
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and commercial gaming operators to offer integrated products through multiple highly regulated licensed distributional channels. in fact night at the top 10 legal sports betting jurisdictions in the world offer sports wagering is through their lottery or combination of lottery and commercial operators land-based or internet. let's begin with canada. legal sports wagering has been available in canada since the early 1990s piece of the five provincial lottery corporations enter a full line of sports betting that in the line of parlay wagering. to provide some example of legal secure regulates sports betting happens in canada please anitere is a case study. ontario launched in 19 records available at the nearly 10,000 licensed lottery retailers through the first product launch was a simple three-game parlay with minimum and maximum betting. over the past 20 plus years of product offerings have evolved
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in sophistication include two event parlays proposition wagering and cross wagering to the product has evolved from a lottery only channel to now include the casino channel recognizing the differences between the two ontario created different should model for lottery detailers with betting maximums of a hundred dollars in casinos with maximum at $1000. with engine activity ontario is offering sports betting products on line alongside its current products. british columbia offers a full range of internet sports betting products. both use geolocation and age verification system to assure players are located specifically in d.c. or ontario. i will now turn to -- the maturity offer sports wagering to their lottery for companies of lottery and commercial operators. teachers diction establishes its own betting rosewicz management team policies.
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in 2012 the world lottery association introduced the global lottery monitoring system the system went live in partnership with sports radar in june 2015. geoa mess provides members alerts on adding around the world. each member reacts to it independently looking at the feting -- betting in their market reporting to the appropriate authorities for their seven s. and 27 global members from your canada south america asia and africa. the program is planned to be expanded in the latter part of 2016. in addition to technological vans men's sports are as asians themselves beginning charge of these measures to ensure game integrity. as an example in 2013 interpol and fefa came together to announce a new initiative to combat batch mixing. the program focused on raising
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awareness of the dangers of players referees officials administrators organizations and public authority and to raise the ability of those involved in professional soccer to know how to recognize that rejected and reported. it's estimated the illegal u.s. sports betting market could be as much a sport a billion dollars paid to put this number into perspective legal regulated global lottery businesses approximate 280 billion in the u.s. casino industries approximately 240 billion but for the point to understand here is that sports betting is an enormous market in the u.s.. implementation of regulation integrity accountability and consumers save ours in the sports wagering can turn the current multibillion dollar black market into a transparent effective system that keeps professional sports and amateur sports saved for future generations. mr. chairman are making membership cascade i want to thank you and your members of this committee for inviting me to testify before you today in
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this very important hearing. i hope my presentation provided provided -- employed around the globe and i look forward to the opportunity of answer your or your colleagues questions. >> it the chair thanks the drummon. mr. said to you are recognized for five minutes for helping statement rates thank you chairman burgess and ranking member schakowsky. appreciate the chance to talk about daily fantasy sports. i'm a law professor and this is my third time testifying in front of the subcommittee about internet gambling issues. i must be doing something right or you wouldn't keep inviting me back. i should say up front i don't oppose or support daily fantasy sports are gambling. my purpose is to argue that if it is legalized, it needs to be regulated so that there is proper consumer protection to maximize the experience of players and to protect them from being cheated or beaten unfairly
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and also to make sure that problem gamers get the help they need so that gambling and daily fantasy sports don't destroy the players and their families. one issue that constantly comes up is that gambling are not? is this a game of skill or a game of chance? i would like to say that for the people who are really good at it, it's not a game of skill, it is not a game of chance, it's a game of algorithms. the top players as far as i can tell and i've. a lot of interviews at the big players, they are not long-term sports fans. many of them that i've seen come up either through poker or data management. what they do is they construct these very sophisticated algorithms and import a huge amount of data, much more data
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than any human could hold in their brain at one time and use these algorithms to spit out lineups and then they can take these lineups and entered them into multiple multiple many times different competitions both high-stakes, mid-stakes, low stakes so you could be just an average recreational gamer and suddenly be playing head-to-head with one of the top daily fantasy sports gamers in the world and perhaps not even recognize them. out there playing tennis and suddenly roger federer is slamming at you when you're playing for money. the last attempt to testify talked about internet poker in the big issue is the internet poker industry says it's wrong to use these algorithms to beat human players.
