Is Fantasy Sports Gambling?
8 years ago10 Oct
This weekâs allegations of âinsider dealingâ at DraftKings has seen the companyâs CEO Jason Robins take to the airwaves to counter not only the breaking news story, but also the widely-held view that DFS is undeserved of its legal status while other online games â such as sports betting and poker â are widely prohibited.
Robins appeared on ESPNâs âOutside the Linesâ yesterday in the wake of the news that a DraftKings employee had âinadvertently released confidential dataâ relating to NFL teams, and in the same week winning $350,000 from rival DFS site FanDuel.
The breach of security by employee Ethan Haskell has since led to a permanent ban on employees playing on any DFS sites while the Attorney General's office in New York has apparently launched an inquiry into the regulation of sites such as DraftKings and FanDuel, who are the 2 leading players in the Daily Fantasy Sports market.
Robins stated on the show that his own company had hired a law firm to conduct an independent investigation into the matter, the results of which DraftKings have promised to publish.
The CEO claimed that Haskell had âsimply made a mistakeâ, and it had no bearing on the employees massive windfall through FanDuel. Haskell released data âwhich showed which particular players were most used in all line-ups submitted to the Millionaire Maker contestsâ, information which is usually restricted until all DFS players have submitted teams. Having this knowledge in advance is a huge edge, a fact which has prompted the âinsider tradingâ allegations and investigations.
Is Fantasy Sports Gambling?
DFS have profited greatly over recent months from being considered a âgame of skillâ, something which normal sports-betting â and online poker â have not.
When quizzed on such an âanomalyâ by sports lawyer Daniel Wallach towards the end of the show, Robins was quick to launch a defence:
â(DFS)âŚis pretty different, I think, from sports books, where even though there is some advantage that can be had, the edges are so minimal that it is primarily chance-based."
The example he cites is a reasonable one:
"If you randomly picked against the [point spread] you would be close to 50/50 almost every time. If you randomly picked a fantasy line-up and played against someone who put thought into it, they would beat you 9 times out of 10, if not more.â
However, poker also fails the âskill testâ according to the 2006 UIGEA Act, which describes it as a game of chance, despite everyone involved in the game being able and willing to provide examples such as Robinsâ DFS one.
DFS sites have used this âlegalisedâ opportunity to spend $millions on advertising their sites and games and the leading companies now have valuations of between $1.5bn and $2bn, despite not yet having turned a profit. FanDuel has sponsorship deals with 15 of the NFLâs teams, while TV advertisements for both sites appear extensively during NFL broadcasts.
In light of the recent uproar, the NFL Commissioner Roger Goodell yesterday said that they would:
Q:âContinue to monitor the situationâ when asked if there were plans to âreconsider their relationship with the DFS sitesâ. Consumer protection and making sure companies operate responsibly is important to us.â
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