In our initial installment on DreamCo Design CEO and FSTA Legislative Committee member Jay Correia’s groundbreaking overview of the DFS landscape, we provided some background on how the idea for the book came about, examined his extensive background as a service provider to the industry and touched on some of the many topics he covered in his work. One of the most pertinent subjects is certainly regulation, and the fact that it’s now set to become an indelible part of the future of daily fantasy sports.
The Quick Rise and Fall of the Fantasy Sports Control Agency (FSCA)
However, prior to Virginia becoming the first state to officially legalize DFS after last fall’s industry controversy, there was a sudden and very tangible movement towards self-regulation. In late October 2015, the Fantasy Sports Trade Association (FSTA) announced the creation of the Fantasy Sports Control Agency (FSCA), a would-be self-regulatory body which was to be headed up by Seth Harris, former acting U.S. Secretary of Labor.
The FSTA e-mail announcing the formation of the FSCA emphasized that one of the driving forces behind its creation was the FSTA’s belief that “that we [the FSTA] cannot and should not allow the future of our industry to rest in the hands of others.” It went on to declare that the FSCA was conceived “for the purpose of bringing enhanced transparency, ethics and integrity to the industry.” The communication also itemized the four areas that the FSCA planned to provide mandatory guidelines to FSTA members in: Standards, Company Controls , Processes and Leadership, Auditing Policies and Procedures and Enforcement.
In short, the mission of the FSCA appeared to be clear, concise and well thought-out, and was to be spearheaded by a highly respected figure. The situation presented as a badly-needed positive development at a time when the recent turmoil surrounding the industry was at one of its highest points.
Yet early in 2016, the FSTA abruptly announced that the nascent FSCA had essentially become obsolete before it ever truly got off the ground, as dialogue with more and more states to explicitly legalize fantasy sports intensified. The future was clear- the regulation of the industry would exclusively come from the various state legislatures around the country that were moving to pass bills legalizing and codifying the business of fantasy sports in their jurisdictions.
The FSCA- A Missed Opportunity at Self-Regulation
This rollercoaster of events didn’t exactly sit well with Correia at the time, and still provokes lament from him to this day.
“I do think we missed out on an opportunity,” Correia remarked, in reference to the FSCA never materializing. “It [the idea] was reactive rather than proactive.”
The industry veteran doesn’t necessarily agree with the reasons given for why the organization never had an opportunity to fulfill its stated purpose either.
“The reason that I’m told that we did not continue with it was the financial aspect,” he explained. “I disagree with that. If that’s the case, it never should have been announced and you should have never gone down that path to begin with.”
In Correia’s view, one of the costlier consequences of the failed attempt at self-governance is losing out on the foundation it would have provided when engaging with lawmakers around the country. In Chapter 10 of Daily Fantasy Sports, the aptly-titled “Freedom with Responsibility”, he argues that with a set of self-developed regulatory guidelines already in place at the onset of any legalization discussion, the industry would have been operating from much more of a position of strength.
“We would have been able to give them [state legislatures] a blueprint at that point, and it would have led to more consistency and perhaps a bit more leniency since there’s already evidence that there’s self-regulation taking place,” said Correia.
As he elaborates in the aforementioned installment of Daily Fantasy Sports, regulatory consistency is perhaps the single most important benefit the existence of the FSCA could have engendered.
“At the very least the FSCA could have been leveraged in a way that made it easier to get consistency out of all of the individual states. Simply put, the FSCA could have formed its own regulatory guidelines that could have been issued by each state as a template to work from. This would have helped fast-track any state-specific guidelines and helped provide consistency that could be expected from all states. Tackling each state with a blank canvas will take longer, lead to more inconsistencies, cost more money, and increase the chances for harmful regulation.”
Internal Corrections Needed, Feasible
Despite some of the missteps of the past, and the still tenuous legal state of DFS in many areas around the country, Correia sees a reasonably bright future ahead for the industry as a whole. However, he also feels a substantial amount of internal self-correction will be necessary for that future to manifest.
In “Freedom with Responsibility”, he doesn’t hesitate to given a frank assessment of some of what he sees as errors in judgment by DFS operators that helped lead to increased scrutiny:
“One of the main reasons why the fantasy industry is in such a legal fiasco right now is largely because of the way the first generation ads came off. The “win cash now” style of ads we saw on television put up a lot of red flags. The messaging pissed of casino operators, perked up lawmakers, and undermined what fantasy sports has always been about: having fun.”
While he surmises that “the damage has already been done” with respect to how certain DFS operators portrayed themselves through their ads, he certainly doesn’t see that damage as irreversible, concluding that “the industry has no choice but to fight through the very propaganda it created. Improving on the way advertisements come across is a great place to start.”
Correia goes on to emphasize what he sees as the industry’s ample ability to largely police itself, and feels that the guidance the free market would provide would also serve a valuable purpose in this regard.
A Final Call to Action
Correia wraps up Daily Fantasy Sports with a call-to-action-oriented Chapter 11 entitled “Keep Fighting the Good Fight”, where he provides readers a detailed overview of how the FSTA, paid fantasy contest operators, and fantasy players themselves can all help effectuate positive change in the industry going forward.
From his suggestion that the FSTA craft an official legal argument against “harsh regulation” and put forth a set of official self-regulatory principles that it proactively presents to states–to encouraging the average fantasy player to raise awareness for the legal threats the industry is under by leveraging social media, signing online petitions, and contacting elected officials within their states– Correia closes out his work with the message that all interested parties have more control over the future direction of the industry they love than they likely realize.
While he acknowledges that state-by-state regulation is going to bring plenty of “real world challenges”, i.e. paperwork, fees and taxes that paid fantasy contest operators will have to deal with as laws are enacted, he sees the combination of continued innovation, and an increasing number of states expressly legalizing paid fantasy sports, as strong forces that will propel the industry forward.
His outlook on what the coming months—and years—hold? Decidedly bullish.
“I think we’re going to see more legality than this being considered illegal”, Correia said. “I still have a positive outlook on it. I think the industry is going to turn out just fine.”