The Commish: Scandal-Plagued Fantasy Sports Group Brings in New Leadership

In an effort to get ahead of the scandals facing its industry, the Fantasy Sports Trade Association announced a plan to create a control board led by a former Obama administration official. But some regulators and smaller members of the group are skeptical if the association's move is enough.

Struggling with the biggest crisis in the industry’s short history, the Fantasy Sports Trade Association (FSTA) is trying a strategy straight out of the major leagues.

On Wednesday, the trade group brought in a former Obama administration official, Seth D. Harris, to serve as commissioner of a new independent control board for the trade group, which it will call the Fantasy Sports Control Agency.

Harris, who served as acting U.S. Secretary of Labor for roughly six months during 2013, says the new agency will ensure that the group’s member companies—particularly DraftKings and FanDuel, which have drawn federal scrutiny especially in light of a recent insider trading scandal—have an objective watchdog to keep an eye on things. It will not act as an additional lobbying arm for the trade group, he says.

“We’re going to establish a financial support structure for the control agency so money is paid by the member companies of the FSTA,” Harris told the Boston Herald on Wednesday. “We haven’t decided what that’s going to look like, yet.”

Shades of “Black Sox”

FSTA’s approach, Forbes contributor Marc Edelman notes, evokes a move made by Major League Baseball in the wake of the 1919 Black Sox scandal, in which players were accused of throwing games in exchange for money.

After the scandal, MLB brought in Kenesaw Mountain Landis, a federal judge, as its first commissioner. The result gave the league a tough and impartial face as it attempted to recover from a scandal that threatened the game’s legitimacy and popularity.

Will It Work?

Harris’ ties to the Obama administration could help build a tough face and watchdog structure for fantasy sports at a time when the association needs just that.

Earlier this month, a DraftKings employee was accused of using insider information to win $350,000 on the rival FanDuel website.

At the same time, both state and federal governments have determined that daily fantasy sports websites are forms of gambling that should be more strongly regulated. FSTA recently announced it was moving an event from Nevada in protest of that state changing its rules around daily fantasy sports.

The FSTA says it’s working with federal regulators on these issues. In addition, the association hopes that self-regulation in the form of the Fantasy Sports Control Agency headed by Harris will discourage regulators from restricting the industry’s growth.

“The hope is, by doing that, regulation from outside won’t be necessary, that we’ll have actual compliance within the industry and no violations that will attract attention from others,” Harris told Reuters of the planned control agency.

Skeptics Speak Up

It’s unclear whether the approach will win over everyone. Massachusetts Attorney General Maura Healey is skeptical of the approach.

“Clearly this is an industry that has needed regulation and controls, and that’s important,” Healey told the Boston Herald. “I don’t know enough of what it is they’re proposing. [But] I highly doubt that I would be satisfied, as a consumer protection matter, trusting or relying on that industry to regulate itself.”

And a smaller firm, Star Fantasy Leagues, expressed concern that it was being left out of the conversation in favor of the larger members. Star Fantasy COO Seth Young described the move as “totally reactionary.”

Seth D. Harris, a former acting Secretary of Labor, essentially just became the commissioner of fantasy sports. That'll make for a fun business card. (Wikimedia Commons)

Ernie Smith

By Ernie Smith

Ernie Smith is a former senior editor for Associations Now. MORE

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