Skip to main content

tv   Key Capitol Hill Hearings  CSPAN  May 12, 2016 5:31am-7:01am EDT

5:31 am
internet businesses do. we stand ready to work with the ftc and this subcommittee in moving forward to ensure the transparency of daily and sports. we also hope that in doing so we preserve the ability of states to regulate this ability and that they do so without killing the innovative experiment for fans. thank you again for the opportunity to testify today. i look forward to answering any questions you may have. >> the chair thanks the gentleman. mr. mcman niss. five minutes, please. >> thank you, chairman burgess, members of the subcommittee. i appreciate the opportunity to be here to testify today. i am the executive vice president and general counsel for mgm resorts. we operate land-based casinos throughout the many states. many of the members are from
5:32 am
states where we operate or may be developing a casino. i have submitted written testimony. i am going to just summarize it as we have many more knowledgeable panelists on the subject today and like to allow additional time for your questions. really from -- and i don't speak for the land-based casino industry generally. there's different points of view with respect to daily fantasy sports. my company has its point of view and i will speak really on behalf of my company. but i think where there are differences i can address that through questions if you'd like. really, like most other people, i first became aware of daily fantasy sports through the barrage of television advertisements and sort of first impression i had is, what is this? and sort of feels like gambling to me, was my initial reaction. and over the last year-and-a-half or so i've tried to study it and learn
5:33 am
more about it. we're a gambling company, a gaming company, and we are a bookmaker in nevada, the one state that has really full-scale sports betting permitted under paspa. so it's of great interest to us and our first reaction was, well, maybe this is something we want to get involved with. we looked into it and concluded that as a regulated company there was a lot of risk because there wasn't clarity on whether it 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 that what we really need is to know whether or not it is leel because whether we choose to engage in it directly, have marketing partnerships with the companies that do engage in it or any other association, as a licensed gaming company we need
5:34 am
to associate ourselves with businesses that are legal and avoid falling into situations where we're associated with an illegal operation. so we really want clarity. and that's what -- that's 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 historicically and i think appropriately been regulated at a state level and legislated at a state level. there are many states represented on this subcommittee where there is no legal casino gaming and there are others where it's an important industry and part of the economy in those states. we think that's where these decisions ought to lie. on gaming anyway. that that ought to be an issue decide bid the states to decisions of each
5:35 am
state. however, to the extent that daily fantasy is or is not gambling, it ought to be run fairly with appropriate consumer protections and appropriate level of regulation, whether gaming regulation or otherwise. so we fully support the consumers being able to engage in this activity in a lawful and safe manner and with appropriate protections. and we hope, whether it is at a federal level or a state level, appropriate actions 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. it is something that has activated fan bases for varieties of sports and increased engagement. 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
5:36 am
to answer any questions. >> the chair thanks the gentleman. the gentleman yields back. mr. bru baker. >> good morning, chairman burgess, ranking member schakowski and pa lone. i'm here representing the small businesses of fantasy sports. i think like many of you i didn't know there were small businesses of fantasy sports until about six weeks ago. i was contacted by a mutual friend that had some fantasy football -- he's among fantasy football clients that were disappointed in some legislative activity that happened in virginia and indiana. i got in touch with these folks. we decided that we needed to educate legislators. 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. and we're concerned that -- i think you mentioned chairman
5:37 am
burgess this patchwork of laws across the country. we're concerned about this patchwork. it is hard work for a small group of companies to ban together and try to work on legislation in 50 states at the same time. we're trying. we're making that effort. and we're going to continue on as long as we can do that. on the two states that we had problems with early on, virginia and indiana, the issues for the small companies are really financial and regulatory. so we have a $50,000 annual fee in both those states. none of the small companies make $50,000 in those states. so if you're not making $50,000, and 50,000 you're barred. so financially we can't operate there. he mentioned tennessee. tennessee has a 6% tax on net revenues. not horrible. but larger than we want to see
5:38 am
it in that state. but the undefined portion of that is the regulatory fees. we are don't know what they're going to be. we have to negotiate those. we're looking for clarity in laws. we would like to have low fees everywhere we go, low taxes if there's going to be taxes. but it's a regulatory burden that is really troublesome. what i mean is many of the state laws that we have seen on the books are introduced so far talk about annual audits by a third party within the state. if we had an annual audit for our companies, one audit for the company that would be accepted across all 50 states that would be certainly acceptable. that makes sense. we want to see our financials? here they go. all 50 states. go out in the mail. but if we have to have financially -- our audits in every single state, 50 states times that, $150 fee, that's a prohibitive things for us on the regulatory side.
5:39 am
on scale, we talk about draft kings and fan dual. huge huge huge companies. some of these companies that are in the small businesses of fantasy sports group may only have four, 5,000 players all across the country. so it's a different thing. it's like mcdonald's compared to the local java hut you go to to get your morning coffee or a starbucks or something like that. but i think critically what we want to try to get across is we want to work with you. if you're interested in doing some more research on this we will come here and talk to you at length about the needs of small businesses. certainly we're going to keep plugging away in the states. we're working in illinois really hard on that bill. congresswoman schakowski is coming along. we'll see how that progresses. new york has a tough bill. they had a $500,000 fee, registration fee in that state. i don't even know if draft
5:40 am
kings could have afforded that fee. although i think they supported that bill. so there's a lot of work that we have to do to educate people about the number of businesses. the types of businesses. a lot of our members are season long. 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're a season-long fantasy sports player. you have to readjust your lineup every week for 16 weeks of the football season. it's thousands of transactions where you go back and forth, improving your team, so you can beat your buddy who is also in that same league with you. you don't have that in dfs. you pick your lineup, you select it. you might enter in one or a hundred different games for that day. and then you're done. season long, rure constantly working on that team because, as i said, you want to beat your friends that are playing
5:41 am
those games with you. i'm running out of time here. i want to thank you for the opportunity of being here today. >> the chairman thanks the gentleman. the chair recognizes dr. rodenberg. >> good morning. good as a professor -- morning, members of the subcommittee on commerce, manufacturing and trade. i work as a professor at florida state university. one of my primary research lines per tains to sports gaming. i am pleased to be inviteded to testify at today's hearing and appreciate the opportunity to be on this panel. my written statement and oral testimony reflect only my personal views and do not necessarily reflect the views of my employer or any of the media outlets for whom i have written articles. as i detailed in my written statement, the current legal
5:42 am
status lies at three circles in a diagram. federal gaming law, state, and general notion obvious consumer protection. given the overlap and recognizing the daily fantasy sports represents only a small portion of the gaming market i believe any discussion must take place in the context of the simultaneous examination of traditional sports wagering. in this brief oral testimony i focus on the most important federal statute, the act. sional justice jean-paul stevens running for supreme court in the 1999 decision opined that it includes a variety of exceptions some with obsecured purposes. similarly, the department of justice raised a number of concerns about past if a in its 1991 to then senator joe biden. the paradoxical nature among
5:43 am
the states has serious implications for potential consumer protection related regulation of daily fantasy sports, as well as traditional 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 fourth decision imminent here is what we know. first, for grand fathsdz dangered states such as nevada, delaware, montana, oregon, and perhaps a few others, it seemingly freezes in time circa 1992 those states' abilities to enact spors gaming regulations. econd, for nongrand fath dangered states, they retain as is or repealing their prohibitions entirely. to do otherwise would render it unconstitutional under the tenth amendment. whether any middle ground is
5:44 am
permed remains still ongoing litigation by the ncaa, n.f.l., n.b.a., against the governor of new jersey. third, for all states whether grand fathered or not. it restains the ability toff governments to enact common sense and for daily fantasy sports and traditional sports. no court has decided whether it constitutes illegal gambling. a department of justice attorney testified before congress in 2000 and said there is considerable debate we 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 fantasy sports absent a contestimony prarnse evaluation of sports wager. thank you members of the subcommittee for the opportunity to appear before you today.
