DraftKings and FanDuel are in trouble, and MLS is not saying anything about it.
Recently, the state of Nevada ruled that DraftKings and FanDuel, the two ubiquitous "daily fantasy sports" websites, are gambling websites and were illegal in the state unless they got licences from the Nevada Gaming Commission.
This is a pretty big blow to the two websites, that increasingly seem to exist in a legal grey-area, and are already under heavy fire from the New York Attorney General over the possibility of fraud from employees using proprietary information to make money on a competitor's platform.
Major League Soccer is an investor in DraftKings. The partnership has grown throughout the season, with MLSsoccer.com personalities giving their DraftKings picks in league videos, and a link to the DraftKings platform on the MLS league website and on the official phone app.
Once a Metro reached out to MLS to ask if the league would continue their partnership with DraftKings, and for clarification on the league's position on sports betting. Despite numerous requests for comment, we received no answer.
Unlike MLS, Major League Baseball clarified their position in the matter immediately in a statement saying they prohibit their employees and players from using DraftKings, and was unaware of the allowance of DraftKings employees to use the FanDuel platform. ESPN, another investor in DraftKings, immediately reduced their association with the platform to advertisements, removing all sponsored content.
To get some context on the situation, OaM reached out to the International Centre for Sport Security, a think-tank based in Doha, Qatar who aims to promote the integrity of sport, for perspective on the current scandal DraftKings and FanDuel are facing and if MLS' relationship with them needs to be clarified.
"From an ICSS perspective, fantasy sport must be considered in the same category as sport betting," Chris Eaton, Executive Director of Sport Integrity at the ICSS, said to Once a Metro.
"Both industries are now worth hundreds of millions of dollars and involve money being placed on the performances of professional athletes. Whilst some may point out that there is an element of skill involved in fantasy sport, others could argue there is also a degree of skill involved in the way sport betting professionals make their money."
Currently, DraftKings and FanDuel allow employees to participate in the other's platform, so long that they don't use the proprietary information they have access to at their jobs. This is allowed, because both websites are considered "games of skill" instead of "games of chance," and are exempt from the 1992 Professional and Amateur Sports Protection Act, which made sports betting illegal outside of Las Vegas.
This allows both websites to be unregulated by the federal government because they are not considered "gambling."
"The alleged insider trading that has taken place in the US has certainly cast a shadow and posed a big question about the way the fantasy sports industry and its companies are run," Eaton said.
"Only through supervision and proper, well-resourced regulation by an external authority, ideally government, can the fantasy sports and betting industry ensure that its employees are accountable to a clear code of conduct and protect itself from other more serious corruption issues from taking place."
Eaton said that MLS investing in DraftKings "is not concerning per se," but the silence regarding the league's position on the matter, especially given the limited regulation of "daily fantasy sports," is troubling.
"If it is buying advertising to promote a product or service, then [investment] is understandable given the audience a fantasy sports website would attract, not to mention being an exchange of services," Eaton added.
"For me, what is more concerning is that businesses, who operate in an under-regulated environment and as a result are more vulnerable to corruption issues and criminal infiltration, are directly associated with sports clubs.
"This potential direct link between sport and organised crime groups increases the possibility of senior executives, officials and players being corrupted, which could potentially result in more serious cases of corruption, such as money laundering and match-fixing."
It is unclear what the future holds for "daily fantasy sports" as more and more government bodies continue to probe the two websites.
The NCAA recently told the two websites that they will be barred from advertising during championship games, and that the companies must notify the NCAA of any referees who have used the platforms.
With increasing regularity, sports leagues are coming out and realizing that there could be real issues here in associating with sports gambling in the current unregulated market.
"The only way to ensure the integrity of these companies is to introduce proper, independent, well-resourced regulation, as well as government legislation, that is passed at a national level," Eaton said.
"If this happens, companies in the fantasy sports industry will be accountable to an independent, federally-regulated authority and have to comply with proper good governance and transparent business standards, not to mention introducing codes of conduct for its employees. "
MLS, I will ask one more time, where do you stand?