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and they claim they can stop it. i'm not sure they can but at least they are trying. in daily fantasy sports as far as i can tell they don't even try to stop algorithms and instead welcomed the professionals who gamble a lot of money every day against people without these algorithms that they have a huge advantage not because they know more about sports but it goes they have more data and have algorithms that can use that data to select the best portfolio of teams. i would like to ask industry representatives to explain why is this a good day and to have a few top players take all this money from the many recreational players who are just trying to have a good time? so let's look at what these algorithms can do. they can track, same baseball
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for a hitter that can track whether the hitter is going to hit lefties or righties were get this particular pitcher. they can track what direction the winds are likely to blow on a given day. they can track when will the sun be in the batters i? i looked at one person who just won a competition and he said we were tracking the strike zone of the umpire. how many average players can import that kind of knowledge and make use of it? with the professionals can. so what do you do to help the recreational player? i think you need strong consumer protection. you need to limit the amount of lineups that people can enter because people are entering a lot of lineups. very their pros or people with a problem. you also need to label the high earners so that the average player knows look, i'm going
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against somebody way out of my league and can either choose to play or not. you also need services for problem gamers. you need them to know that they can get help if they need it if you need to prevent insider playing and you also need regulators to oversee the games to make sure that people get paid and that the right people get paid. but that i'm done and i appreciate you inviting me back and i'm happy to answer questions. tonight while thank you and thanks to all of our witnesses for their testimony and we will move down to the question and answer for the hearing for member questions. i will begin the questioning by recognizing myself for five minutes but again let me say, a fascinating amount of information you have provided for us this morning. perhaps if i could let me ask you before we leave here you are
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algorithm conflict in the slader i want to include you in this question because you have heard chairman upton talk about how you exclude someone who is under age from involving themselves in these daily fantasy sports, where they are and you know something about how they are playing. is there a way to exclude the 18 and under-year-old group from playing the sports? we all know teenage boys love sports. that's all they do. >> i can speak to excluding individuals, not necessarily verify their age or identity. when we do a geolocation that geolocation is anonymous so we don't know who they are where they live or whether they are a big-time player. all we are concerned about is where they are but if we based on the data we have for the operator of the web site decides
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that we need to exclude this player, them off for certain period of time geocomply can help with that. we have tools that would cause you to always -- or location and therefore never be able to enter contests. you could do that by their account name. you could do it by any device that's ever been associated with their account. if they plan to computers and a tablet we can block them all. you can do it by an ip address so their home internet connection or wherever they may have ever played so there are lots of tools at their disposal to keep people out if you single out an individual. >> the cleverness of the 16-year-olds should never be underestimated. ms. slader how do you recommend this issue be addressed? is there a way to do with algorithms? >> the new massachusetts relations require the want to
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play fantasy sports you have to prove who you are and you have to have only one account in one name and i think that is necessary both to make sure that miners aren't playing the games and also to give people tools that they want to self exclude, you can ever process where they can self exclude and they just can't come in with a different name. so i think it can be done and i think it has to be done. >> and for someone who wants to play by the rules, someone who not -- want to not play by the rules how are you going to exclude that? >> if you have to prove who you are in order to play there may be ways around that but the state should try to make sure they know who is playing and they are of age and that they have a an inclusion. sad sad but manski from a small business perspective here, how
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do you see addressing that problem and chairman up to and addressed it to the underage person should not be allowed to play. how do you prevent that from happening? we can't really hear you. >> we as an industry have always been against minors playing fantasy sports in contest for money. our providers use some make on the year customer technology. they give a whole bunch of information on them name, address and they run them through databases leading third-party companies to figure out if the customer is who they say they are, and then you need a credit card. the major providers don't want
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minors to to play if they find out the miners playing they will refund the person in question. >> or most of the transactions done on it or the card type transaction? >> digital currency for these transactions? >> primarily credit card and paypal and those types of transactions. it. >> mr. brubaker i want to ask and maybe i should ask others on the panel as well i wanted to look graph the limited amount of knowledge that i have about this issue but i'm having a hard time with the season-long sports and fantasy sports. clearly those are different avenues. i guess what i don't understand his football. and you stand a correctly played game once a week on sunday and get daily fantasy sports you are playing the same games all week long but there is no actual game being played.
