FORMER GOV. JIM GILMORE: Will Regulators Kill Your Favorite Fantasy Sports Games?

Jim Gilmore Former Governor of Virginia
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Across my decades in public service, including as a governor and attorney general for the Commonwealth of Virginia, protecting the free market, price competition, and choice for consumers has always been one of my principal priorities. That is why I am so troubled to see large conglomerates trying to use government regulators to drive their competition out of the marketplace.

DraftKings and FanDuel, two of the nation’s most successful sports betting companies, are lobbying state gaming commissions and attorneys general to stop their competitors’ operations. They claim that their fantasy sports rivals’ games are gambling, and that since they don’t have gaming licenses, the government must shut them down. Some states have already laid the groundwork for such efforts.

As Virginia’s attorney general and as a state prosecutor, I was always quick to call out (and stamp out) illegal gambling when I saw it occurring. But fantasy sports games aren’t gambling. Historically, lawmakers and regulators have treated fantasy sports contests as games of skill, not games of chance, because contest participants require knowledge of real-world athletes’ capabilities to do well.

The rules currently on the books don’t say that only one type of fantasy contest should be treated as a game of skill; they say all should be treated the same. But that is not stopping DraftKings and FanDuel — whose merger the Federal Trade Commission previously blocked — from working to get bureaucrats across the country to reinterpret the law in a way that would hurt their competition. 

This practice is called “rent-seeking” — the process by which businesses try to increase their wealth by manipulating the legal and political landscape to impose burdensome regulations on their competitors. And it’s nothing new. 

In some states, large gas stations successfully engaged in rent-seeking by having the government mandate that all stations hire pump station attendants. These wealthy and politically connected companies knew that only the richest gas station chains could afford to move from self-serve to attendant service and that by bankrupting their competitors, this regulation would drive out their competitors and make the “big boys” fatter and happier.

Every year, well-connected industries also lobby for import tariffs that prevent competing products from entering the American marketplace. When such economic tools are based on favoring one economic actor over another, negative ramifications abound for American families. 

Be it in fantasy sports, the gas station industry, or tariff-rich sectors, one cannot blame companies for rent-seeking. As Milton Friedman once wrote, “The social responsibility of business is to increase its profits.” That doesn’t mean, however, that government and bureaucratic actors should be persuaded to impose regulations that favor one company or group of companies against their competition. 

DraftKings and FanDuel might have sizable war chests of lobbying dollars and make considerable political campaign contributions nationwide, but officeholders and regulators cannot allow themselves to be influenced by corporations in a manner that would impair new companies’ ability to compete in the marketplace. 

Democrats and Republicans have their political differences, and those differences have increased significantly over the last decade. That said, both sides of the aisle say they put fairness, justice, and the concerns of consumers above all else. If this is true, defeating the imposition of anti-competitive regulations should be a no-brainer. 

Do state gaming commissions, attorneys general, and elected officials across the country want to be a part of the solution that the FTC began to implement by stopping the DraftKings-FanDuel merger, or do they want to become part of the problem and take on all the baggage that comes with going to bat for special interests?

The choice is theirs to make. The right choice is for regulators to treat business competitors equally in the marketplace to ensure more choices and lower prices for all. 

James S. Gilmore III is the president of the American Opportunity Foundation, a nonprofit research and educational economic and political policy organization. He served as governor and Attorney General for the Commonwealth of Virginia. From 2019-2021, he served as the United States Ambassador to the Organization for Security and Cooperation in Europe (OSCE). 

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller.