The federal Senate Judiciary Committee will hold a hearing on sports betting on Tuesday, December 17. While the exact details of what will be discussed at the meeting, titled “America’s High Stakes on Legalized Sports Gambling,” have not been specified, the hearing comes following several far-reaching proposals aimed at the stricter regulation of sports betting in the U.S.
Democrat Sen. Dick Durbin will preside over the hearing, while a witness list has yet to be published. The session has been scheduled for the Senate’s final week of activity before it breaks for winter recess.
FanDuel and DraftKings under scrutiny
Democrat Sen. Mike Lee and Republican Sen. Peter Welch, who authored a letter last week urging federal authorities to investigate alleged anti-competitive business practices by FanDuel and DraftKings, sit on the committee.
The duo wrote to FTC Chair Lina Khan and Assistant Attorney General for the Antitrust Division Jonathan Kanter to raise concerns over the operators’ dominance across U.S. gambling. They claim the two market leaders “may be violating” Section 1 of the Sherman Act, which bans agreements that are restrictive for trade or commerce.
The senators allege the operators have collaborated with the Sports Betting Alliance to prevent emerging brands from securing deals with their existing partners, obstructing competition. This ultimately has made it more complicated for new entrants to gain meaningful market share, the senators say.
The senators request the FTC investigate the two operators, potentially enforcing actions “necessary to protect competition.” They allege that, after their merger to monopoly was blocked, FanDuel and DraftKings have still “arguably acted as one company, violating antitrust laws.”
Stifel analysts said in a Monday note that the request for investigation has “zero validity,” arguing that duopoly behavior would have seen both operators, for instance, adopt DraftKings’ ill-fated proposed tax surcharge.
The surcharge, which DraftKings said would apply to customers in high-tax states in August, was later withdrawn after multiple other US sportsbooks said they would not be following suit. FanDuel was among the first to confirm it would not implement a similar tax.
Push for national regulatory standards
Democrat Sen. Richard Blumenthal also sits on the committee. Blumenthal is co-author of a wide-ranging sports betting bill: the Supporting Affordability and Fairness with Every Bet Act, or the SAFE Bet Act. He and Democrat Rep. Paul Tonko introduced the SAFE Bet Act in September this year.
The bill has been designed to be “the first comprehensive legislation that would address the public health implications inherent in the widespread legalization of sports betting,” according to its authors. However, the proposal has not been without its controversy, facing criticism from influential lawmakers and the industry.
The proposal would include a variety of regulations, including advertising standards and consumer protections like deposit limits. Under the new proposals, a nationwide ban on sports betting would be introduced. The 38 states that have legalized sports betting in some form would then have to apply for its legalization via the U.S. Justice Department.
The proposal quickly drew criticism from several parties, including politicians. Democrat Nevada Rep. Dina Titus was among them, who said it’s “better to have self-regulation or state regulation,” and not have federal involvement. She suggested the act would have its fair share of opponents in Congress.
The gambling industry also opposed the move. “Six years into legal sports betting, introducing heavy-handed federal prohibitions is a slap in the face to state legislatures and gaming regulators who have dedicated countless time and resources to developing thoughtful frameworks unique to their jurisdictions,” Chris Cylke, the AGA senior vice president of government relations, said in a statement at the time.