This has been the season of daily fantasy. Yes, it was always there, but this year, the biggest players—FanDuel and DraftKings—have gone all in, buying up seemingly every possible piece of ad space available in sports media. There they are, sponsoring one of the biggest fantasy writers. There they are, advertising during every damn game. There they are on your TV, on your iPhone, on your podcast (even the one done by this website). The logic behind it isn’t hard to deduce. They make lots of money and want to make even more. What better way than to go big during football season, their most popular sport?
But this fall hasn’t been kind to daily fantasy. There’s been the backlash to all that sponsored content. There’s the fact that everyone agrees that all those ads are annoying. And of course there’s the DraftKings employee with access to inside information who won $350,000 at FanDuel, soon followed by New York state Attorney General Eric Schneiderman launching an investigation into the two sites.
If daily fantasy has, up to now, enjoyed a sort of marginal respectability, that’s largely because the NFL has embraced it as the NFL gambling option of choice, all while consistently pointing to the obviously absurd yet Congressionally-approved claim that daily fantasy isn’t gambling, but rather a game of skill. The NFL makes huge money off of daily fantasy, all without contradicting its ridiculous anti-gambling stance. And when it comes to it, the league—like any supplier at the top of the chain—knows to offer the best defense: We can’t help it if there’s so much demand for our product.
This is true enough, but leaves out an important piece of history. Daily fantasy enjoys its present place in the sports landscape because the NFL helped make it that way—directly.
It was the NFL that supported the little-discussed legislation that outlawed gambling companies from accepting payments via the Internet related to illegal bets or wagers (a roundabout way of banning Internet gambling) that also conveniently excluded fantasy sports. It was an NFL lobbyist who briefly joined George W. Bush’s White House, where he specifically worked on the rules governing how a new Internet gambling law would be enforced, solidifying daily fantasy’s bizarre position as a “game of skill.” And it’s the NFL—most of whose teams have agreements with DraftKings or FanDuel—that spends millions lobbying Congress.
The NFL won’t put any of this in a press release, but it’s true, and it makes sense. The NFL isn’t against gambling, after all; it’s against gambling that doesn’t maximize NFL profits. Our daily fantasy nightmare has arrived, and it is largely by the NFL’s design.
Because this is a Washington story, it starts with a piece of legislation that has nothing to do with what we’re talking about. The language that gave rise to daily fantasy wasn’t in legislation about gambling, but instead was tacked onto the very bottom of a 2006 bill about, of all things, counterterrorism measures at U.S. ports. The Washington Post reported that it passed “in the waning hours of the congressional session that year and was approved without getting a separate vote in the House or Senate.”
The language that set up the rise of daily fantasy starts on page 69 of a 79-page document, which starts out titled “Security of the United States Seaports” and moves on to sections that include “Security of the International Supply Chain” and “Domestic Nuclear Detection Office” before tacking on the otherwise unrelated “Unlawful Internet Gambling Enforcement” at the very end. The carve-out is a tidbit within the definition of bets and wagers that notes the definitions exclude “participation in any fantasy or simulation sports game.” Here is the language in full; it’s hard to read it and not essentially see the blueprint for DraftKings and FanDuel right there in the legalese. (Emphasis added, here as elsewhere, is mine.)
‘‘(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:
‘‘(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
‘‘(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real world sporting or other events.
‘‘(III) No winning outcome is based—
‘‘(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
‘‘(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.
Despite the way the law was passed, the new rules got plenty of press coverage, which often noted that the NFL had lobbied for the law using one of its favorite clichés, the integrity of the game. But none of those stories talk about the carve-out. One of the law’s sponsors, Rep. Jim Leach, told ThinkProgress earlier this year that, basically, this mess was never his intention. The Iowa Republican wanted to curb what he saw as a trend that could “bring the casino to the home, the work station, college dorm, even the treadmill.” There was just one problem:
After “a number of Members indicated they couldn’t support it if it didn’t make a minor exception for fantasy sports,” Leach said he reluctantly agreed to add the exemption ... Leach also noted that the major sports leagues supported the bill “because they wanted to do everything possible to protect the integrity of their games.”