5:45 am
i am happy to answer any questions you may have. >> the chair thanks the gentleman. mr. lock. >> good morning. many thanks to the committee for giving me the opportunity to speak today and share my experiences and views in relation to sports and integrity. my name is matt lock chief executive officer. we're a u.k.-based technology company that amongst other things specialize in providing technology and education services to sport in order to help them preserve their integrity and help them understand the market in which they operate. as i see it my role here today is to share my experience and knowledge of factors that can influence the integrity of sport. at no point during today's seg will any views i have be those be those other than my own. i am not speaking on behalf of or representing in any way those of our partners or clients. genius sports was established as a technology company in the year 2000 and we've been
5:46 am
operating a regulated market providing various technical sluningses that enable us to collect data, model how events should be expected to proceed and monitoring betting markets. as a result of this work and technology we are able to help sports to recognize anomaly that is could indicate potential problems with the integrity of their events. as sports become more widely appreciated and internationalized there has been an increasing need to have technology services education available to provide necessary breadth of knowledge and extezz in order to help them manage in a safe and responsible fashion the growth of their events. we work across all sports and technology to education, helping them achieve these goals. i hope my experience and knowledge will be helpful to the committee today and once again many thanks for give meg the honor of participating. >> the chair thanks the gentleman. the chair recognizes ms.
5:47 am
slater. thank you, chairman burgess and members of the subcommittee for having me here today. my name is lindsey slayeder i'm the operations manager of geocomply, a technology provider. we've all heard of the internet of things the term used to describe how the internet has gone from a desktop to connected devices today. from phones in our cars to tv, everything is connected. however, with the internet of things has also come the need of internet of places. these raise concerns as well as the requirement for national sovereignty over what can and can't be accessed have given rise the need to term what jurisdiction and the internet connected consumer is governed
5:48 am
by. the weakness of the original technologies and the availability of cheap and easy methods to fake your location. however, with the advent of i gaming four of the five u.s. states participating in i-gaming today have taken the initiative in employing security protocols in order to geofence their services. by doing so they act with the the clear letter and spirit which requires such rigorous tools as a prerequisite of operating. 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 nor in what manner the industry may be regulated there is no technology available to filter consumer access in any form that may be required. to promote or restrict access technology is no longer an
5:49 am
impediment. it can be an indispensible tool and enabler. geocomplies technology is currently in action throughout the u.s. processing up to 1 million transactions per day. our technology ensures state rites are respected. and business operators are equipped with advanced tools. for internet gaming and lottery we're currently working with licensed operators to uphold state regulations and the geographic orders of new jersey, nevada, delaware, and georgia. this also means not only enabling eligible traffic from these states but also blocking traffic from states that outlaw internet gaming such as utah, california, new york, and so on. for dfs, our geolocation solutions are designed to be highly adaptive to the constantly changing landscape of the industry thus far. given the volume and speed at which state legislation is currently evolving, our systems are designed to turn on or off
5:50 am
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 whereas tomorrow there could be a whole host of others. by providing the means to respect sovereignty and the jurisdictional powers of the given physical territory all by the internet, it provides the necessary twofold function. one, to uphold the preferences and rights of any given risdiction seeking to enable and protect access. and two to respect those that choose not to license or may ban it altogether. neither can be achieved without robust and adequate location tools. so if a state doesn't want it they don't have to have it. to perform a geolocation, we are able to gather pinpoint accurate location data from a number of sources to determine
5:51 am
the where abouts of a user. then we confirm the integrity of that data to ensure it's secure and hasn't been masked or tampered with by tools such as proxies, remote software, mock location settings, the list goes on. by the time we approve or deny transactions, the data may have gone through up to 350 checks that our system seeks to verify. these can be set and adjusted by regulators and operators depending on the market needs and requirements. therefore, it should be well noted that the technology and safe guards that may be necessary if state or federal parties choose to become more involved in some shape or form are very cableable and in fact very robust to uphold such standards. we believe that all legislative and regulatory issues can easily be addressed with effective fencing technology. if i can point your attention towards the map up on the
5:52 am
screen. go back to the -- yeah. so as you can see on the map here, these are live geolocation queries. instant analytics currently happening in the u.s. in particular, this dems strailts the importance of pinpoint accurate location given population centers that lie near state and federal borders and this technology is used to or can be custom configured and adapteded accordingly to any given uses ase. then just a quick video clip. this is a zoom-in on the new jersey-new york border, which is really a significant area for all the stakeholders speaking here today, be it gaming or dfs. his shows that not only can we accurately pinpoint someone's location but also defend any
5:53 am
given border even from the banks of the hudson river in such a highly densely populated area. that concludes my testimony. thank you for having me. >> the chairman thanks the gentlelady. the chair recognizes mr. gnat. >> thank you chairman burgess, ranking member schakowski, ranking member pa lone and members of the subcommittee for the opportunity to testify before you today. my name is jordan and i am the senior vice president of strategic business development for scientific games corporations. it is a leading innovator in the regulated global lottery gaming and interactive industries offering a range of products technologies and services to more than 300 customers over the last 40 years. also the service provider to the delaware lottery of its legal regulated sports betting offering. i am honored to be with you today to share my observations from my 12 plus years in the international gaming industry.
5:54 am
i would like to offer some insights regarding the means by which other countries have successfully implemented systems. my testimony will outline two case studies from canada and the e.u. to help illustrate how realtime practices, global monitoring and education, have enabled effective transparent wagering. additionally, in almost all cases these regulatory systems have enabled both governmental lotteries and commercial gaming operators to offer innovative products through multiple regulated licensed distribution channels. nine of the top ten legal sports betting jurisdictions in the world offer sports wagering either exclusively through their lottery or combination of lottery and commercial operators being land based or internet. canada. legal sports wagering has been available since 1990s. each offer a full line of sports betting.
