Opinion

DraftKings, FanDuel and Airbnb: The "masters of the universe" are morons

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Let's destroy a myth: The sagacity and bravery of corporate leadership makes America great in spite of bumbling governments. Not in New York, anyway.

We have enshrined corporate raiders and entrepreneurs as "masters of the universe." They were the epitome of savvy, private-sector leadership, contrasted with the small and large idiocies of government and public service.

Enron and the Great Recession put a real dent in that. Donald Trump, Wells Fargo, Epi-Pen and Volkswagen didn't help, either. Now two recent events in New York have put the nail in the coffin. The sports fantasy gambling guys, combined with the jokers at Airbnb, are the dispositive examples of dumb and self-destructive corporate shenanigans.

Take DraftKings and FanDuel. They enticed big money from the best and brightest of the financial class, the NFL and Major League Baseball, and more. They successfully launched a massive advertising campaign enticing young men to bet the ranch each week. But two problems occurred. First, the smaller issue of misleading advertising that failed to mention the insider gambling that drove winnings to professional "whales" from the pockets of stupefied "minnows." The bigger issue is that the entire concept was illegal under New York's constitution.

In stepped Attorney General Eric Schneiderman, to a chorus of catcalls and threats from the companies.

"Baseless," they howled. “We are thoroughly disappointed in the attorney general and will fight this meritless, suit." "This is a politician (who) realized he could now get himself some press coverage, (and) decided a game that has been around for a long, long time is suddenly now not legal."

So how did that work out for ya? A year later and FanDuel and DraftKings are ponying up $12 million for misleading advertising, operating much-revised games with a much-diminished pool of gamblers, and hurriedly negotiating a shotgun marriage because they're bleeding cash.

Take Airbnb. It was an interesting concept intended to allow real people to occasionally rent out space to budget-conscious tourists. Airbnb turned it into an unregulated hotel industry where apartments were being taken out of the rental market, others became full-time tourist residences, tax and regulatory standards be damned. So New York state passes a law goosing up penalties for such violations in New York City.

How does Airbnb respond?

It funds an intervention into contested state Senate races outside of New York City, to the tune of at least $560,000. The money is used to criticize the environmental record of an upstate incumbent whose district has real water-quality problems. Say what? Airbnb as an avatar of clean water? How does that play?

Not so well. Twitter exploded: "Deplorable and despicable." "Wake up@airbnb. You screwed up big time. Apologize. Now." And more.

It ain't over.

DraftKings and FanDuel will have to answer some serious legal questions. Did you honestly assess the legalities of sports gambling in New York and the myriad other states that found it illegal? What did you tell investors? How much did your legal missteps affect the value of their investments?

Airbnb is now the poster child for the anti-Citizen's United crowd. And I can tell you from a few years serving in the Legislature that Airbnb's lobbying style will be carefully noted. Bullies tend to get their comeuppance, even in Albany.

These are more than small tactical errors. What unites FanDuel, DraftKings and Airbnb is a witches’ brew of corporate arrogance and contempt. As for arrogance, these companies share the notion that a combination of big money and glib lawyers are enough to solve real public issues. It isn't. They also share the notion that New York's public officials are dumb and cowardly. They're not. As for contempt, these companies share the notion that voters won't eventually see through their machinations and figure out what's really going on. They do. Usually.

All these guys needed to remember are the words of Lincoln: “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.” But no, they put their own and their investors’ capital, their reputations and their ability to function in New York at risk, and got punched in the nose.

I'm keenly aware of the limitations, excesses and idiocies of government. There's plenty to complain about in New York. But the masters of the universe don't seem to function well when they're not at cocktail parties or in Trump Tower, talking to themselves.

If it wasn't for the continuing self-congratulatory tone we get from these folks as they tell us how the country and the state should be run, we could shake off the peccadilloes. But there is something more at stake. We need an honest appraisal of the strengths and weakness of corporate leadership, and of the strengths and weaknesses of public leadership. Until then, there's plenty of room for gloating as the masters of the universe fall on their faces.

Richard Brodsky is a former assemblyman who is in the private practice of law and serves as a senior fellow at both Demos and NYU's Wagner School. He is a regular columnist for the Albany Times Union and The Huffington Post.

 

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