In the wake of multiple investigations in states across the country over allegations of “insider trading,” the NCAA has imposed a ban on advertising for the fantasy sports betting sites FanDuel and DraftKings.
The college sports organization notified both websites about the ban via letter on Tuesday, telling them that advertising will be prohibited during championship events, including television broadcasts.
The letter addressed to DraftKings CEO Jason Robins and FanDuel executives Christian Genetski and Matt King also requested that the sites inform the NCAA if any referees or other officials had sports betting accounts.
NCAA bylaws have long precluded advertising for betting services. The section in question explains “that states we will not accept advertising from sports wagering entities.”
The NCAA also canceled a previously agreed upon meeting between the fantasy sports sites and NCAA officials.
“Such a meeting is inappropriate at this time in light of the fact that your enterprises appear to be under investigation by the Federal Bureau of Investigation and Congress,” NCAA executive vice president Mark Lewis wrote in the letter, “and several states and their attorneys general appear to be looking into your business platform, offering and policies for their compliance with the law.”
An earlier letter to the two sports betting websites also demanded that they stop including NCAA games and players in its betting services because “they were inconsistent with our values, by-laws, rules and interpretations regarding sports wagering, as well as possibly a violation of UIEGA (sic) and PAPSA (sic), and various state laws.”
Clearly the NCAA has made the decision that fantasy sports betting is gambling and not a “game of skill.”
The definition holds a legal distinction. Games of skill are not regulated and are not considered gambling where as games of chance are pure gambling in the eye of the law. It is this distinction that many state authorities and lawmakers from the states to the federal government are reconsidering in light of the allegations that employees of the two websites were using “insider information” to make bets and in some cases win a sizable amount of money.
The scandal has raged since early in October when The New York Times leveled charges of “insider trading” at FanDuel and DraftKings. The scandal broke after an article in the Times alleged that an employee of DraftKings released player data and then personally made $350,000 using the info on rival site FanDuel. Charges were then made that employees of the sites used early data to make their own bets win big money.
New York Attorney General Eric Schneiderman immediately launched an investigation into the charges, but the Empire State wasn’t alone. The following week the state of Nevada ruled that the websites were “gambling” and demanded that the two sites exclude state residents from membership on the sites until both got state gambling licenses.
For its part, DraftKings issued a report saying that charges that one of its employees made $350,000 betting on FanDuel using insider information were untrue. The site said that an internal investigation revealed that its employee did not use insider info to win the large amount of money on the rival site.
Follow Warner Todd Huston on Twitter @warnerthuston or email the author at igcolonel@hotmail.com