Gaming Control Board Report on DFS
FanDuel and DraftKings Avoid Describing Their Games as Sports Betting
A.G. Burnett of the Nevada Gaming Control Board announced this week that his agency has commissioned a study into the daily fantasy sports industry. Burnett said no timeframe exists for when the report is expected, but hinted that it is being prepared and should be available soon.
When the report is released, many in the DFS industry expect it might suggest daily fantasy sports is not strictly legal in the state of Nevada. The reasoning is the Control Board would not announce the commissioning of such a study if the results found DFS was entirely legal.
Daily Fantasy Sports in the United States
The question will be: what might A.G. Burnett’s regulatory agency find wrong with one-day fantasy sports? Under the UIGEA, the federal government views fantasy sports legal. The hobby gained an exemption when the UIGEA was written in 2006, alongside horse racing and lottery betting. It’s true that the US lawmakers who wrote the UIGEA did not envision a daily version of fantasy football being played, but the carve-out exists.
Not all states allow online daily fantasy sports. Five states specifically ban online DFS contests: Arizona, Iowa, Louisiana, Montana and Washington. These states either have an outright ban against (what they see as) daily fantasy sports betting, or they draw a sharper distinction about the skill game aspect of such gaming.
Game of Skill or Chance?
The question of whether one-day fantasy sports is a “game of skill” or a “game of chance” is likely to prove important in any drawn-out debate on the subject. Most states allow betting on games of skill, such as billiards, darts, or shuffleboard. When luck plays a greater role in the outcome, the states which do not set up regulations tend to ban the activity.
Daily fantasy sports requires a significant amount of skill in winning consistently. Competitors must analyze statistical trends, player match-ups, injuries, weather reports, and team news to select the best options. This might be simple enough (pick the stars) if the selection process was not limited in some fashion, but all DFS contests use a salary cap. Thus, the skillful DFS players must pay special attention to resource allocation. They spend a finite amount of money for each starter, and must weigh their value against other options at the position.
Despite the many aspects which go into lineup decisions, a great deal of luck goes into winning or losing, as well. One’s receiver might have a 75-yard reception and get tackled at the 1-yard line, thus losing points from a touchdown. One’s running back might have a hamstring injury early in the 1st Quarter. In such ways, daily fantasy sports has an interplay between skill and chance which makes it comparable to poker. Yet despite being seen as a game of skill by many, poker is banned in many states.
William Hill CEO on Daily Fantasy
William Hill US’s chief executive, Joe Asher, embodies the attitudes many have about DFS. Asher recently suggested daily fantasy sports is no different than sports betting. He called for the legalization of both, but left it under no doubt that he thought one was the moral equivalent of the other.
Asher said, “I make my living in the gambling industry, so I’m hardly opposed to gambling. I think daily fantasy sports betting should be legal, just like I think traditional sports betting should be legal. But let’s not pretend one is OK and the other is not. Drawing some artificial line between the two makes no sense as a matter of law or policy.”
That seems to be a common attitude among executives and players alike, though it is not a healthy one for the industry. The more of a distinction between sports betting and DFS, the better. It is an easy mode of thought to fall into, though.
Another commenter in the same article summed up the dilemma of the DFS industry pretty well. One woman asked about the legal difference in the two types of games said, “When you start offering daily fantasy contests, then you start to blur the line between skill and chance. When chance begins to govern the outcome more than skill, you have a form of gaming, and that’s when the need for regulation kicks in.”
Player Versus House Contests
The Gaming Control Board report on daily fantasy sports might not be as dangerous for the industry as it might seem at the moment. It could be that AG Burnett’s researchers find the player-versus-player gaming which prevails at FanDuel, DraftKings, and Victiv (PokerStars) is legal. Other, less well-known services offer player-versus-house gaming, which more closely resembles the kind of stacked-house gaming one finds in blackjack, roulette, or craps.