5:55 am
but in the form of parlay wagering meaning that a wager placed must be on the outcome of more than one event activity or form. to provide you an example how it happens in canada i will use the province of ontario as a case study. they launched pro line in 1994 and available at nearlyly 10,000 licensed retailers. the first product launch was a simple three-game parlay with max money betting limits set. it has continued to evolve to include two event, cross event wagering. the product has also evolved to now include the casino channel recognizing the differences between the two, ontario created a different model for lottery retailers with betting maximums for players and casino with betting maximum for players at $1,000. for internet activity ontario is soon to offer its products
5:56 am
on line. british columbia, for example, offers a full range of internet sports betting products. both provinces use geolocation and age verification systems to ensure players are of age and located specifically. i will now turn to europe. the majority of jurisdictions offer sports wagering through their lottery or commercial operators. each establishes its own betting rules, risk management teams, policies, onsetting framework or outsources to professional organizations. in 2012, the world lottery association introduced the global lottery monitoring system glms. the system went live in partnership with sports radar in june 2015. it provides its members alerts on betting anomalies from around the world. each member reacts to the alert independently looking at the betting in their particular market and determines what corrective action is necessary. there are 27 global members
5:57 am
from europe, canada, south america, asia, and africa. the program is planned to be expanded in the latter part of 2016. in addition to technological advancement, professional sports organizations are beginning to introduce measures to ensure game integrity. in 2013 fifa, and interpol came together to announce a new initiative to combat match fixing. the program focused on raising awareness of the dangerous of match fixing. and to raise the ability of those involved in professional soccer to know how to recognize it, reject it and report it. it is estimated that the illegal u.s. sports betting market could be $400 million. the legal regulated global lottery is approximately $280
5:58 am
billion and the casino is $240 billion. sports betting is already an enormous market in the u.s. implementation of regulations that ensure integrity, accountability, and consumer safe guards can turn the multibillion dollar black market into a transparent effective system that keeps professional sports and amateur sports safe for future generations. i again warrant to thank you you and your members of this committee for having me testify before you today. i hope my presentation has provided insight. i look forward to the opportunity to answer mr. burges the questions. opening statement, please. >> thank you, chairman burgess and ranking member schakowsky and pallone. i appreciate the chance to talk about daily fantasy sports. i'm a law professor. this is my third time testifying
5:59 am
in front of this subcommittee about internet gambling issues. i must be doing something right or you wouldn't keep inviting me back. at least that's my hope. i should say upfront, i don't oppose or support daily fantasy sports or gambling. my purpose is to argue that if it is legalized, it must be regulated so there's proper consumer protection. mr. eggert: to maximize the experience of players and to protect them from being cheated or beaten unfairly 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 -- is it gambling or not? is this a game of skill or a game of chance? and i'd like to say that for the people who are really good at it, it's not a game of skill.
6:00 am
it's not a game of chance. it's a game of algorithms. the top players, as far as i can tell -- i read a lot of interviews of the big winners. they are not longtime sports experts. they come up through, many i've seen have come up through either poker or data management. and what they do is they construct these very sophisticated algorithms and import huge amount of data, much more data than any human can hold in their brain at one time and use these algorithms to spit up lineups and then they can take these lineups and enter them into multiple, multiple, many times different competitions, both high stakes, mid stakes, low stakes. and so you can be just an average recreational gamer and suddenly be playing head-to-head
6:01 am
with one of the top daily fantasy sports gamers in the world. and perhaps not even recognize it. that would be as if you're out there playing tennis and suddenly roger federer is slamming balls at you and you're playing for money. the last time i testified i talked about internet poker and the big issue there are bots and the internet poker industry said it's wrong to use these algorithms to beat human players. and they claim they can stop it. i'm not sure they can. at least they're trying. in daily fantasy sports, as far as i can tell you, they don't even try to stop algorithms. instead, welcome the professionals who gamble a lot of money every day against people without these algorithms so they have a huge advantage, not because they know more about sports, but because they have
6:02 am
more data and have algorithms that can use that data to select the best portfolio of teams. i'd like to ask industry representatives to explain, why is this a good thing 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, say, in baseball for a hitter to track whether a hitter is good against lefties or righties or against this particular pitcher. they can track what direction the wind is likely to blow on a given day. they can track when will the sun be in the batter's eyes. i listened to one person who just won a competition and he said, we were tracking the strike zone of the umpire. how many average players can
6:03 am
import that kind of knowledge and make use of it? but the professionals can. so what do you do to help the recreational player? you need to limit the amount of lineups that people can enter because people are entering a lot of lineups are either pros or people probably with a problem. you also need to label the high earners so the average player knows, look, i'm going 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. 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. so with that i'm done. i appreciate you inviting me back and i'm happy to answer
6:04 am
your questions. mr. burgess: well, thank you. thanks to all of our witnesses for their testimony and we'll move now into the question and answer portion of the hearing for member questions. i'll begin the questioning by recognizing myself for five minutes. again, let me say, fascinating amount of information you have provided for us this morning. perhaps if i could, mr. eggert, before we leave your algorithm concept and ms. slader, how do you exclude someone under age from involving themselves in these daily fantasy sports, you know, where they are and you kind of know something about how they're playing. is there a way to exclude the 18 and under-year-old group from playing these sports? we all know teenage boys live on sports, right?
6:05 am
that's all they do. ms. slader: i can speak to excluding individuals. not necessarily about verifying their age or identity. when geocomply does a geolocation, the geolocation is anonymous so we don't know who they are, where they live, whether they're a big-time player or anything. all we're concerned about is where they are. but if we, based on the data that we have, or the operator of the website decides we need to exclude this player, cut them off for a certain period of time, geocomply can help with that. we have tools that would cause you to always fail a geolocation and therefore never be able to enter a contest. you could do that by their account name. you could do it by any device that's ever been associated with their account. so if they play on two computers and a tablet, we can block them all. you could do it an i.p. address
6:06 am
so their home internet connection or work or wherever they may have ever played. so there's lots of tools at our disposal to keep people out if you singled out an individual. mr. burgess: yeah. but the cleverness of a 16-year-old really shouldn't be underestimated. mr. eggert, how do you recommend that this issue be addressed? is there a way to do it with data, algorithms? mr. eggert: the new massachusetts regulations require if you want to play daily fantasy sports you have to prove who you are and you have to have only one account and one name and i think that's necessary, both to make sure that minors aren't playing the games, and also to give people tools if they want to self-exclude, you can have a 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. mr. burgess: ok. that's someone who wants to may
6:07 am
play by the rules. someone that wants to not play by the rules, how are you going to exclude them? mr. eggert: well, if you have to prove who you are in order to play, there may be ways around that, but at least i think the states should try to make sure they know who's playing and that they're of age and that they haven't excluded themself. mr. burgess: how do you see addressing that problem? chairman upton addressed it. the underaged person should not be allowed to play. how do you prevent that from happening? [inaudible] mr. burgess: we can't really hear it.