[...]
“The assumption was that while unconstrained Internet gambling could change the nature of America’s savings and investment patterns, fantasy sports would be a ‘de minimus’ footnote. No one ever conceived of it becoming a large scale activity.”
A more sinister view on this, though, was aired in the New York Post. Headlined “NFL Makes Fantasy Pass,” this article outlines a far more devious version of events, in which the NFL specifically shops around the legislation—carve-out included—with the help of Marty Gold, a former counsel to the majority leader who had gone on to become a lobbyist for Covington and Burling. The article goes so far as to cite Gold (whose firm, disclosure reports say, cost the NFL $560,000 that year) saying that the final move didn’t come from him.
Gold says it wasn’t his idea. NFL Chairman Roger Goodell and past chairman Paul Tagliabue wrote Senate Armed Services Committee Chairman John Warner (R-Va.) that the bill was an “achievement” he could be proud of, but that couldn’t get through the Senate by regular means.
Warner, a senior Navy and Marine veteran, refused.
He wrote [Majority Leader Sen. Bill] Frist – a likely presidential candidate and champion of the gambling bill in the Senate – voicing his “strong objection” to including it in a bipartisan bill for U.S. troops.
Frist relented – but then hatched a new plan to add it to a bill to secure the nation’s ports. Rep. Jim Leach (R-Iowa), who holds sway in a key primary state, wrote the original House gambling bill, backed by social conservatives.
House Homeland Security Chairman Rep. Pete King (R-N.Y.) was more compliant, and allowed it onto his port bill without a vote by negotiators.
“I’m not going to stop a bill because of Internet gambling,” explained King, who wrote the port bill. “That was their final offer for that day.”
However it went down, it was a classic example of Washington trickery, with a business-friendly rider being attached to a security bill it had nothing to do with, so that a vote against the NFL’s preferred gambling policy was—or, more to the point, could be sold as—a vote for terrorists exploding nuclear bombs in American ports.
Two months after the New York Post report, the Associated Press put together its own takeout on fantasy football and the new law. Asking how the exemption got in, the AP found that a convenient case of Washington amnesia had set in, reporting that “none of the bill’s sponsors in the House or Senate would say the how exemption for fantasy football ended up in the Unlawful Internet Gambling Act.”
Interestingly, while Leach nowadays claims he didn’t know any better, his spokesman took a slightly different angle with the AP in 2006:
The spokesman for Rep. Jim Leach, R-Iowa, a bill sponsor who in November lost his bid for a 16th term, said Gold was the NFL’s point man for the bill and referred all questions to him.
The passage of bill wasn’t the last step in making the carve-out a reality. Lobbyists for those affected—including online poker interests—moved in and began searching for a way to delay the changes or soften their blow. The NFL didn’t give up though, and kept the checks coming to Covington and Burling, whose services would come in handy again soon.
There is the bill that passes, and there is the bill that is actually enforced. After the anti-Internet gambling law passed, there was also the matter of actually implementing it. In 2007, some Democrats proposed legislation that would shift the law from banning online gambling to regulating and taxing it. This idea was lost on Republicans who, the Washington Post reported, “depicted the existing law as a way to safeguard morals and stop personal misspending.” Meanwhile, online poker interests and various banks got together to try and slow down the administration of the new rules.
The Bush White House reacted by rushing through the new rules. After all, a new president was coming in, and his administration might craft rules that were less friendly to the fantasy sports exemption. Working on these new rules with Bush’s White House was a man who, just months earlier, had been lobbying on behalf of the NFL for Covington and Burling. White House spokeswoman Dana Perino confirmed that William Wichterman was working on the gambling restrictions in the White House Office of Public Liaison. As Politico noted, he’d not only been working for Covington and Burling, but had represented the NFL and worked on Internet gaming laws for them.