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so how is that constructive? how do you construct a daily sports transaction where the games are only played one day a week? >> on daily you have got one game or you have one contest that you play. in the season-long you draft your own team to play for entire season. you are at the gm of the football team and you draft the players for your team and you enter them for that weekend and then the next weekend if you have an injury, tom brady gets injured, he is the guy you drafted you have to put a different quarterback in his spot. >> is a complicated the whole season at that point place you can fire your team and walk away? >> i don't believe you can. well, you can. there are trades you can do with other people within your league. if you need a quarterback you can trade a running back for another team's quarterback or something like that.
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those are the transactions that go on in season-long but don't happen in daily. daily pick your players. i'm knowing justin daily. i did get a fanduel account a few weeks ago to learn how to play that. .. >> >> you don't know if you have one intel the end of the season. >> 84 that.
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professor you referred to the massachusetts attorney general issuing regulations i wonder if there are any other states? into issues saw regulations and massachusetts is a good model which can be improved upon. >> with those regulations issued of the fly by night to collect wages and then fail to pay out. >> right now the industry is dominated by the two major companies.
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i have not heard of instances with the gaming organizations in the cayman islands so that can well be an issue. >> so basically you talk about the industry? because this is 90 percent dominated interspace is the rest? >> there are different statistics what it means to the rest of the industry there are daily statistics only which i think is 95% for the other dailies providers to do daily fantasy sports. >> and those that with you that percentage. >> they are small companies.
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>> d.c. gambling addicts. >> i think there was a recent study that indicated there is an overlap between people with issues and daily fantasy sports play. there is a new industry that would nail this down and takes a while to do. >> you mention in your written testimony with contest based on amateur sports of high school and college. why is this a prohibition? to protect the high school kids to have a great
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interest if they score that touchdown or fall of bounds up the 1 yard line. game fixing and sports it is hard for a college kid those debtor making money to never go. with a pile of money to do the wrong thing and for high school and college athletes. >> anybody disagree? >> in the time remaining to talk gave little bit more of the massachusetts regulation and the model for states. tsa this date is the best place to regulate? >> i think it is.
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because there are local interest some don't want to have gambling and they should have the right to do that. >> so talk to me in terms of consumer protection. >> it is good to see how they work. my concern is we would consider even further the elements with a decent amount of injuries in it may be they have overstated they have a form of labeling that they call highly experienced
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players. that should be based on your return of how much you make rather than if you enter a lot of games. so they may have entered a lot and not be very good. they should not be labeled who is the scary person? >> that could be a person with a problem. >> it could. but if you over label the top players and then who aren't there will start to ignore though label. >>. >> in with those
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jurisdictions in with the integrity of sports with those sports wagering jurisdictions. and into distinct areas that allows us to aggregate and what we do is to remodel and the overlay with that. into those distances of what we would expect for the issues that need to be looked at.
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and then to identify those political risks. but then with the same series of games but the way we do sports at the moment is the risks that they may be exposed to so for example, to be have constructing in that conversation that is a great place but then to be put in a position and maybe that
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they would be exposed. >> in with the state audits that were required can you give a sense of how many members of all 50 states? and expecting audits from one another to readers -- reduce the regulatory burden >> there is only 45 states that did disease boards can be played right now. they will escape me at this moment but i will mention now there isn't a lot of
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players some states may have 500 butted new jersey or 20 in delaware but they're spread out all over the country. >> do you see a path forward for states excepting another state spirit that path is to get to the states to get it changed. so there has to be an annual audit. isn't quite as specific it has to be from an auditor from the state there is a lot of work to do with a small organization with small amounts of companies that is a lot of work. for those issues to be platform we are playing catch-up right now.
