DraftKings and FanDuel have been lobbying for years in a number of states for legal daily fantasy sports. And now they’re onto representing their interests as they’ve become sports betting companies, as well.
That dynamic is on display in many states — records researched by PlayUSA show they’ve spent nearly $1 million in campaign contributions in just a handful of states.
But nowhere are the stakes higher than Illinois, where some lawmakers are quietly trying to exile DraftKings and FanDuel for past sins.
A closer look at DraftKings, FanDuel and Illinois
With the spread of sports betting, casino operators are continually working to have the best retail sportsbook on the market. They also have to compete with mobile-first operators like DraftKings and FanDuel. These have slowly been on the rise as sports betting giants.
In theory, the easiest way to stomp out the local competition is to put a bad-actor clause into any piece of legislation.
That is what Illinois is proposing. State Rep. Bob Rita, a Democrat, introduced a bad-actor amendment into, H 3308, a recent sports betting bill.
The language is simple. Anyone who operated in the state illegally cannot apply to be a legal sports betting operator.
During a Subcommittee on Sales, Amusement and Other Taxes hearing on March 29, Paul Gaynor, representing Rivers Casino, said both companies refuse to comply with the law, and without such language, the licensing process would “ignore DraftKings and (FanDuel’s) pattern of criminal conduct.”
In response to the bad-actor clause, DraftKings said, “Amendment 5 is a blatant attempt to restrict competition and specifically box out potential operators they know will be major draws for consumers seeking out the best possible legal mobile sports betting experience.”
“Establishing an artificial, restrictive market will only ensure that many Illinois residents will continue to bet through illegal offshore websites that offer no consumer protections, no responsible gaming measures and generate no revenue for the state.”
But looking into the mechanics of Illinois politics, bills are passed by two things, votes and money.
Sins of DFS past and a seat at the table
In 2015, Illinois’ attorney general took the initiative to label daily fantasy sports as gambling. The decision by then-Attorney General Lisa Madigan, a Democrat, has since caused the now-sportsbook operators some headaches.
“It is my opinion that the contests in question constitute illegal gambling under Illinois law,” Madigan wrote in her 14-page opinion.
But despite all of this, DraftKings and FanDuel continued to operate in Illinois. They also continued to write five-figure checks to political campaigns and party leaders.
In 2016, following the Madigan opinion, FanDuel pumped $62,500 into state coffers by way of campaign contributions, according to records from the Illinois State Board of Elections.
DraftKings followed suit, contributing $38,500 during the same year.
Kent Redfield, an emeritus professor of political science at the University of Illinois – Springfield, said it’s not uncommon for companies to keep forking over bundles of cash despite things taking a turn for the worse.
“Most of the time it’s about means of access, visibility, having phone calls returned, keeping a place at the table,” Redfield said in an interview.
Considered a campaign finance guru, Redfield’s knowledge of Illinois politics dates back to the early ’90s. Per his years of analysis, there are two ways money can flow when it comes to political contributions.
The traditional way is for money to follow policy.
“For example, labor money goes to someone supportive of labor that sits on a county board or a city council, that’s understandable,” Redfield said.
However, Redfield also spoke about money and it’s corruptive tendencies.
“The unethical side of that is, public policy positions following the money,” he said.
Major upset: New Jersey over the NCAA
The contributions from DraftKings and FanDuel came long before the two were considered the sports betting powerhouses they are today.
In 2017, records show DraftKings contributed another $26,000 to state Democratic lawmakers. One could argue that FanDuel saw the error of its spending. That year, it only donated a small sum of $3,500 in $500 increments to individual politicians.
But in May of 2018, everything changed.
There is a phrase that reads: “Change the game so the game can never be played the same.”
That change came when the US Supreme Court ruled the Professional and Amateur Sports Protection Act of 1992 (PASPA) to be unconstitutional, opening the door for individual states to decide whether or not they wanted to legalize sports betting.
The monumental ruling, brought upon by efforts from New Jersey, changed the sports betting landscape overnight.
The Supreme Court also inadvertently created a money highway extending from sports betting operators to some of the most powerful lawmakers in Florida, Illinois, New York, and New Jersey.
Sports betting spreads like butter — and so does money
The walls that held sports betting confined to Nevada for decades were suddenly torn down. Sportsbook operators now possessed the freedom to lobby in states looking for additional revenue streams.
