The year 2014 has seen an influx in a new market of fantasy sports–daily fantasy sports. The advertising slogan that has permeated the first few weeks of the NFL season: “You can win $56,000 playing fantasy football online!” These websites, led by Fanduel and DraftKings tap into the $70 Billion dollar fantasy football industry. They allow competitors to win prizes substantially larger than at any kitchen table league, all from the comfort of their own couches.

At first glance, fantasy football seems to be more than gambling. Rather than guessing numbers for a weekly drawing, players select athletes and wager upon who might perform better in a range of arbitrary categories. While lottery contestants may have superstitions guiding their picks, fantasy football enthusiasts rely on hunches and intuitions about team-matchup and player hot streaks. Although selecting the appropriate roster to put a contestant in the best position to be successful is clearly somewhat skillful, at the end of the day contestants are putting up money for the chance to win more money — with no real ability to control the outcome. That sounds an awful lot like gambling.

In 2006 Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) that regulated the industry. Five years later, on a date referred to as Black Friday, the Department of Justice used the UIGEA to shut the door on American online poker. At the time, online poker was a multi-billion dollar enterprise.

Compared to poker, a game where players skillfully outmaneuver their opponents and the best players rarely risk large sums until the outcome is guaranteed, fantasy football is largely luck-dependent. Any last minute injury or benching can cripple a contestant’s hopes of winning. Conversely, a player having an above average performance can cause a team to luckily win. Although the contestant must set his roster, he has no control over the execution of his wager.

Obviously, gambling has been regulated long before the Internet existed. Organized gambling is legal in select jurisdictions across the country — notably Las Vegas and Atlantic City. Like poker and games of chance, sports betting has also been relatively tightly regulated. Sports betting is governed by a federal statute which basically bans it outside of named sportsbooks. Recently, New Jersey has attempted to legalize sports betting. Nevertheless, most sports betting in America takes place between bettors and bookies — underground oddsmakers who operate at the outskirts of the law.

Fantasy sports are somewhat different than traditional sports betting where a bettor wages on the outcome of a game. Fantasy sports traditionally extend throughout an entire season. The bettor selects a roster before the season begins and scores are tallied every week. Generally, groups of friends create fantasy leagues with dues that are paid to the winner at the conclusion of the season. Because these leagues occur around kitchen tables for limited stakes their legality tends to not be a major concern for players or law enforcement.

With the advent of the internet, however, fantasy leagues have become bigger and more inclusive. Now, instead of playing for small money, winners can score thousands of dollars because of leagues comprised of players across the world. With the advent of daily and weekly fantasy sports, players don’t even have to wait until the end of the season to find out if they win or lose. Instead, players can place a wager on Wednesday and know by Sunday night if they win big. As the commercials peppering the NFL broadcasts claim, lucky players can win thousands or even millions of dollars.

Objectively, playing fantasy football online seems to include just as much—if not more—gambling than playing poker. Why is the UIGEA not being used to shut down these rapidly growing websites? Well, the UIGEA includes a specific exemption covering fantasy sports. This exemption was created within the world of season-long fantasy sports. Now, websites like Fanduel are claiming coverage by the same exemption. They argue that the only difference is that their contests merely last a day or a week.

For a compulsive gambler weekly fantasy sports could prove problematic. Rather than being limited to wagering before a season starts, now gamblers can put up money each and every week for a shot at the big win. Some states have already banned online fantasy sports as gambling. Do you think fantasy sports should be considered gambling? If so, do you think it deserves an exemption? Let us know in the comments!

 

Zach Altman

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One Response to The New Online Gambling: Fantasy Sports

  1. Anthony Jackson says:

    The television advertising for these leagues focuses almost entirely on the supposed financial windfalls that players have won, rather than the enjoyment of playing fantasy football. Once a league buy-in is induced for the intent of financial gain, rather than incentivizing players to take care of their teams from week to week, these websites look less and less like facilitators of leagues and more like facilitators of games of luck. While some of these leagues may already be subject to attack for false advertising, an exemption to gaming laws would only foreclose another avenue for regulating these potentially exploitative services.