IPPOLITO: Daily Fantasy Sports Should be Considered Gambling
The Water Cooler

Ducks are easily recognizable. They have definitive physical and behavioral characteristics — like their inability to win a college football national championship — that separate them from other animals and similar species. In essence, the same thing can be said about gambling. If you risk money for the chance to win money, there is a high chance that you are gambling. So, if you are one of the millions of people who have taken fantasy sports to their atomized form, probably on DraftKings or FanDuel, you are gambling.

In principle, there is absolutely nothing wrong with that type of gambling. However, when the NFL, NBA, MLB and several franchise owners in those respective organizations have a fiscal stake in you doing so, yet simultaneously maintain steadfast opposition to broader sports betting, there is both a problem and a contradiction.

Sites like DraftKings and FanDuel are designed for users to play fantasy games on a daily or weekly basis and come without the yearlong commitment that traditional fantasy leagues require. Obviously, like many fantasy leagues, there is money at stake. Players pay an entry fee ranging from $1 to $1,000 and the companies pocket a certain percentage of the entry fees as fewer than half the entries will win and profit.

Like gambling in Las Vegas, Atlantic City or anywhere else, the house always wins, but it is who comprises the house that matters. Cowboys owner Jerry Jones and Patriots owner Robert Kraft have a fiscal stake in DraftKings. Both companies also have partnerships with sports leagues and players’ associations for marketing promotions and various sponsorships.

Again, none of this is a problem, except for the fact that the NFL remains adamantly opposed to gambling. For instance, New Jersey’s effort to legalize betting on professional and college sports was blocked by a U.S. appellate court because it violated the Professional and Amateur Sports Protection Act of 1992, which essentially restricts legal gambling to certain states. The big winner of that decision was daily fantasy sports because they are not covered by that law. In fact, a special provision in a 2006 bill was created just for fantasy sports with major sports organizations at the forefront of the lobbying effort.

It should be clear why the leagues feel the way they do. By owning a stake in a private corporation that can profit off of gambling, the NFL and its partner leagues can also profit. If individual states were to legalize gambling, the states, not professional organizations, would be reaping the revenue. There have also been proposals to give sports leagues a very small fraction of the proceeds generated from gambling, but they have failed to gain traction.

The key distinction carved out in the 2006 law is that fantasy sports were deemed games based on knowledge and skill rather than games of chance, like picking point spreads or over/under totals. However, at a certain point, this game of knowledge and skill reduces to luck. It takes some small amount of knowledge to start Packers quarterback Aaron Rodgers over Texans quarterback Brian Hoyer, but there is always a decent degree of unpredictability in sports, and it is impossible to eliminate random chance from any equation. Likewise, it is possible to use knowledge to make reasonable decisions on traditional sports betting. As a result, daily fantasy sports should not receive special treatment.

Some sort of regulation in this online industry is absolutely essential because there is massive potential for corruption and abuse within these companies. Recently, an employee at DraftKings utilized private information about popular players and won $350,000 on FanDuel because DraftKings did not prohibit its employees from playing on other sites.

The integrity of the game and its players are main reasons the NFL and NCAA cite in their opposition to classic sports betting. Somehow, by allowing people to wager on the game themselves, there is the possibility that the integrity and legitimacy of the game can be threatened. But in the fantasy sports world, where information is extremely valuable, asymmetries that result from de facto insider trading and abuses of power create that exact same void of legitimacy.

Paradoxically, the NFL and its peer leagues are remarkably consistent when it comes to being hypocritical and inconsistent. At a minimum, the people who choose to play these games should be aware of the tilted playing field and that they are gambling. It is high time for a gimmicky legal loophole to close and for the fantasy sports industry to undergo much overdue regulation.



Michael Ippolito is a junior in the College. The Water Cooler appears every Friday.


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