6:08 am
mr. mcmanus: we as an industry at fsta have always been against minors playing fantasy sports, paid fantasy sports contests for money. our leading providers use know your customer technology. when people sign up they give a whole bunch of information on them. name, address, they run it through databases using third-party companies to figure out if the customer is who they say they are. and then, you need a credit card. you need to sign up for credit card information. the companies don't -- the major providers of daily fantasy, they don't want minors to play. if they find out if a minor is playing, they'll refund the person in question. mr. burgess: let me ask you. are most of the transactions done on a credit card-type question? bit coins and visual currency for these transactions? mr. mcmanus: primarily credit card, paypal, those kind of transactions. mr. burgess: mr. brubaker, let me ask you and i should be
6:09 am
asking others on the panel as well. i don't want to telegraph the limited amount of knowledge i have about this issue but i am just having a hard time with the season-long sports and the daily fantasy sports. clearly those are different avenues. i guess what i don't understand is football, if i understand correctly, is you play a game once a week, any given sunday and yet daily fantasy sports you're playing these same games all week long but there's no actual game being played. so how is that constructed? how do you actually construct a daily fantasy sports transaction when the games are only played one game a week? mr. brubaker: so on daily you bet one game or contest you play. season long you draft your own team to play for an entire season. you are the g.m. of a football team. and you draft the players for your team and you enter them for that weekend.
6:10 am
and then the next weekend, if you have, say, tom brady gets injured. he's the guy you drafted. you have to sit him and put a different quarterback in his spot. that's all the work. mr. burgess: you're obligated for the whole season? you can't fire your team and walk away? mr. brubaker: well, i don't believe you can. well, there are waivers and trades you can do with people within your league if you need a quarterback you can trade a running back for another team's quarterback, something like that. those are the transactions that go on in season long that don't happen in daily. so daily you pick your players. now, i am no expert in daily. i did get a fanduel account a few weeks ago to learn how to play that. and i was playing baseball. so in that you pick a pitcher. you pick a catcher. you pick a first baseman, so on and so forth, and you lock those people in for that game only. you pay your fee and then at the
6:11 am
end of that game, all the players that you picked, their stats are added up. and if you beat everybody else you win. if you don't you don't. season long you do your draft before the first game of the season is played. be it baseball or football. you don't know if you won or not until the end of the season after all 16 games have been played. so that's the difference. mr. burgess: thank you for that. ms. schakowsky, you're recognized for five minutes for questions, please. ms. schakowsky: thank you. professor eggert, you referenced the massachusetts attorney general just issued regulations. i'm wondering if there are any other states or is this the -- for this model of regulation? mr. eggert: i think it's a good model. i know tennessee just issued some regulations. to be honest, i haven't gone through -- i think those are
6:12 am
fairly well-advanced. i think massachusetts is a good model and can be improved on. ms. schakowsky: one of the concerns that regulations issued in massachusetts attempt to address is fly-by-night daily fantasy sports companies that collect wages and fees from users and then fail to pay out. are you seeing that at all as a problem? mr. eggert: well, right now we -- the industry is dominated by the two major companies. they're far from fly by night. i haven't heard of instances in the u.s. where that's happened. i know it has happened with gaming organizations in the cayman islands, for example. i haven't seen it here. ms. schakowsky: mr. brubaker, you're talking about basically the 2% of the industry? because if 98% are dominated by two companies, is your space the rest? mr. brubaker: well, there's been different statistics for what
6:13 am
draftkings and fanduel mean to the industry. there are statistics which is 95% for draftkings and fanduel and other 5% for several other daily providers that do daily fantasy sports. and there's also all the small companies that do season long which would skew that percentage. they're small companies. ms. schakowsky: professor eggert, are you seeing gambling addicts playing d.f.s. and is this a big issue? mr. eggert: i think there was a recent study that indicated there is an overlap between people with problem gambling issues and daily fantasy sports play. obviously this is a very new industry and the kind of study that would really nail this down takes a lot to do and i anticipate we'll see more of that. ms. schakowsky: thank you. you mentioned in your written testimony that massachusetts regulations would forbid daily
6:14 am
fantasy contests based on amateur sports such as high school or college and the ncaa has repeatedly professed ncaa opposition to ncaa sports being part of it. why is this prohibition important? mr. eggert: i think it's important to protect amateurs, high school kids, college kids from having someone have a great interest on whether they score that touchdown or fall out of bounds right at the 1-yard line. when we've seen game fixing in college sports, it's really hard for a college kid who, you know, isn't making a lot of money, will never go pro, it's very tempting to take a pile of money to do the wrong thing. and i think we need to protect high school and college athletes from that. ms. schakowsky: does anybody on this panel disagree with that? ok. let me in the time remaining if
6:15 am
you could talk a little bit more about what you would add to a massachusetts regulation and what might then be the more complete model for states. are you saying the state is the best place to regulate? mr. eggert: i think the state is the best place to regulate because i think there are local interests that are implicated. i think some states don't want to have gambling or daily fantasy sports which are equivalent to gambling and i think they should have the right to do that if they don't want to have it. it shouldn't be forced on them. ms. schakowsky: talk to me what massachusetts, for example, or any state should add in terms of consumer protection. that's my emphasis. mr. eggert: what i want to look at and these regulations have just gone into play and so it will be good how they work. my concern is i would consider
6:16 am
reducing even further their limits that they have on the number of entries. we see professionals enter a lot and it may be they overstated the number. i'd also want to look at, they have a form of labeling of i think what they call high expertise or highly experienced players. i think that should be based on your return of -- how much you make rather than have you entered a lot of games. because someone may have entered a lot of games and not be very good. and they shouldn't be labeled as oh, this is a scary person. the labeling -- ms. schakowsky: could be a person with a problem, right? mr. eggert: it could be a person with a problem. but if you overlabel as the top players and label many people who aren't i think people will start ignoring the label so i'd
6:17 am
want to tighten up who gets labeled as a highly experienced player. ms. schakowsky: thank you. i yield back. mr. burgess: the chair thanks the gentlelady and the gentlelady yields back and the chair recognizes the gentleman from new jersey, mr. lance, the vice chair of the subcommittee for five minutes for questions, please. mr. lance: thank you. mr. locke, as a sports monitoring service and many legal international sports wagering jurisdictions, can you walk us through how your technology works to protect the integrity of sport? is usage of this technology required in most legal sports wagering jurisdictions? mr. locke: sure. the technology is we operate in two -- in two distinct areas. the first is around the technology play which allows us to aggregate and monitor betting
6:18 am