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>>. >> i obviously believe in a lot of hypocrisy of the daily disease sports but to think it is complete we separate despite the fact that similarities cannot be denied the say mr. rove at the same time they embrace these boards -- sports claiming they're trying to protect the integrity of professional sports with organized crime. so sports betting is legal in some states including canada and the sports world is not falling apart but i
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question that you said it your testimony canada has had legal betting since the early '90s is it limited to canadian sports? >> in canada you can bet on any sport in any country or even certain jurisdictions and to bring your sophistication. >> have you heard of any major scandals linked to sports betting. >> not that i know. >> no major scandals. we also know the legal sports betting market in the u.s. of $400 billion so it just doesn't make sense to me in legalizing sports
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betting with the same type of consumer protections that we are consuming more dash talking today so would you like to comment how to bring the current black-market organized crime whenever whenever, bringing it out into the sunshine how can you ensure integrity? >> it brings integrity and consumer trust. it drives the acceptable activity underground with no integrity there for people involved and not accountable for the consumer's interest so if you look bad examples even with the nevada sports betting has been done legally and responsibly. >> like prohibition of
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alcohol i would think it sports betting were not legalized you see a way to stop the practice from recurring illegally? >> i don't see how you can prevent something of an industry of this size and magnitude. >> money go to the fantasy sports trade association. you said you to comprehensively in answer any question but i will ask that they would normally be here to answer. receiving a given licence in the united kingdom but in the now my knowledge both companies maintain that the fantasy sports is not gambling so what is the rationale to have a gambling
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license it is a daily fit disease sports is not gambling? how do they justify this? >> the laws of the united states are very different than the united kingdom. to have any skill in those states if it has more skills than market is not considered gambling that is why fantasy sports is an enterprise never considered as gambling bug that has been called into question. >>. >> it is a different country >> they're not really doing anything differently. >> but it is the same game. >> this sounds like the
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difference in one country to have a lot of smart lawyers and lobbyists to define things one way. but the game is the same. >> as far more skilled them up -- what. >> you have five minutes for your question. >> the key for being here. there is a lot of interest in this but chairman we appreciate you having a hearing i think there is a lot of the knowns as people try to get the information what exactly is the way we are headed and what is the future and how will this benefit? this is a generic question
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for the panel so is anybody aware of push back of concerned for the organization's best come after on-line betting? anybody? >> coming from two distinct areas perhaps dozens of private lawsuits. >> what are they concerning? allegations of fraud or illegal gambling and preliminary stages to be consolidated in a federal district court. >> on the fraud watery talking about?
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>> allegations of false advertising common this use of insider information a number of the claims were similar enough. >> is that due to a specific group or the ability to defraud people on line? >> of the daily fantasy companies themselves. with the affiliated companies including payment processors in high-level successful fantasy player so perhaps that could be inferred to the defendants are. >> what are the of qualifications?
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>> before you're able to do this you have to comply with certain agreements to look over your shoulder. does that exist? or do you put up a web site? >> ladder -- literally in the last couple of weeks those who were recently enacted by state governors the most savvy effective dates literally in its infancy outside of the normal state run regulations with the trade association. but that certainly is more of a private self-regulatory form of government. >> what does your company have to do?
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>>. >> with the best business model? >>. >> and not to comply with any regulations. >> so with a betting organization? >> the prime business is to help protect the integrity. >> what is the biggest bush backed? does it come from the state or from organizations? >> it is related to my previous response of the
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push back at the state so by my count from new york to illinois to a texas to under the auspices of the state law whether it is a cease and desist letter over the last six months they have removed themselves from those excluded states from washington and arizona and iowa to now would is over 15 it has increased over the last six months with the push back to come from the state level so far. >> my time has run out.
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>> thank you very much mr. chairman in this subject to strict regulation casinos can lose their license consumer protections some of those consumer protections are similar to those to be put into place of love to hear why they comply with gambling regulations with those that apply in every state. ken you discuss if they're
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old enough to gamble legally? >>. >> really operate land-based casinos we don't have the on-line presence at this time. saw that is a different approach to age verification the old-fashioned way as serving alcohol you ask for identification and verify identification. there is extensive training of the security staff to question if somebody is of age son have regulations that require you to present identification others are responsibility of the operator that all the people of a jar gambling within our facilities and our jurisdiction -- jurisdictions the minimum age is 21 everywhere.
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>> so some gambling by certain employees is the holder of a gambling license how do you ensure that mgm employees are complying? >> so i will exclude all employees in nevada as a key employee you are excluded for instance i'm excluded from gambling at our facilities second planet competitors facility but that is to avoid the appearance of impropriety that a gambling game is next >> what about casino policies? betting pools are kept separate from casino operations? >> in the data we have requirements to maintain sufficient cash to make sure bet with the on-line environment to have an
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account typically most customers pay for chips with cash. >> we just try to get the distinction. how do your casino employees identify problem gamblers and how are they trained to respond? >> . .
