Debate continues on wether fantasy sports betting is gambling

Debate on the booming online daily fantasy sports industry and whether it constitutes gambling continued over the weekend at the National Council of Legislators from Gaming States conference in Las Vegas, where legislators and industry representatives exchanged views rather inconclusively on the subject.

Reporting on the discussions, the mainstream newspaper USA Today pointed out the growing popularity and big-money nature of the phenomenon, with a market largely dominated by major corporates FanDuel and DraftKings, both of which have inked partnership deals with national sports leagues (see previous reports).

Industry executives argued that by skill game exemptions in federal law and in practice, daily fantasy sports activity does not constitute gambling. It is more like a tournament structure, in which players pay an entry fee, and in return the d.f.s. operator presents information, communication and the opportunity to win cash prizes based on the performance of athletes in professional or college sporting teams in football, basketball and hockey.

FanDuel CFO Matt King said the product was not gambling related, but an entertainment offering. And there would be further partnerships with national sporting league franchises, he promised.

But he emphasised that d.s.f. was entirely distinct from gambling, saying: “We view sports betting to be a totally separate question relative to where our business is going.”

Joe Asher, who heads the US operations of UK gambling group William Hill plc had a different view, opining that d.f.s. was definitely gambling in the sports betting category.

“You’re risking money on something of an uncertain outcome, and to me that sounds like gambling,” he argued, adding that d.s.f. should be subject to the same regulation as gambling to ensure that marketing was appropriate, and measures were enforced to prevent underaged participation.

USA Today notes that the rise in d.f.s. players has boosted television viewership, and that is good news for the sports leagues, which reap massive revenues from TV rights. If fans have money at stake in daily fantasy sports, they are more likely to watch more games, more diligently than they otherwise would.

“In November, the NBA announced it had become an equity investor in FanDuel, making itself part owner of a company that says it pays out more than $10 million in prize money every week,” the newspaper reports.

NBA chief, Adam Silver, has been widely quoted as suggesting that the expansion of sports betting beyond the restrictive Professional and Amateur Sports Protection Act is desirable.

Opposing both expansion and the rise of daily fantasy sports was Les Bernal, national director of the action group Stop Predatory Gambling, who characterised d.f.s. as a “…bridge to legalized sports gambling because that’s where the big money is.”

Bernal described activity in the vertical as a “complex parlay wager” and said daily fantasy sports share similar traits with online poker because the entry fees of many low- or middle-income “fish” are pooled to feed the sharks who use data-driven strategies to win big money.

FanDuel’s King disagreed, pointing out that his company offers rookie leagues, and that the average deposit is $65.