internationally. what we do is we model how we expect sports events to look on a mathematical basis and then what we do is overlay what is actually going on in the international betting markets in a live experiment with that. the way we work is we provide factual data on any anomalies, any differences to what we would expect that could indicate issues that need to be looked at. also, from a technology point of view, what we do is work with the sports to identify correlated risk. for example, if you're seeing anomalies with particular players and umpires or officials all in the same game or all in the same series of games, we will highlight that as well for sports to look into and sports police. the other side is important and the emphasis especially here should be focused around education. the way that we work with sports at the moment is to help sports to understand the environment that they work in and any risks they may be exposed to. a great example of that is, you know, if a chat was done -- if,
6:19 am
say, for example, a team physio is in a bar, they strike up a conversation. they share the fact there might be a particular injury of a particular player, that -- you know, the guy goes away, places some wages, comes back. he's able to put pressure on the physio of the team by saying, here's the information and here's the share of the winnings and he feels like he's providing information. our motivation is providing the teams, the umpires, the risks that they may be exposed to. both in the market they operate in. mr. lance: is there anyone else on the panel that would like to comment on that? mr. brubaker, in your testimony you say state operators should
6:20 am
be -- can you give us a sense of how many of your members have players in all 50 states and do you see a path forward for states accepting audits from one another to reduce the regulatory burden on smaller operators? mr. brubaker: so on the states, there's only 45 states that fantasy sports can be played in right now. and so the five are going to escape me at this moment, but i would imagine that most companies have players from almost every state. now, there's not a lot of players in some states. may have, you know, 400, 500 in a state like new jersey. you may have 20 in delaware, but they are spread out all over the country. second part of your question, sir, sorry? mr. lance: do you see a path forward for states accepting audits from another state to reduce the regulatory burden on smaller operators? mr. brubaker: the path forward is for us to get to a lot of states and talk to a lot of legislators and try to get that changed. some state bills that we've seen
6:21 am
are just say there has to be an annual audit. it's not quite as specific as some states that say it has to be from an auditor from the state. so there's a lot of work to do and it's, you know, when you're small organization with a small number of companies, that's a lot of work and it takes a lot of time. we will push for those regulatory issues to be uniform across all the platforms, but we're playing catch-up in a lot of these states right now. mr. lance: thank you, mr. chairman. i yield back 50 seconds. mr. burgess: the chair thanks the gentleman. the chair recognizes the gentleman from new jersey, mr. pallone, the ranking member of the full committee, five minutes for your questions, please. mr. pallone: thank you, mr. chairman. i obviously believe there's a lot of hypocrisy surrounding the daily fantasy sports betting and the daily fantasy sports industry has said that they are completely separate from sports betting despite the fact that similarities can't be denied. the same is true of the
6:22 am
professional sports leagues. at the same time they're embracing daily fantasy sports, they're banding together to prevent new jersey prevent sports betting claiming trying to protect the integrity of sports and will be involved in organized crime and all that illegal stuff. sports betting is legal in some states and many other countries, including canada, and the sports world is not falling apart. my questions are mostly for you, mr. gnat. you said in your testimony it that canada has had legal betting since the early 1990's. is sports betting in canada limited to betting on canadian sports or do canadians legally bet on american sports as well? mr. gnat: thank you. in canada you can bet on any sport in any country and even in certain jurisdictions as the sports have continued to gain sophistication, the offerings -- as well.
6:23 am
mr. pallone: ok. i have to get through this. have you heard of any major game fixing scandals linked to american sports betting since sports betting was legalized in canada? mr. gnat: not to my knowledge. mr. pallone: there haven't been any major scandals. we know that legal sports betting market in the u.s. you mentioned to be as high as $400 billion. so the integrity of the game argument just doesn't make sense to me. in fact, legalizing sports betting would simply allow for the same kinds of consumer protections that we're discussing today for daily fantasy sports. so my question is -- would you like to comment on how bringing the current black market, organized crime, mob, whatever, you know, doing all this sports betting, if you bring it out into the sunshine and make it legal, how could you ensure integrity? mr. gnat: regulation just in general brings an environment of accountability, integrity and consumer trust. prohibiting does not do that.
6:24 am
it drives an acceptable activity, traditionally drives it underground where you have no integrity in the game and therefore the people involved are not accountable to anybody. and the consumers' interests are not maintained. so i think when you take a look at examples of how it has been done in other jurisdictions, even in nevada, sports betting has been done legally and responsibly in other jurisdictions and as you said, the world has not come crashing down around it. mr. pallone: kind of like prohibition of alcohol, i would think. if sports betting were not legalized, do you see a way to stop the practice from occurring illegally? mr. gnat: i don't see how you can prevent something of an industry of this size and this magnitude that exists today. mr. pallone: all right. let me go to the fantasy sports, trade association, mr. schoenke, if i can. i know you say you can comprehensively answer any question about the industry because even though fanduel and
6:25 am
draftkings are not here that i'll ask you the questions that they would normally be here to answer. last year draftkings applied and received a gambling license in the united kingdom. fanduel also applied for a gambling license in the u.k. but hasn't yet received it, to my knowledge. yet, in the u.s., both companies maintain that daily fantasy sports is not gambling. so what is draftkings' rationale for getting a gambling license in the u.k. if they say that daily fantasy sports is not gambling? and what about fanduel, how do they justify this when they ask for the gambling license in the u.k.? mr. schoenke: the laws of the united states are different than in the united kingdom. if it's under skill it's gambling. in america in most states, if a game has more skill than luck, it's not considered gambling. that's why fantasy sports for over 20 years as an enterprise
6:26 am
has never been considered gambling. we didn't have -- didn't meet before congress or at the state level. that's been called into question in the last -- mr. pallone: they're doing the same thing, right, in both places? mr. schoenke: i think the laws are different. it's a different country. mr. pallone: it sounds like one place -- mr. schoenke: if it's considered more skill than luck. mr. pallone: they're not doing anything differently, right? mr. schoenke: it's the same game. mr. pallone: it sounds like the difference in one country they have a lot of smart lawyers or lobbyists that are, you know, defining things in one way and the other they're not. but the game is the same, correct? the game is the correct? mr. schoenke: it's still a game that has far more skill than luck. mr. pallone: all right. thank you very much. thank you, mr. chairman. mr. burgess: the chair thanks the gentleman. the chair recognizes the gentleman from oklahoma, mr. mullin, for five minutes for your questions. mr. mullin: thank you for the panel for being here. a lot of interest in this. more so than members are
6:27 am
interested in it. but chairman, appreciate you having a hearing. outside there's a lot of people wanting to get in. i think there's a lot of unknown facts that people are trying to get information and that's the whole point of this panel is, ok, what exactly is a way we're heading? what is the future? and how is this going to be benefit or negative? and so i'm going to focus just a little bit on this and this is a generic question for the panel itself. is anybody aware of certain pushbacks, lawsuits, concerns through the states or through different organizations that have came after online betting? anybody want to take that? all at once. >> i'm happy to speak to that. i have come from two distinct areas.