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>> we would be fine if we were marking someone who self excluded themselves. how someone is self identified at a gaming table, i'm not an expert on that. >> are there any other consumer protections that your casinos have in place? >> we have many consumer protections. gaming regulation is exhaustive, it is thorough. the most basic consumer protection is making sure that it is run by honest and reputable people. that their backers are scrutinized. so that you know you are dealing with. then every aspect of our industry is regulated that you have to do it with integrity from advertising to how you conducted the gain. >> very well mr. chairman, you'll back.
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>> we think the gentle lady, and re-recognize the gentle lady from kentucky. >> thank you, this is been interesting, i appreciate it. in your testimony you discuss the prevalence of scripting tools on daily fantasy sports website. my understanding is that a script allows one player to enter or change multiple lineups in many contests faster than human could. is that correct? what about a dfs site to make it more optimal for scripting tools than a season-long fantasy sports? >> yes, that is correct. if you have an algorithm that generates hundreds of lineups professionals use scripting tools in order to easily and put those into the dfs site. as far as how it is different from season-long, i have not looked into scripting tools in season-long, my understanding is people have the purpose of
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season-long is to do trade and things like that where people are much more engaged in the game. so their strategy is how to work with other players. so i suspect scripting tools are not use that much because people are much more hands-on with their individual lineups. again, i've not looked at the season-long as much. >> thank you. okay and mr. shank he, how do your member companies do scrips on the services? >> script is a new term and technology. lastly what was his companies did not have the functionality of their own game so players figured out how to do something on their own. they developed something to swap out players at the last second if there is an injury. since then the industry has shifted in terms of scripts. the companies had built more functionality into their game so they can do it. they have also the leading companies draft yahoo banned
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third-party scripts. we've also seen as addressed at the state level where state regulation we talked about a massachusetts and also the state laws that are passing in indiana and tennessee and virginia they also banned third-party scripts as well. i think that is going to minimize any unfair advantage that people will have by using. >> you'll answer this as, are your providers, i know the service providers you just said, but fantasy games are they able to detect with him and is able to use a script on their site? >> there's technology they are using, they are using best practices which is the goal. the regulation of loss make it incentive to do it. also the customer is caught using a script there is a disincentive for them to use it. their account will be suspended, could be revoked completely. there is a disincentive for them to try to do that.
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>> for season-long fantasy sports you do a draft before every season starts. so there would be 12 teams in the league and each general manager of that team would hold a draft. then you would go through all 12 people and you see drafts on tv before. same thing there's no scripting in season-long. scripting is something unique to daily fantasy sports. it does allow people to who enter multiple contests. i think peter did a good job job explaining how they did it. >> a previous question i you said there are two major players in the daily fantasy sports and you represent the small player. >> there's two major players. >> what's the difference, with the key characteristic of small player. >> small companies. so there are probably 80 providers that are not draft
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kings and they range as peter mentioned, yahoo is one of the larger once but many of these are very small companies that have 2000, 3000, 5000 players 3000, 5000 players total in their company. where draft kings and others have millions of players. so the scale is completely different between what what the two big companies do and the traditional smaller companies who have been around for many years. >> there is a question previously asked that was answer, but if you would, some made the argument that setting a license or registration to bear entry into the market place from fly-by-night operators from running off with the money is that a concern? >> maybe peter should answer the daily question comes that a right. >> okay that is fine. >> in the state laws that we've been advocating for one of the key components for consumer protection is that the funds consumer funds be protected so
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the prices will be there in a segregation of funds. we're advocating for that. >> thank you, i yield my time. >> thank you we recognize ms. brooks for five minutes. >> and that one and 14 congress we have been excellent what we call the disruptor series which changes the landscape of the economy. we have explore things like huber and bid coin and now with this packed audience today it is interesting because i think this too is something that is disrupting the way we think about the world of gaming and gambling. it is important for us to explore the largest disruptor in
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the gambling community, the daily fantasy sports. but there are many different questions that we have to grapple with as to whether or not, we don't want to limit innovation but we want to protect consumers and when we find that balance. obviously indiana has just taken the lead in becoming the second state in the nation as i understand to adopt what we thought was thoughtfully developed legislation, creates the regulatory framework that ensures that jake games are fair, participants are over 18 years of age and it allows players to restrict their play. while some of the regulatory measures maybe her stern, one 50,000 hoosiers are participating in daily fantasy sports and they need to have confidence in the integrity of the product. so i hope that we can continue to explore how to expand this shape guard that hoosiers now enjoy. and ensure that we can embrace this new trend in sports entertainment. a couple of questions that i have, my question is if we don't allow this -- i learned
