Adam Silver’s Plan to Embrace Sports Gambling Includes Cross-Promotions with DSL Sites
On Wednesday of this week, the National Basketball Association signed a four-year promotional deal with FanDuel, one of a growing breed of legal daily sports gambling websites. Unlike traditional online casios and poker sites, FanDuel is backed by major U.S. corporations, including lead investors like NBC Sports Ventures, Shamrock Capital Advisors, and Bullpen Capital.
Also unlike sports betting, “daily fantasy sports” is legal in 50 states. The UIGEA of 2006 carved out an exemption for fantasy sports. Lawmakers at the time thought they were making the Internet safe for local fantasy football and fantasy baseball leagues. Since then, operators like FanDuel and DraftKings have built a business model around daily fantasy sports.
How Sports Betting Is Similar
The two hobbies are quite similar, otherwise. Both require a gambler to pay to enter the bet. Both pay off if you are better at predicting the outcome of events than your opponent: other gamblers in fantasy sports and the casino’s bookmaker in sports betting. To the outside observer, one would imagine similar laws would apply to each.
NBA Commissioner Adam Silver recently has been speaking about the need to embrace sports betting. Most people assume he’s talking about traditional sportsbooks like those that exist on the Las Vegas Strip. Silver is talking about sportsbooks like those, but the daily fantasy sports industry is also a part of his plan. The plan is simple: find the NBA its fair share of the revenues from a legal and licensed sports gambling industry.
Sports Betting Lawsuit by New Jersey
Meanwhile, the NBA is still a part of the lawsuit against the state of New Jersey, because Governor Chris Christie is trying to push policies that would allow racetracks and casinos in the state to operate their own legal sportsbooks. The American Bar Association recently published a report that was critical of the sports leagues’ decision to oppose state-licensed gambling, but a U.S. District Judge agreed with the NBA and NFL’s legal stance, and ordered a temporary restraining order against the sportsbook at Monmouth Park.
Thus, Adam Silver has staked out a complicated position on sports betting. He is against expansion of the number of sportsbooks in America, but wants to embrace the concept otherwise. He is for daily fantasy sports, but not traditional bets on sporting events.
Reactions to Promotional Deal
The reviews of the FanDuel deal have been mixed. Haralabos “Bob” Voulgaris, once described as the world’s greatest basketball gambler, tweeted, “Newsflash to the NBA – DFS is actually gambling.”
NBA owner Mark Cuban and former disgraced NBA referee Tim Donaghy gave their support to Commissioner Silver. Mark Cuban recently suggested the NBA’s position on sports bets and daily fantasy sports were hypocritical, though.
Credit Card Payments
Unlike online gambling in New Jersey, banks accept payments to sites like FanDuel and DraftKings. According to New Jersey Senator Ray Lesniak and a host of other experts on the licensed gaming industry in the United States, credit cards declining have been the top detriment to the industry. Banks still think online gambling is illegal, so more than half of VISA card payments have declined.
That is not a problem with FanDuel. It appears that the National Basketball Association and the NHL have both decided to follow the example of the American banking system and embrace daily fantasy sports.
FanDuel Hopes for Billion Dollar Deal
In an update of this story, as of February 2015, FanDuel is attempting to lure investors in a power move, hoping to put major distance between their one-day fantasy sports service and the service provided by their chief rival, DraftKings. FanDuel is seeking $1 billion in investments, in a time when both companies have been receiving investments in the $40 million to $60 million range.
If such a deal could be struck, FanDuel CEO Nigel Eccles believes his company will be able to seize the #1 position in the DFS competition for good. Regardless of the eventual outcome, both companies have had meteoric rises in the sports betting ranks over the past 5 years. Neither company is much older than 5 years old.