6:28 am
there is a large number, dozens of private lawsuits that's been consolidated as a class action. mr. mullin: what are they concerning? >> number of different claims based on allegations of fraud and illegal gambling. they are in very preliminary stages. they've been part of a federal district court in massachusetts. mr. mullin: on the fraud, what specifically are we talking about with fraud? >> allegations have been made about false advertisement. misuse of insider information has been part of the lawsuit. a number of e mullin: is that da specific group? is that due to the ability to build it online because it's faceless, nameless and unregulated? >> perhaps that's a component of it. perhaps indirectly to answer your question, a majority of the defendants are the daily fantasy
6:29 am
companies themselves as well as a few of the lawsuits have named investors and affiliated companies, including payment processors, including some high level successful daily fantasy players. dr. rodenberg: so perhaps that can be inferred as far as who the departments are. mr. mullin: what are the qualifications for a fantasy sports group to go online? is there a regulating body that oversees it that says before you're able to do it you got to comply with certain agreements? we're going to come in, we're going to look over your shoulder, is that -- does that exist or is it just put up a website and let's go bet? dr. rodenberg: in a small minority of states, all within the last couple weeks -- literally for the last couple of weeks, virginia, indiana, tennessee, there's regulations in massachusetts now, those have been recently been enacted and signed by state governors but most of them have effective dates sometime this summer. so it's literally in its infancy
6:30 am
outside of formal state-run regulations, certainly a vast majority of fantasy companies are members of fantasy sports trade association. whether mr. schoenke's organization or others, but that's certainly more of a private self-regulatory model than a formal governmental one. mr. mullin: mr. locke, did -- what did your company have to do? mr. locke: what did we have to do within fantasy? mr. mullin: to be able to do business within the united states and to keep down the complaints, make sure it's fair, make sure it's on the up and up, so to say, were there certain qualifications you had to comply with or use best model? mr. locke: we don't work in sports fantasy. we work in sports integrity. it helps them protect their events. in terms of working within the u.s., we have not had to comply with any regulations. mr. mullin: so you work with the
6:31 am
fantasy betting organizations? mr. locke: we don't work with any fantasy betting organizations within the u.s. our prime business in the u.s. is working with sports to help protect the integrity of their events. mr. mullin: ok. what are the biggest pushbacks, the biggest complaints that we're seeing? is it coming from the state or coming from organizations? is it coming from the sport community itself? dr. rodenberg: related to my previous response. the biggest pushback has come at the state level. as of two weeks ago, by my account, there are roughly a dozen state attorney generals, from new york to illinois to texas, from hawaii to idaho to georgia, to tennessee that have looked at daily fantasy under the auspices of their state law and they have concluded that it constitutes illegal sports gambling in their state. they have issued whether it's a cease and desist letter or negotiated letter with daily fantasy companies. within the last six months, fantasy companies have removed themselves from those excluded
6:32 am
states. the list of excluded states have risen dramatically from the original five states -- washington, louisiana, arizona, montana and iowa -- to now -- of course, it's suddenly over 15. so certainly the number of excluded states have increased within the last six months. that's the other in terms of pushback, it's come from the state level so far. mr. mullin: thank you for your time. my time has run out. mr. burgess: the chair thanks the gentleman. the chair recognizes the gentlelady from new york for five minutes for your questions. ms. clarke: thank you, mr. chairman. mr. mcmanus, brick and mortar casinos mandates consumer protections such as age verification, support for problem gamblers. they could lose their license if they don't comply with these safeguards. of course, consumer protections must be implemented carefully and effectively to be successful. some of the consumer protections that have been suggested for daily fantasy are similar to those that have already
6:33 am
successfully put in place by casino operators. i'd like to hear from you about how m.g.m. complies with gambling regulations and protects consumers. for instance, are age restrictions on gambling apply -- that apply in every state in which gambling is permitted, can you discuss how you ensure your customers are old enough to gamble legally? mr. mcmanus: yes, thank you for the question. we only operate land-based casinos. we don't have an online presence at this time so it's a different approach to age verification. we do it the old-fashioned way as you would for serving alcohol. you ask for identification. you verify identification. there's extensive training for our gaming staff, security staff and for frankly anyone to question whether somebody is of age. some states have regulations that require you to present identification as you enter a
6:34 am
casino. others it's just a responsibility of the operator to ensure that people only of age within our facilities and jurisdictions and i don't know if it's differences elsewhere. the minimum age is 21. ms. clarke: nevada regulations prohibit gambling by certain employees of the holder of the gambling license. what policies do you have in place to ensure that m.g.m. employees are complying with that regulation? mr. mcmanus: yeah. different jurisdictions have different rules. some exclude all employees. in nevada, we -- if you're a key employee, you're excluded. i'm, for instance, excluded from gambling at our facilities. i could play at a competitor's facility and that's really to
6:35 am
avoid even the appearance of impropriety that a gambling game is somehow fixed. ms. clarke: what about casino policies for handling gamer's money? for example, betting pools are kept separate for casino operations, right? mr. mcmanus: in nevada we have requirements to maintain sufficient cash in our cage to make sure we can pay winners. again, in the online environment it's a little different because you have an account. typically, most of our customers are paying for chips with cash. ms. clarke: we're trying to get the distinction kris cal clear. clear.tal how do your casino employees identify pro-gamblers and how are they trained to respond if they learn that a customer may be struggling with a problem gambling -- problem gaming, excuse me? mr. mcmanus: sure. by no means i am the authority of problem gaming. there is extensive training for our employees. i would say the biggest thing
6:36 am
that is uniformly accepted in the land-based casino industry is making information and help available. there are 800 numbers. they are all methods for self-exclusion or self-limiting in some cases where, you know, somebody has identified them self as a problem is able to say, please don't let me game here. and we enforce that. and frankly our regulators enforce that where we would be fined if we are marketing someone that self-excluded them self. how someone is specifically identified at a gaming table, for instance, i'm really not the expert on that. ms. clarke: no problem. are there any other consumer protections that your casinos have in place? mr. mcmanus: we have many consumer protections. gaming regulation is exhaustive. it is thorough. the most basic consumer protection is making sure that it's run -- the casinos are run by honest and reputable people and their backgrounds are scrutinized so you know who you're dealing with.
