user: At Republican Debate, Fantasy Sports Got More Attention Than Wall Street
It’s easy to miss things when watching long, crowded presidential debates like the CNBC event on Wednesday night. So it can be good to go back to the transcript the next morning to verify one’s recollections.

I looked for the discussion of how to regulate the financial sector that I must have somehow missed. I searched for “Too big to fail” and turned up one fleeting reference by Ben Carson. There were zero references to “Glass-Steagall,” the Depression-era banking law discussed extensively in the Democratic debate earlier in the month, or “Dodd-Frank,” the 2010 law meant to rein in risks in the financial sector.

The transcript also revealed that I was not hallucinating when I saw a reasonably detailed discussion of whether the government should regulate “daily fantasy sports” sites — and learned that Jeb Bush’s fantasy football team is undefeated and is anchored by the Miami Dolphins quarterback Ryan Tannehill.

This isn’t meant to pick on the CNBC hosts who moderated the debate; asking an off-the-beaten-track question like the one on fantasy sports can be revelatory in a way that well-hashed debates on tax policy aren’t. It’s also not to suggest that the Republican candidates have no opinions on the Dodd-Frank Act (most of them have criticized it vigorously).

Rather, the thin-to-nonexistent discussion of financial regulation was indicative of something that has hung over the race for the Republican nomination throughout, and shows little sign of changing.

The candidates have been quick to criticize what they call the over-regulation of businesses, and to argue that loosening this regulatory burden will unleash faster economic growth. That’s fine as an ideological disposition. But it doesn’t really answer the question of how to manage trade-offs that are inherent in how the government oversees Wall Street, or the pharmaceutical industry or, for that matter, sports gambling.

Many of the choices a president and his or her appointees make are not so much about “more regulation” versus “less regulation” as they are about “regulation that favors X industry” versus “regulation that favors Y industry.”

Government oversight of Wall Street is a prime example. Advocates for community banks have long argued that the biggest banks enjoy implicit government subsidies that allow them cheaper access to capital and thus an unfair advantage in the financial services marketplace. A bipartisan group of senators, including the Republicans David Vitter and John McCain, have advocated a new version of the Glass-Steagall Act, which prevented commercial banks from engaging in investment banking activities, and vice versa.

If adopted, would that be a case of the heavy hand of government overregulating the big banks, or leveling the competitive playing field by trying to strip away unfair advantages? Your answer may depend on whether you spend more time talking to lobbyists for big banks or small banks.

Or consider another question that came up in the Wednesday night debate. CNBC’s Jim Cramer asked Ben Carson about accusations of profiteering by pharmaceutical firms, alluding to a recent case in which Turing Pharmaceuticals sharply raised the price of Daraprim, a drug used to treat a serious parasitic infection, from $13.50 a pill to $750 (the company backed off after public outcry).

Mr. Carson responded in part by saying that “the average small manufacturer, whatever they’re manufacturing, drugs or anything, if they have less than 50 employees, the average cost in terms of regulations is $34,000 per employee.”

But the Daraprim case is a prime example of how regulation cuts both ways. The company was able to raise prices drastically only because federal law makes it onerous for a competitor to begin producing the drug (though one company seems to have found a way to do so relatively quickly), and prohibits the importation of the same drug from Europe or elsewhere. In the market for new drugs (though Daraprim is actually an old one), patents allow the creators of a drug to sell it exclusively for years, giving its inventor tremendous pricing power.

Pharmaceutical companies would argue that patents create the incentives for innovation and that health and safety are crucial concerns, and Congress would do well not to interfere with a successful industry by changing the laws. Health insurers would argue that regulations should be changed to ensure more competition and less price-gouging. A president’s appointees to the Food and Drug Administration would need to decide which of these competing imperatives is more urgent, and can’t simply fall back on “less regulation is better” bromides.

Finally, consider the daily fantasy sports industry, which received that comparatively detailed discussion in the debate. Mr. Bush indicated awareness of recent allegations of “insider trading” by employees of services like DraftKings and FanDuel, and said “there should be some regulation.” Chris Christie retorted with a blustery assault on the very idea of regulating fantasy sports when there are so many bigger issues.

But Mr. Christie of all people should know how federal laws shape the entire context in which gambling enterprises operate. He is, after all, the governor of New Jersey, and “N.C.A.A. vs. the Governor of New Jersey” is a federal court case, still in process, that seeks to stop New Jersey from allowing sports betting within its borders, citing a 1992 federal law.

After all, as The New York Times recently pointed out, the daily fantasy sports industry exists only because of provisions in a 2006 law that was driven by the casino industry’s desire to make online poker websites illegal. It had a clause making fantasy sports an exception to the restrictions, which DraftKings and FanDuel have exploited to build enormous businesses.

Now, the casino industry would like to see those companies regulated as extensively, hoping for what they see as a fairer playing field. The daily fantasy sports companies argue they aren’t a gambling enterprise, so they shouldn’t be regulated as such. Mr. Christie may think the issue trivial compared with bigger issues, but given his familiarity with gambling law, it’s pretty clear why this will become an issue for Congress to resolve — and it will boil down to siding with the daily fantasy sports industry or the casino industry.

It’s nice to know how a presidential candidate thinks of regulation in the abstract, and the Republican candidates have left no doubt they are skeptical of it. But in asking how they would govern, the question becomes less about philosophy and more about how, faced with competing interests, they would decide among them.
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assistant: Republicans like to stress their opposition to regulations. But a closer look reveals it’s seldom a simple choice of “more” or “less.”