For sports fans, it’s hard to go more than a few minutes without being bombarded with advertisements from FanDuel and/or DraftKings. Listening to local sports radio, watching sports on television or visiting sports-related websites, it seems like every other ad is touting this new, revolutionary way to play fantasy sports. They tout players who have earned six or seven figures by competing in daily fantasy leagues. They often offer to match a new customer’s first deposit into the system, up to a few hundred dollars. “It’s easy!” they say. Just pick your players and win cold, hard cash. Then do it all over again tomorrow. Of course, as mommas around the world will warn you, “If it seems too good to be true, it probably is.”
In a move that was more a matter of ‘when’ than ‘if’, New York Attorney General Eric Schneiderman dealt a major blow to daily fantasy sports when he declared them illegal gambling and demanded that both FanDuel and DraftKings cease accepting wagers from NY residents.
“It is clear that DraftKings and FanDuel are the leaders of a massive, multibillion-dollar scheme intended to evade the law and fleece sports fans across the country,” Schneiderman said. “Today we have sent a clear message: not in New York, and not on my watch.”
Why now? Daily fantasy sports has been in existence since 2007. They have been categorized with weekly fantasy sports as “games of skill” and until now, have avoided too much scrutiny. There is a stark difference between daily and weekly fantasy leagues though. First, most weekly fantasy leagues are free to competitors. Those that do charge, charge the league’s commissioner for the service, and typically do not offer cash compensation for winners. Obviously many league commissioners set up their own buy-ins and payouts for their individual leagues, but that is completely independent of the fantasy site that is hosting the league. Daily fantasy sites generally charge an entry fee to every competitor for every game entered and make a cash payout to the winner. Sounds a lot like gambling to me.
Proponents of daily fantasy claim that it is skill-based, rather than luck-based, and therefore should not be categorized as gambling. Yet poker fails to stand up to the same scrutiny. I dare anyone to sit across a poker table from Phil Ivey or Daniel Negreanu with a pile of cash and emerge with anything more than lint and regret in their pockets. The same skills involved in picking fantasy sports are used by those picking sports winners and losers against the spread. Of course, that is illegal in most places across the country with the exception of Las Vegas.
Speaking of Vegas, the City of Sin actually preempted New York’s decision by declaring daily fantasy sports as gambling and demanding that companies cease operation in Vegas until they acquired the proper gambling licenses.
The question now is why would so many big sports entities decide to align themselves with a business model so close to gambling? The MLB, who banned Pete Rose for life for gambling, invested an undisclosed amount in DraftKings in 2013. The NBA acquired an equity stake in FanDuel. The NFL and NHL, not wanting to be left out of the party, agreed to multi-year sponsorship deals in daily fantasy sports corporations. Roger Goodell, never a man of contradiction, has pointed out that the NFL does not have equity in any daily fantasy sports league, and individual teams are not allowed to do so. However, he conveniently forgets to point out that two of the most public and identifiable owners, Jerry Jones and Robert Kraft, are investors in DraftKings. To no surprise, DraftKings has a very visible presence at the stadiums of both the Dallas Cowboys and New England Patriots.
Now that New York has taken the step to outlaw daily fantasy gambling sports, expect other states to follow suit. You can also expect the NFL, MLB, NBA and NHL to do some major backtracking on its backing of daily fantasy sports as the daily draft empires to come crumbling down. Actually, they will likely just morph into prize-oriented games instead of cash-oriented. However in doing so, they will lose much of the get-rich-quick allure that allows them to prey on low-income sports fans.
Though I’m an avid (weekly-format) fantasy football and basketball competitor, playing in a league with a dozen friends (with or without a small seasonal prize) is different than daily leagues with unlimited cash entries operating outside of gambling regulation. Another one of those universal momma-sayings is that, “If it looks like a duck, swims like a duck and quacks like a duck, then it is probably a duck.” Let’s see how long daily fantasy sports operations are able to duck the sword of state attorney generals. The rush of advertising was meant to lure in more customers, but instead may have been the reason for the demise of an industry.
Follow Ishmael and In the Clutch on Twitter @IshmaelSistrunk