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yesterday total illegal sports betting market grew to 148.8 billion in 2015. illegal sports betting. so i guess doctor rosenberg and amy others, if if states do not allow this within their state, will this simply drive more competition oversees to places, where are the places that we would be competing with? can you just talk about that and can the industry talk about that if we do not figure this out? >> antigua, cursed down close to regard the most likely overseas jurisdictions that have sports book operations, samantha may not offer the services to american citizens. that is certainly a possibility if daily fantasy is not legalized in jurisdictions like yours. there could be an underground market, the technology, excuse
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me the offering of dfs is so new that i think it's a little premature. you have the figure in terms of the 140 plus billion dollars, the overall market of daily fantasy is quite small relative to that. the estimates i've seen is anywhere between three and 4,000,000,000. it is very small portion of the overall american sports gaming market. so while it's important and relevant, and the disruptor series it is still a small portion of the overall american sports gaming market. >> however like huber, zip quinn and others they may be started out small but look at where it grows. any other comments from anyone else about the offshore competition if we do not get this right in figure this figure this out. anyone want to comment? >> yes. i would like to come in. speaking for, think i can speak
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for my entire industry here. any form any form of unlawful gambling is bad. we do find these forms of entertainment are not going to go away if they're made unlawful. you will develop a black market if you do not have illegal illegal out let for daily fantasy. one thing i want to talk about war talk about season-long versus daily. to me the distinction on whether it's appropriate is whether it is house bank. if it is season-long fantasy operator that just raise the platform for private leagues, i see no need for regulation. as soon as you are taking money from citizens and promising to pay back under certain scenarios, you should be regulated. and respectfully whether it is a small a small business or large is. >> you have talked about the difficulty with small operators complying with 50 different state audits.
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can you give us a sense of how many of your members have players in all 50 states? >> we do not know for sure that question came up previous to your arrival there were five states where no play has been allowed and it has been mentioned there has been changes since that's from different attorney generals that have made some decisions. i would say most of our companies have players in every legal state. >> thank you. my my time is appeal back. >> thank you. at this point i believe all members request for time has been honored i would recognize the gentle member new jersey for an additional five minutes should you so desire. >> thank you. let me follow up on the comments you talked about the difficulties all fantasy sports company may have tried to comply with so many different state laws.
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do you support federal involvement, is there way to do something at the federal level that does not for states who does not want daily fantasy sports to allow it? >> we will work with just about anybody who wants to figure this out. if that's the federal government will do that. if it is going to state to state that is a much a much harder path for us to go down. certainly if you look at. let me take a step backwards, we looked at eugenia as companies did and they saw that in 2006 as a green light by the federal government to go online with fantasy sports. that was. that was all season-long at that time. that was before daily was even contemplated. companies that are relying on you guys and said go ahead and go start your businesses and they have gone out started businesses and now we have states coming in and changing the game, changing the format. i do not think you'll hear any daily fantasy sport company or
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season-long sport company balk at consumer protections as long as they are done in a way that is financially viable to stay in business. >> maybe that is something we can look into, thank you. let me go back to mr. shaky again. again. again i'm asking you specifics about draft kings and so if you can answer. i want to talk about the so-called insider trading scandal that was reported on last fall. even haskell addressed was accused of using information he obtained in the course of his work to help us play on sando's platform. an independent investigated cleared of wrongdoing noting that he did not receive the information until his lineup was locked. but the report prepared by the law firm that conducted the independent investigation was not publicly released. do you know why draft kings did not
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release that report? >> i do not have that information. i know they they have been forthcoming with the details of what happened. >> i apologize i do not have the details of that. >> again were relying on you to answer these questions of the draft kings, where did the information received by mr. haskell come from? you know we sent it to him, was that person playing daily fantasy sports? to that person gain and in management information? >> information he had was that the number of players, the percentage ownership which may give you an advantage if you know that one player has a lot of ownership one player doesn't. so the internal mechanism to correlate that and he compiled the report after the game was lax and was no big deal there was a in a release of that. >> since you say you can answer these question maybe you cannot today but with the chairman's permission i would like you to
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follow up and get back to me to try to answer them on behalf of draft kings if you would. now draft kings prohibits its own employees and employees of other daily fantasy sports operators from playing on its site. and sandal prohibits it from playing on their site or others. how does drafting ensure that employees of other daily fantasy sports operators are not playing, do competitors share their employee list to your knowledge? >> it's also a component of the laws that we're advocating for across the country and one of the key components of daily fantasy sports company and actually also can all play on other people's platform. there's a big a big legal incentive to get it right as well. >> how to sandal and sure it's not playing on other ds outsides. do they share the list of users with sandals?