In the fall of 2018, DraftKings increased spending and delivered a sum of $94,500 in campaign contributions.
FanDuel delivered another five-figure sum, shoveling in a total of $64,500 to influential Democratic leaders.
Overall, records show FanDuel and DraftKings have combined to spend over a quarter-million dollars in Illinois alone.
To date, DraftKings has contributed $159,000 to individual lawmakers and political committees. Additionally, FanDuel has spent $130,500, bringing the total money given to politicians in Illinois to $289,500.
Hook, line and sinker
In cut-throat politics, there is an infamous term called, a “fetcher bill.”
According to Redfield, such a bill is designed specifically to “fetch” campaign contributions.
“Sometimes something nasty is put into a bill that affects a specific group, and once money comes in, it goes away,” Redfield said.
It’s unclear what the intentions are for Rita’s amendment. He has been a champion supporter of gaming legislation for several years. Rita’s amendment could be an honest attempt to keep bad actors from operating in the state and have absolutely nothing to do with limiting competition.
Rep. Rita could not be reached for comment.
“Different stakeholders are going to have different ideas, which is understandable,” said James Chisholm, director of Global Public Affairs for DraftKings.
In an interview, Chisholm said DraftKings is good at what they do because they are always competing.
“The biggest competition we face is the illegal market,” Chisholm said.
Sources have indicated Illinois is merely taking the necessary steps to draft good policy. The state is discussing multiple options, some that are realistic and others that are not.
However, it begs the question, what would it cost for lawmakers to reverse positions and welcome DraftKings and FanDuel back with open arms?
But Illinois is only the beginning.
Does money follow policy?
In Republican-heavy Florida, similar contributions are made to top political figures.
According to the Florida Department of State Division of Elections, FanDuel contributed $101,000 to campaign funds during the 2016 election cycle.
DraftKings, on the other hand, spent a modest $86,500.
But in a state where the Seminole Tribe of Florida is the unofficial kingpin of gaming, the numbers only continue to increase.
Records show that over the same three-year period, FanDuel and DraftKings combined spent a massive $602,500 in the Sunshine State:
A sizable chunk of cash was spent on a crusade to challenge the combined forces of Walt Disney and the Seminoles.
Last year, Disney and the Seminoles financed a political committee called “Voters in Charge,” which pushed for a gambling amendment that would strip power from lawmakers and put it in the hands of residents.
Known officially as Amendment 3, it would require a statewide referendum to take place on any proposed gaming bills.
FanDuel and DraftKings lined the pockets of “Citizens for the Truth about Amendment 3,” in an effort to challenge the Disney-Seminole juggernaut.
In the end, the resulting scenario was David versus Goliath, but in this instance, Goliath triumphed with ease, and the amendment was approved.
Money equals votes
Sports betting is all about money. In a way, these companies are betting on lawmakers to pass good policy which will ultimately affect their business. But to pass any bill, you need votes.
New Jersey was the first to state to legalize sports betting post-PASPA. In New York, sports betting is set to make its debut by the start of the 2019 NFL season.
Sports betting in Florida, on the other hand, appears as likely as the Miami Dolphins winning the Super Bowl this year. And for Illinois, with so many stakeholders at the table, the result may be a horrendous monstrosity.
Ryan Keith, a gaming consultant with RK PR Solutions in Illinois, said it’s highly unlikely that FanDuel and DraftKings get left out.
“Will they be left out of the market, my sense is no, just because they bring a lot of potential revenue to the table,” Keith said.
Chisholm agreed, saying, “We 100 percent intend to acquire a license in Illinois and compete in Illinois — absolutely.”
Regardless, DraftKings and FanDuel will continue to expand their growing empires, state-by-state because that’s what successful companies do.
But, traditional brick-and-mortar casinos might ban together to prevent the spread of such a dynasty. In New Jersey, DraftKings and FanDuel have combined to take over roughly two-thirds of the market share.
It’s not clear that this will repeat itself in Illinois, but it’s at least possible.
Chisholm declined to comment on who specifically DraftKings has and has not spoken with but said they remain fully engaged in the state.
“Does money influence votes? It does, in terms of accessibility and keeping your seat at the table,” Redfield said. “Spending is protecting turf, and they don’t want the legislature to do anything to upset their operations.”