6:37 am
then it's every aspect of our industry is regulated that you have to do it with integrity from advertising to the games. ms. clarke: thank you, mr. chairman. i yield back. mr. burgess: the chair thanks the gentlelady. i recognize mr. guthrie five minutes for your questions. mr. guthrie: you talk about scripting tools on daily fantasy websites. a script allows one player to enter or change multiple lineups in many contests faster than a human could, is that correct? what about a d.f.s. site could make it optimal for playing more
6:38 am
than season-long fantasy sports? mr. eggert: yes, that's correct. if you have an algorithm that generates, you know, hundreds and hundreds of lineups, professionals use scripting tools in order to easily input those into the d.f.s. site. and as far as how it's different from season-long, i haven't looked into scripting tools in season-long. my understanding is people have the purpose of season-long is to do trades and things like that where people are much more engaged in the game and so their strategy is how to work with other players. i suspect that scripting tools aren't used that much because people are much more hands on with their individual lineups. but, again, i haven't looked at the season-long as much. mr. guthrie: ok. thank you. mr. schoenke and mr. brubaker, how do your companies view scripts on member services? mr. schoenke: scripts is a new term, new technology. they didn't have functionality in their game and so players figured out how to do something on their own and so they developed something to swap out
6:39 am
players at the last second if there was an injury. since then, the industry has shifted in terms of scripts. the companies have built a lot more functionality into their game so they can do it. they have also -- the leading companies, fanduel, draftkings, yahoo!, have banned third-party scripts and we've seen this addressed at the state level where regulations in massachusetts and also the state laws that are passing in indiana and tennessee and virginia, they also ban third-party scripts as well. so i think that's going to minimize the -- any kind of unfair advantage that people would have by using these. mr. guthrie: mr. brubaker answered this, too. are your providers -- under the surface providers, you said, but fantasy games, are they able to detect when somebody is using a script on their site? mr. schoenke: there's technology they're using. it's best practices. these regulations and laws make an incentive to do it.
6:40 am
if a customer is caught using a script, you know, there's disincentive to do it. they could be revoked completely. mr. guthrie: ok. mr. brubaker. mr. brubaker: for season long you do a draft before the season starts. so there would be 12 teams in the league and each general manager of that team would hold a draft and we'd go through all 12 people. 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 enter multiple contests. i think peter did a pretty good job explaining how they do it on the other side. mr. guthrie: the previous question, there are two major players in the daily fantasy sports and you represent the small players? mr. brubaker: there's two major players.
6:41 am
mr. guthrie: what's the difference? what's a key characteristic of a small player, i guess? mr. brubaker: small companies. small companies. so there are probably 80 providers that are not draftkings and fanduel. yahoo! is a larger one. many are smaller companies that have 2,000, 3,000, 5,000 players total in their company where draftkings and fanduel have millions of players. so the scale is completely different between what the two big companies do and the traditional smaller companies, season-long companies that have been around for many, many years. mr. guthrie: i'm about out of time. there is a question that mr. eggert answered it. some made the argument setting a license or registration fee -- i will read it quick. the barrier to enter into the marketplace to keep fly by night
6:42 am
operators from running away with people's money. is that a concern in the daily marketplace? mr. brubaker: maybe peter should answer the daily question. dr. rodenberg: in the state -- one of the key components for consumer protection is the funds -- consumer funds be protected so the price will be there. there would be a segregation of funds and that's something we're strongly advocating at the state level. mr. guthrie: i appreciate your answers. mr. burgess: the chair recognizes the gentlelady from indiana, mrs. brooks, for five minutes for your questions, please. mrs. brooks: thank you, mr. chairman. [inaudible] in this 114th congress, we have a disruptor series which changes the landscape of the economy and we've explored things like uber and bit coin and now with this packed audience today it's interesting because i think this, too, is something that is really kind of disrupting the way we think about the world of
6:43 am
gaming and gambling. i think it's important for us to kind of explore the largest disruptor in the gambling community, the daily fantasy sports, but there are a lot of different questions that we have to grapple with as to whether or not we don't want to limit innovation but we have to protect consumers and where do we find that balance and obviously indiana has taken the lead and 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 games are fair, participants are over 18 years of age and that sites allow players to restrict their own play. and while some of the regulatory measures may be are stern, 150,000 hoosiers are participating in daily fantasy sports and they need to have confidence in the integrity of the products. and so i hope that we can continue to explore how to expand the safeguards that hoosiers now enjoy.
6:44 am
as -- and ensure 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 type of -- well, i learned yesterday total illegal sports betting market in the united states grew to $148.8 billion in 2015. the illegal sports betting. and so i guess to dr. rodenberg and maybe others, if states don't allow this within their state, won't this simply drive more competition overseas to places -- where are the places that the -- we would be competing with? and can you just talk about that and can the industry talk about that if we don't figure this out? dr. rodenberg: sure. antigua, curacao and are the likely overseas jurisdiction that have book operations that
6:45 am
some may and may not offer it to american citizens. that's a possibility if daily fantasy is not legalize and regulated in jurisdictions like yours that would be so inclined there could be an underground market. the technology -- the offering of d.f.s. is so new. i think that's a little premature. you had the figure in terms of the $140 billion-plus. the overall kind of market of daily fantasy is quite small relative to that. it's -- the estimates i've seen is anywhere between $3 billion and $4 billion. it's a small portion of the overall american sports gaming market. while the important and relevant to the disruption and the disruptor series that you're evaluating as part of this subcommittee, it's still a small portion of the american sports gaming market. mrs. brooks: however, like uber and bit coin and others, they may have started out small but
6:46 am
look how they grew. any other comments about the off-shore competition if we don't get this right and figure this out, anyone want to comment? >> yeah. i'd like to comment. speaking for -- i think i can speak for my entire industry here. any form of unlawful gambling is bad. and we do find -- mr. mcmanus: and we do find these forms of entertainment are not going to go away if they're made unlawful and you will develop a black market if you don't have a legal outlet for daily fantasy. one comment i would like to make when we talk about season long versus daily, for me the distinction on whether regulation is appropriate is whether it's house banked. if it's a season-long fantasy operator who creates a platform for private needs, i see no need for regulation. as soon as you're taking money from citizens and promising to pay back under certain scenarios
6:47 am
you should be regulated. respectfully if it's a small business or large business. mrs. brooks: mr. brubaker, you talked about the difficulty with small operators are complying with 50 different state audits and can you give us a sense of how many of your members have players in all 50 states? mr. brubaker: we don't know for sure. that question came up previous to your arrival. and there were five states where no play is allowed or has been allowed and dr. rodenberg mentioned there was changes since that from different attorneys' generals that have made some decisions. but i would say most of our companies have players in every legal state. mrs. brooks: thank you. my time is up. i yield back. mr. burgess: the chair thanks the gentlelady. at this point i believe all members' requests for time have been honored and i would recognize the gentleman from new jersey for an additional five minutes should he so desire.
