Amaya exec calls for more regulation of daily fantasy sports
Montreal-based Amaya Inc., which operates the fantasy sports site StarsDraft, said the self-regulatory practices the industry has under-taken "have fallen short."
In a statement, Amaya Vice President of Corporate Communications Eric Hollreiser said daily fantasy sports needs "stricter state regulation consistent with existing state consumer protections for other gaming activities."
The comments came after FanDuel and DraftKings, which control 90% of the daily fantasy sports market, undertook steps to repair public damage when it was learned a DraftKings employee won $350,000 in a FanDuel contest reportedly by using inside information. The two sites spent an estimated $60 million on advertising during the opening weekend of the National Football League, often giving daily fantasy sports more attention than the actual game.
Several members of Congress, including Rep. Dina Titus, D-Nevada, have called for hearings on the legality of daily fantasy sports, questioning if the activity is skirting the 2006 Unlawful Internet Gambling Enforcement Act, which prohibits financial transactions associated with online wagering.
Amaya, which spent $4.9 billion last to acquire PokerStars, bought Victiv earlier this year. The company was viewed as the No. 3 daily fantasy sports operator behind DraftKings and FanDuel. The product was reintroduced as StarsDraft before the kickoff of the NFL season. Yahoo's daily fantasy sports website has since become the third most popular location.
Hollreiser said gaming regulators in the U.S. need to "adopt tougher restrictions that safeguard players and institute controls" with daily fantasy sports websites.
"We are launching an active effort to work with states to enact legislation that meets the consumer protection interests of all parties," Hollreiser said.
Nevada gaming regulators asked the state's attorney general's office, which advises the Gaming Control Board and Nevada Gaming Commission, to analyze the legalities of daily fantasy sports. While the Control Board hasn't taken a formal position on daily fantasy sports, regulators have cautioned casino and sports book operators to keep their distance. Several operators have said the activity is gambling.
Eilers Research gaming analyst Adam Krejcik said Amaya has not concentrated a heavy sales and marketing effort behind StarsDraft.
"(Amaya is) treading very carefully with regards to regulations," Krejcik said. "They want to do everything in their power to maintain positive public perception with regulators."
Krejcik said Amaya was also blocking StarsDraft access by Florida residents. The Legal Sports Report website reported that a grand jury is allegedly convening to analyze whether daily fantasy sports operators are violating state and federal law.
"While this is a complex and serious issue, we believe Amaya motives regarding daily fantasy sports are much different versus the big two (DraftKings and FanDuel)," Krejcik said. "They will do whatever is necessary to appease regulators and maintain good public perception."
Hollreiser said Amaya utilizes regulated gaming practices for StarsDraft, including segregating player funds from operational funds, as well as age and location verification tools when customers sign up.
"Contrary to industry norms, StarsDraft works to ensure a proper and fair playing field for all those involved," Hollreiser said.
DraftKings and FanDuel banned their employees from competing in daily fantasy sports contests and brought in outside law firms and former prosecutors to investigate and review their internal controls.
Meanwhile, the issues concerning the two sites did little to slow business.
According to an analysis from SuperLobby, an industry research firm based in the United Kingdom, DrafKings and FanDuel received 7.1 million entries to their guaranteed prize pool tournaments, generating $43.6 million in entry fees.
"Fears concerning the potential impact of the mainstream media's negative daily fantasy sports coverage last week appear unjustified," SuperLobby CEO David Copeland said in a statement.
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