Applying Shareholders Approach to Stop Regulation Bill

Applying shareholders approach to stop regulation bill

Draft Kings, a daily fantasy sports company is being accused by many for running on an unregulated gambling platform as well as for deceiving consumers from knowing their actual chances of winning. In this essay, I will argue against the regulation bill put forth by supporting the idea to lobby members to defeat the proposed bill. Doing so would prevent the company from facing increased taxes and a loss in revenue, which would evidently cause the whole business model to be restructured, thus leading to potential missed opportunities in the market. I will explain and describe Friedman’s Shareholder approach as well as implement it to the case to backup my argument.  Moreover, I will also respond to objections one may bring forward such as deception and desires of shareholders and oppose against the ideas with counter arguments in that odds of winning statistics are accessible as well as desires of shareholders are driven with the intent to maximize profits only. With all the objections kept in mind, I strongly believe following the approach above to continue business as is would lead to the best outcomes for Draft Kings and other similar operating businesses.

It is generally believed and seen throughout many cases that any business needs to see a profit to an extent that would make it feasible for it to continue operating. So really without mentioning a profitable business in a discussion, there is really nothing to argue for or against any idea. In this case the profit of Draft Kings seems to be at stake with the introduction of this bill, as well as the stakeholders interests. By that I mean, stakeholders may choose to back out of a commitment if possible or worse the company may not attract any new investments. This is where the argument for shareholders approach may be brought up. Shareholders approach focuses primarily on shareholders who are the primary owners of a company through stock ownership. Milton Friedman focuses supports this approach and puts forth ideas such as he believes managers have moral obligations to the shareholders and primary purposes are to maximize profits over other forms such as engaging in socially responsible behavior. The only times he believes in prioritizing in committing to socially responsible actions is if it maximizes profits. He also believes that the money spent by managers on social causes can be seen as a tax as this money is really someone else’s money. Shareholders want to see profits increasing, as they have been year over year. However the bill may shift all of that and by having government intervention introduce greater regulations may reverse all of that. It is very much possible that by displaying consumers chances of winnings upfront may in fact reduce consumers interest to play and that could even force the business to close, at an extreme case. According to Friedman, “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” Now the idea of deception put forth in the case is not accurate in my opinion. Doing some research, I found out that the company does not seem to hide the odds of winning, rather it is accessible if you are seeking that information specifically and quickly retrievable if you do a quick search online. However, I would agree Draft Kings does not convey these numbers when they advertise. But let’s be real. Who does? Draft Kings along with many other companies all obey the law by making the information accessible to consumers but not having it in their faces at all times. In this case, Friedman would clearly be in support of the company, given the above statement’s resemblance. On the other hand, another objection pot forward is the desire of shareholders. However, Friedman views manager’s role as,  “His or her responsibility is to conduct business in accordance with their desires, which are to maximize profits. The key word here is having desires to maximize profits. So, no shareholder would ask the manager he or she employs to do their laundry because doing that would cause the person do shift away from their duties towards conducting personal household chores for his employer, which wouldn’t maximize profits, rather lower it.  Therefore, keeping these objectives in mind as well as prioritizing the shareholder’s desires allows for businesses like Draft Kings to maximize profits and achieve the best outcomes, while also staying consistent within the laws.