6:48 am
mr. pallone: thank you. let me follow up on -- mr. brubaker, follow up on the gentlewoman's comments. you talked about the difficulty small fantasy sports companies may have in complying with different states' laws. so do you support federal involvement? is there a way to do something at the federal level that doesn't force states who don't want daily fantasy sports or gaming to allow it? mr. brubaker: we'll work with just about anybody that wants to help us figure this out. if it's the federal government we'll do that. if it's going state to state, that's a much harder path for us to go down. certainly if you look at -- let me take a step backwards. so we looked at ugia as a company, small companies did and they saw that in 2016 as a green
6:49 am
light by the federal government to -- 2006 as a green light by the federal government to go online with fantasy sports. that was season long. that was before daily was contemplated. so we have companies that are relying on you guys and said go ahead and go start your businesses and they've gone out and they started their businesses and now we have states coming in and changing the game, changing the format. i don't think you'll hear any daily fantasy sports company or season-long sports company balk at consumer protections as long as they're done in a way it's financially viable to stay in business. mr. pallone: maybe that's something we can look into. thank you. let me go back to mr. schoenke again and, again, i'm asking you specifics about draftkings and fanduel which you said you can answer. i want to talk about the so-called insider trading scandal that was reported on last fall. ethan haskell, a draftkings employee, was accused of using information he obtained in the course of his work to help his play on fanduel's platform and an independent investigation
6:50 am
cleared him of any wrongdoing noting he didn't 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 draftkings did not release that report? mr. schoenke: i don't have that information. i know they've been pretty forthcoming with a lot of the details of what happened. i apologize. i don't have the -- i don't have the details of that. mr. pallone: all right. but, again, we're relying on you to answer these questions of the two, you know, of draftkings and fanduel. where did the information received by mr. haskell come from? was that person playing daily fantasy sports? did that person gain advantage from the information? mr. schoenke: the information he had was the number of players, the percentage ownership, which may give you an advantage if you know that one player is -- has a lot of ownership in one player doesn't and so the internal, you
6:51 am
know, mechanism to calculate that and he compiled the report after the game was locked, when it was no big deal and there was an inadvertent release of that. mr. pallone: mr. schoenke, since you say you can answer these questions but maybe you can't today but with the chairman's permission i would like you to follow up and try to answer them on behalf of draftkings, if you would. all right. draftkings prohibits its own employees and employees of other daily fantasy sports operators from playing on its sites and fanduel prohibits its own employees from playing on their site and other fantasy sites. how does draftkings ensure that other sports operators are not playing? do competitors share their list to draftkings, to your knowledge? mr. schoenke: it's also a component of the laws that we are advocating for across the country and one of the key components that daily fantasy
6:52 am
sports companies cannot play on other people's platform. there's obviously a big legal incentive to get it right as well. mr. pallone: how does fanduel ensure their employees do not play on another d.f.s. site? do they share their list? mr. schoenke: as far as what the specific companies are doing, i don't have that -- mr. pallone: well, again, i would ask you to find out. because professor eggert point out that they have access to spreadsheets that show the players who are the biggest losers on the d.f.s. sites and i'm just wondering how does fanduel ensure those lists are not being used to invite those losers to head-to-head matches and the same thing with draftkings. i mean, i guess you can't answer these things right now, but -- mr. schoenke: we as an industry are advocating for laws at the state level to prevent this from
6:53 am
happening. i think that will be a big disincentive for any company to allow that to happen. mr. pallone: i want you to get back to me on those questions because, again, the two companies didn't come and they say you can answer the questions so please get back to us. i'll send it in writing as well so you know. thank you, mr. chairman. mr. burgess: the chair thanks the gentleman. let me just -- a couple things for follow-up. i guess, mr. eggert, even off topic from what we've been discussing. the concept of the amount of data that -- maybe we can direct this to you. the amount of data generated seems to be phenomenal. is this useful for anyone else in the sport? is a general manager interested in these performance statistics? it just seems like this has the potential for changing the way competition is handled by the -- how well you're able to manage these large data flows.
6:54 am
would you comment on it? mr. eggert: i think general managers have an increasingly great interest in data acquisition and management and i think the sport is moving in that direction to be more data-based and less just see how a person swings the bat. it's gotten so far i think there's espn fantasy sports analyst who is good at this data management. who will go and look at players and see how they play in certain environments and select.w to the concept of moneyball and how he selected teams was based on starting with those analytics.
6:55 am
doing the been disruptor series. it is based on the way data is every strataghout of our ecosystem. mr. cologne made the -- mr. -- you the observation may have players on a roster, you are now interested in the performance of that team. while he was describing that, i couldn't help but think that had ago,been around 30 years the new jersey generals may still be a franchise. but maybe not. purely speculation at this point. we would all be doing something different. pollone: purely speculative at this point. night, i was one of
6:56 am
about 5 million people who checked out john oliver's explanation of daily fantasy sports. regardless of one's position on it, you may get a kick out of it. i am not his agent. i get no kickbacks from john oliver. but it is a humorous and informative, from my point of view, explanation of daily fantasy sports. >> the chair thanks the gentlelady. if there are any further members that would care to ask questions -- i do thank our witnesses for being here today. i would like to submit the following document -- a letter from the american gaming association, a letter from the letter from the stop predatory gambling group, a letter from the office of the
6:57 am
attorney general from the state of texas. pursuant to committee rules, i remind members that they have 10 this isto submit additional questions or the record. i would ask the witnesses to respond to those questions with their answers within 10 business days.
6:58 am
6:59 am
>> today on c-span, washington journal is next, live with your phone calls, we've, and facebook comments. then, live coverage of the u.s. house. then, a news conference with paul ryan after his meeting with donald trump. we go back to the house to address a bill on opioid addiction. we then speak about simple asset forfeiture laws. and then legislation to deal with opioid addiction. later, tom different, a veteran journalist who has covered both
7:00 am
presidencies. we will talk to him about the bush families strong dislike of donald trump. ♪ host: good morning. happening in washington today, theld trump will meet with speaker of the house, paul ryan. the speaker said he was not ready to support the new york businessman. donald trump said he was not ready to support the republican agenda. will they come together? some worry with donald trump at the top of the ticket, it could hurt republican's reelection efforts.


info Stream Only

Uploaded by TV Archive on