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>> as far as what the specific companies are doing i do not have that. >> again i would ask you to find out because as it is pointed out employees have access to spreadsheets that show the players were the biggest losers on the dfs sites. i'm just worrying how sandal ensures those list are not being used to invite to those losers to head-to-head matches and the same thing with draft kings. you guessed can answer these questions right now. >> we as an industry are advocating the laws of the state level from preventing this from happening. i think that that would be a disincentive for any company to allow that to happen. >> i will ask you to get back to me on these questions because again the two companies it didn't calm and they say that you can answer the question so please get back to us. i will send it in writing as well see you knows. thank you mr. chairman. >> let me just have a couple things for follow-up.
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even off-topic from what we have been discussing and the concept of the amount of data that is generated seems to be phenomenal. is this useful for anyone else involved in the sports, said general manager interested in some of these performance statistics? things like this has the potential for changing the way things are handled by how well you are able to manage these large data flows. would anyone care care to comment on that? >> think general managers have an increasingly great interest in data acquisition and management. i think the sport is moving in that direction to be more databased and less see how the person swings the bat. it has gotten so far that i think there is an espn fantasy sports
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analyst who is a good at this data management so she can talk about these issues. so dated is becoming increasingly important. >> did you have something you'd like to add to that. >> as far as i know there are sports organizations out there today who actually employ members of their general manager staff who are data analyst, who look at players and see how they play in certain environments. and decide how they select the entire concept of the movie moneyball and billy dean and how he was selecting teams was all based on data analytics. >> well it's quite correct we have been studying and doing the disruptor series at the base of the disruptor series is the way data is now handled and managed throughout all of our every stradivari ecosystem right now
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mr. paul made the observation that it could perhaps drive interest in a team that otherwise there one model records might not generate that much enthusiasm but because you would have players on a roster you are now interested in the performance of that team while he was describing that i cannot help but think had this been around 30 years ago the new jersey generals might still be a franchise of usfl. but maybe not, it's a purely speculation at this point. we would. we would all be doing something different. >> i want to thank our panel. >> please the gentle lady is recognized. >> last night i was one of about 5,000,000 people who who have checked out john oliver's explanation of daily fantasy sports. regardless of one's position on it you might get a kick out of it. i am not his agent.
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i get no kick back from john oliver but it is a humorous but also informative from my point of view explanation of daily fantasy sports. thank you see no further members pushing test question for this panel i want to thank our witnesses for being here today. before we conclude i'd like to smith appellate documents for the record for unanimous consent. a letter from the american gaming association, a gaming association, a letter from the mellman group, a letter from the scott gambling group, a letter from the national conference of state legislator, a letter from the office of attorney general for the state of texas. pursuant to rules i remind members that they have ten business days to submit additional questions for the record. i asked asked witnesses to submit their responses within ten business days of upon receipt of those questions. without objection, this committee adjourned.
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>> congress passed a measure that changes when the government databases and medicare doctors. we'll have an update on this changes next on c-span two. after that a discussion on sexual assaults on college campuses and title ix which bans gender discrimination and education programs. >> this week congress approved a gsa's request to hire more airport screeners and pay overtime. tomorrow the head of the transportation security administration, peter nevins or testifies about that management and oversight of his agency. live coverage of the house oversight committee on 9:00 a.m. eastern on see spend three. house speaker paul ryan meets with john trump, following that meeting because reinhold is weekly meeting at the capital. our light coverage at 11:30 a.m. eastern on c-span.
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>> madam secretary, we probably give 72 of our delegate votes to the next president of the united states. >> last year congress made changes to the way government reimburses ed medicare providers. i'm next the testify of rules of implemented the law. the house ways and means subcommittee meeting is 90 minutes.

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