Wichterman’s work for the NFL before joining the White House didn’t just involve, say, passively monitoring developments on the Hill. He actively whipped support in the Christian right to help kill Barney Frank’s attempt at undoing the gambling act. In August, 2007, the Financial Times got a copy of a July 31 email sent by Wichterman encouraging members of the Christian right to help fight off proposed changes to the law by co-signing a letter to Congress, “that ostensibly was written by Focus on the Family,” the FT reported. That letter—signed by, among others, the Christian Coalition—“urged members of Congress to protect the integrity of the 2006 Act, and cautioned that lawmakers should be wary of ‘misinformation campaigns’ by ‘foreign gambling interests.’” (The FT report doesn’t say if the letter told signees that the legislation they were asked to support allowed for certain specific forms of sports wagering.)
Despite all of this, Perino told the Post that ethics officers had given it the OK.
“He appropriately sought and received clearance from ethics officers to be able to work on this rule,” Perino said, adding, “I know our ethics officers to be professionals who know the law and the guidelines inside out.”
At least one Democrat was not amused.
Rep. Stephen I. Cohen (D-Tenn.) wrote to White House counsel Fred Fielding on Friday to express concern that the “impetus for the rule may have been a particular White House employee who has a clear and obvious conflict of interest.” Cohen said he had been told that Wichterman “has been a source of considerable political pressure to speed this regulation through to finalization.”
The Post reported that Wichterman did not return their calls requesting comment, and the rules he worked made their way through the system. They were finalized and dated one day before President Barack Obama took office. The rules that went into place reinforced the carve-out, keeping the definition of bet or wager as it was while brushing aside arguments that other games, like poker, are games of skill.
Less than a month after Obama took office, Wichterman got a new job—or, rather, a homecoming—when he rejoined the exact same law firm he’d been at before heading to the White House. Lobbying disclosure records show that by July 2010, back his old office, he returned to being a registered NFL lobbyist.
In the grand scheme of Beltway life, a fixer’s move between the White House and a lobbying firm is no more spectacular than a train changing tracks. But it certainly appears as if Wichterman was deployed on a special assignment for his firm’s client and then safely returned home. The change of titles and signatures on his paycheck was just a matter of minor inconvenience, allowing for the important work—the NFL’s work—to get done.
The same year Wichterman detached to the White House was also the first year of operations for the NFL’s PAC, dubbed GRIDIRON-PAC. It has gone on to raise close to $3 million. This is on top of the millions it spends on lobbyists, including those at Covington and Burling. From a cynical perspective, none of this is particularly shocking; money and American politics have always paired together like, say, gambling and football.
What’s fascinating is how easily the NFL has distanced itself from the very gambling loophole it created. Here’s NFL spokesman Brian McCarthy last month in a statement to Philly.com.
“There is no change in our long-standing position against the proliferation of gambling on our games,” NFL spokesman Brian McCarthy wrote Monday in an email. “Daily fantasy is considered a game of skill. There’s no league sponsorship agreement or investment in those companies. Clubs may accept traditional advertising within their controlled media properties, including TV, radio, digital, print and stadium signage, provided no club or league marks are included in such advertisements. The daily fantasy marketplace is in its infancy and we continue to follow developments.”
It’s almost as if the NFL took a page from its own book, a massive manual infamous for spending hundreds of words defining events so basic as a catching a ball—to that point it can turn what looks to the human eye like a catch into something that’s not a catch at all. Turning gambling into not-gambling is no different, and that’s how you get, for example, Virginia Republican Bob Goodlatte declaring at a 2007 congressional hearing that fantasy sports aren’t gambling because children do it. All it took was greasing the right palms and giving the fans enough time to forget they were behind this in the first place. And it worked.
Image via Associated Press; graphic by Jim Cooke