4th November 2015
Fantasy Sports Betting Puts America at a Crossroads
One way or another, there are going to have to be some significant decisions made over sports wagering in America in the coming months. The rise of fantasy sports betting has brought the issue to a head and gambling in the US will be changed forever, whether you accept that the service provided by these companies should actually be classed as gambling or not.
DraftKings and FanDuel have cornered 90 percent of the fantasy sports betting market, and what a market it is! The firms were both valued at $1.3 billion this year and boast some high-ranking investors, including sports heavyweights like Jerry Jones, owner of the Dallas Cowboys and New England Patriots proprietor Robert Kraft. Add to that the assorted billionaires and hedge-funds that have put their money where their mouths are and you are talking a truly serious business.
Entry fees to fantasy sports betting contests had been expected to hit $3.7 billion this year, but then one incident seemed to spark a backlash from on high. DraftKings employee Ethan Haskell won $350,000 in a FanDuel contest and was accused of using confidential information on player picks to give him an advantage. Despite being cleared of insider trading, it has since become open season on fantasy sports betting, with the FBI and US Department of Justice probing into the legality of the sites and Nevada shutting down their operations.
The Gaming Control Board in the Silver State has suddenly decided that, under Nevada law, the companies are providing sports wagering services and demanded they cease offering their games to residents until they became licensed and regulated. It has been suggested that the stateâ€™s sudden interest could be to do with eyeing up a slice of these massive revenues in taxes or simply protecting in-state gambling venues.
In fact, far from detracting from the other gambling activities in Nevada, the American Gaming Association reports that sports betting in the state grew 15 percent in line with the rise of fantasy sports and that the games are helping casinos attract fresh players who might not have been otherwise interested.
Fantasy sports betting sites insist that they are not breaking sports gambling laws because they offer a skill-based game, and that is a view backed up by Rob Manford, Commissioner of DraftKings-partnered Major League Baseball, who told the New York Daily News “[fantasy sports betting is] a game of skill, as defined by the federal statute. I’m comfortable with the idea that it’s not gambling.”
These games are not just popular, they are extremely popular, and there are a lot of influential people invested in them, with billions of dollars riding on this fledgling industry already. Simply banning the games would be counter-productive, even if the authorities were to decide that their product is one that conflicts with strict sports gambling laws.
The choices are that they leave the situation as it is, which is unlikely seeing as people have started cottoning on that fantasy sports betting is a goose with a golden egg of which they would love a slice, shut them down as they did with online poker on Black Friday and risk the mother of all backlashes, or recognise that the world is changing and that betting on sports online throughout the country is not the worst thing in the world.
With the latter option, the sites get regulated, the states get their revenue, the backers make a return on their investment and players are left to enjoy these fun contests. Almost too perfect, right?