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Chaffetz avoids fantasy sports as he seeks Web gambling ban

29 Oct 2015

By Peter Urban
WASHINGTON — U.S. Rep. Jason Chaffetz, R-Utah, would leave daily fantasy sports websites untouched as he pursues a federal ban on Internet gambling that is aimed largely at online poker.

Chaffetz filed legislation in February to effectively rescind a Department of Justice opinion made public in December 2011 that held the Wire Act of 1961, the law that prohibits transmitting wagers, applies only to sports and not to other forms of gambling. His bill would roll back the landscape to where it stood before the DOJ opinion was issued — putting an end to state laws enacted in Nevada, Delaware and New Jersey that made it legal for residents there to place online wagers.

The bill, however, would keep previous exemptions in place — including one for daily fantasy sports and another for wagering on horse races.

"There were already other carve-outs in place. My position has been that you just don't unilaterally change a law. You can't erase it or add one without going through Congress," he said. "I'm trying to hold tight to just restore it exactly as it was previously. I'm not trying to make exceptions or adjustments to it."

The bill exempts wagering based on the Interstate Horseracing Act of 1978 and participation in any fantasy or simulation sports game where the winning outcomes are based on accumulated statistical results of the performance of individual athletes.

The Chaffetz bill, and a similar bill in the Senate, is backed by Las Vegas Sands Chairman and CEO Sheldon Adelson, who has put big money behind a campaign against online gambling. Adelson has argued that making wagers over the Internet is detrimental to society and bad business for the casino industry.

Chaffetz acknowledged that concerns over online fantasy sports has intensified in recent months as questions have arisen about the two largest daily fantasy sports companies, DraftKings and FanDuel.

Massachusetts Attorney General Maura Healey launched a review in September into internal controls and consumer protection safeguards at the companies. DraftKings is based in Boston. A similar inquiry was launched in New York where FanDuel is based.

Earlier this month, the Nevada Gaming Control Board issued a "cease and desist" order banning unlicensed daily fantasy sports websites. The agency said the activity was akin to sports wagering that falls under its regulatory control.

"There are a lot of outstanding questions, and there are many of us who are concerned it is truly gambling. So we will see how that plays out," Chaffetz said. "Certainly Nevada is the leader in understanding gaming. So it should cause a lot of people concern if Nevada finds that it is truly gaming."

Chaffetz, however, plans to leave fantasy sports gambling to others while he focuses on his bill.

Chaffetz attended a press conference on Wednesday aimed at bolstering support for his bill, which faces an uncertain future in the House Judiciary Committee. The bill has 24 co-sponsors.

The press conference brought out opposition to the proposed legislation.

The Coalition for Consumer and Online Protection circulated a letter from Chuck Canterbury, president of the National Fraternal Order of Police in opposition to the Chaffetz bill. He said regulations and associated safeguards and technologies work better than bans.

"We believe that its passage would put consumers at risk and undermine the efforts of law enforcement as we seek to protect our citizens from Internet-related crimes," Canterbury wrote.

Poker Players Alliance Executive Director John Pappas said the Chaffetz bill would do nothing to halt unregulated Internet gambling in the U.S.

"(The bill) does not address the current offshore and unregulated market that exists today and is particularly dangerous because it prohibits states from authorizing and safeguarding their own citizens," Pappas said.

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