“AND THE TRUTH WILL SET YOU FREE!”
This movie is one of Jim Carey’s best. It's poignant, funny and way over acted. Jim Carey plays Fletcher Reede, a divorced divorce lawyer who works the system like all good lawyers do. And, of course, by “work the system”, I mean he LIES! His son, on his fifth birthday, wishes that for one day, Fletcher cannot tell a lie. Boom! All hell breaks loose as we learn the pitfalls of telling lies and, well, telling the truth through the antics that go along with a high profile divorce case starring Jennifer Tilly as the diva cheating wife.
So why discuss this? Well, last week, I told you that “You can’t handle the truth.” This week, we had so much happen that made people say things that simply were not true. So I investigated them and came up with my own conclusions.
So before we get started, I would like to reiterate that I am not a lawyer and this does not represent the views of the FSTA even though I am a board member.
We will, of course use quotes from the movies to set the tone for each topic as usual, beginning with this…
“He's a pedantic, pontificating, pretentious bastard, a belligerent old fart, a worthless steaming pile of cow dung, figuratively speaking.”
Fletcher is asked what he thinks of the head attorney at the firm, Mr. Allen, and this is his response…since, well, he cannot lie. Well, speaking of the New York Attorney General, he declared victory by coming to a Provisional Settlement Agreement with both DraftKings and FanDuel. FanDuel and DraftKings immediately exited New York with the stipulation that they could return when this is resolved on June 30, 2016. Why did this happen? Simple – it is a win-win.
From the Attorney General’s perspective, he gets the win he needed to save face with the millions of fantasy sports players. He declared victory like he had just won the Battle of Yorktown. It is a victory for the Attorney General and he can now save face no matter how the legislature decides to act. Win.
For FanDuel and DraftKings, although they are hurt by revenues lost and some confidence lost in New York, the punitive damages in the lawsuit from New Year’s Eve will be averted. Win.
Let’s examine that closer.
The Attorney General original filed suit in November and it had many causes that declared FanDuel and DraftKings gambling operations. On New Year’s Eve, he amended his earlier suit against both companies. In this suit, there are only nine causes of action including one for “bookmaking”, four for promoting gambling and four for misrepresenting bonuses. That is eight of the nine causes associated with the advertising and bonuses practices. Now, here is the kicker. There are penalties in those causes of $5,000 and $2,000 for EACH instance.
These damages could add up to $2B+ in fines. FanDuel and DraftKings have really smart lawyers who found a way to get the Attorney General a victory while they wait for the NY legislature to rule plus allow them to not risk their entire business on a court ruling (less skill than DFS, by the way). Brilliant, in my humble opinion.
“You slammed her! You dunked her donut! You gave her dog a Snausage! YOU STUFFED HER LIKE A THANKSGIVING TURKEY!”
That is the sentiment from many in the fantasy sports community. We got screwed. I am talking about the recent bill in Indiana which contains onerous fee structures for registering as a fantasy sports operator in that state. For those who do not know, both Virginia and Indiana passed laws that clarify the legality of fantasy sports and impose regulations on fantasy sports operators. The laws also both require an excessive $50,000 registration fee each year to operate in the state. I broke down the math in last week’s column. Only a handful of operators could afford the costs and almost all operators WILL exit. So, the big question is who is doing the screwing?
So, let’s look at some of the statements I heard or read this week and look for the TRUTH.
Indiana & Virginia Legislators are just greedy: BOTH LIE AND TRUTH
All politicians on some level are greedy. Whether it is to get more money for their causes or simply fill the basket for future projects. I will submit to you, if the lawmakers involved with the fantasy sports laws were simply greedy, they would have created a system that would have allowed them to maximize the amount of money that they would get from the fantasy sports industry. With the flat fee structure that they created at the onerous $50,000, they will drive every business out of their states except for FanDuel and DraftKings until those fees can be fixed or some exemptions can be added. This means their maximum revenue is $100,000 unless Yahoo! joins in and in that case, $150,000.
There is no greedy government on the planet that sees a multi-billion dollar industry and asks for only $150,000. Just saying. So more lie than truth.
FanDuel & DraftKings want a Duopoly: LIAR LIAR
Well, if you read Sun Tzu’s Art of War, you could see this as a business strategy. Even I thought at one point that it might be remotely possible. So I started listening and watching the public hearings. Here is the one from Nevada which was after the Virginia ruling. Listen about :28 min in and you will hear that the CEO of DraftKings is asked if Virginia is the law that should be followed. He immediately expresses that it has “many flaws”, but it is a good start. Listen at about :49 min and FanDuel CEO says that they are not in favor of legislation that would cause their to be only two companies. It hurts competition, innovation and slows investment. Overall, it is bad for FanDuel.
That to me was crystal clear.
Then I asked many of those who are involved with the lobbying and all of them told me that the starting point for all bills recommended is the model bill that contains no fees and no one is asking for flat fees. They are arbitrarily put in by lawmakers so that they can put an actual number in the budget.
Additionally, both CEOs have reiterated this stance recently. So this is a lie.
The FSTA is lobbying for big fees to protect the FanDuel and DraftKings gravy train: LIAR LIAR
“I’m not paranoid. {turn head left and right} That’s a rumor started by all those people who are out to get me.”
This is so delusional and paranoid, that it's difficult to address. First, you have to believe that the above is true and that the two big companies covet a Duopoly. Then you have to connect the dots to a non-profit organization having the necessary resources and lack of integrity to have 16 separate board members give up their dignity, duty and integrity in order to help two companies own the multi-billion dollar industry that the board members all participate in.
Then, there is more. While executing this evil plan, they all need to keep it secret.
The FSTA has announced these things to its members, and has been working with these things in mind from the beginning of the heavy lobbying efforts in 2012.
- Clarification that fantasy sports contests are legal games of skill
- Common sense regulation
- Costs that allow small operators to remain viable in the state
When the FSTA does not succeed educating lawmakers of the pitfalls of onerous fees, they continue to work with legislators to get those addressed as soon as is humanly possible.
“Ding ding ding! What do we have for her, Johnny?”
Here is the most likely truth using Occam’s Razor, I guess. Isn’t it more likely that the legislature in Virginia did not understand the industry’s size and sheer number of smaller business and create a law for assurance to their budget at $150k? They simply did not understood how big the industry is and what their actions would do to spurn the fantasy sports business out of their state. Then, isn't it likely that Indiana followed when someone in the administration wanted to write a number in the budget.
Provided that you believe that FanDuel and DraftKings are not subscribing to the Art of War, which I have no doubt, this is the only explanation. No one intended this to happen. We won’t win them all. We need to fight to get the lawmakers and administrators to understand our industry and that they will be able to protect consumers, encourage innovation & investment and generate revenues for their state governments.
It is totally cool to disagree or to see things differently, but let's only resort to name calling if we are Fletcher Reede and cannot tell a lie.
"You have bad breath caused by gingivitis. You couldn't get a porn star off. Your hairpiece looks like something that was killed crossing the highway. I don't know whether to comb it or scrape it off with a shovel and bury it alive. Loser! Idiot! Wimp! Degenerate!"