NBA commissioner Adam Silver on Wednesday called for federal regulation of daily fantasy operators and said his league will continue its partnership with FanDuel despite multiple investigations into industry trade practices and questions over the legality of the contests under federal and state gambling laws. In the first extended comments by the leader of a major sport since daily fantasy became engulfed in scandal two weeks ago, Silver told Outside the Lines that he is “nervous” about the recent developments but welcomed the growing scrutiny as a path to regulation that will protect fantasy players. “There should be a regulatory framework; there should be increased transparency for consumers,” Silver said in a telephone interview. “I think it would ultimately aid the industry. In fact, I think we’re seeing the marketplace impacted, because there’s not a clear regulatory framework right now.”
Asked if he thought daily fantasy is, in fact, gambling, Silver replied: “I don’t, because of the legal definition of daily fantasy vs. what sports betting is. … Daily fantasy, as it’s currently constructed, is clearly a game of skill.” Silver said the NBA conducted its own analysis to determine that daily fantasy is legal, based on a “carveout” in the 2006 Unlawful Internet Gambling Enforcement Act that exempted fantasy sports. That analysis occurred, he said, before the league entered into its agreement with FanDuel. “We believe we are following federal law in this case and are clearly on the protected side of the law,” he said.
Silver downplayed the extent of the NBA’s financial relationship with FanDuel: “We have a small equity position in the company and a business relationship with them, but we are not a decision-maker with them,” Silver said. The NBA acquired a small ownership stake in the company — less than 10 percent, according to a source familiar with the agreement — in exchange for making FanDuel the league’s official daily fantasy partner. “We didn’t write them a check; we’re not cash investors,” Silver said.
On its website, FanDuel lists a senior NBA official, Salvatore LaRocca, as a member of the company’s board of directors. But Silver and LaRocca denied that was the case. “He’s an observer, not a board member,” said Silver. LaRocca, the NBA’s president of global operations and merchandising, said he attends FanDuel board meetings but does not vote and provides advice only “if I’m asked an opinion.” A spokeswoman for FanDuel confirmed that description of LaRocca’s role, adding that LaRocca also receives all email correspondence related to the board. Shortly after being contacted by Outside the Lines on Wednesday, FanDuel added the word “observer” next to LaRocca’s name.
Former NBA Commissioner David Stern said Thursday that it is time for sports betting to be legalized in the United States, as his successor, Adam Silver, has suggested. “I’m with Commissioner Silver,” Stern told an audience at a forum in midtown Manhattan on the future of sports and digital media. “There should be federal legislation that says, ‘Let’s go all the way’ and have betting on sports. It’s OK. It’s going to be properly regulated.”