DraftKings, FanDuel could face first significant legal challenge after hearing request

[oberliner]

A ranking member of the Energy and Commerce requested a hearing about the relationship of fantasy sports to gambling, potentially the initial step in what is believed to be the first direct legal challenge to the exploding daily fantasy sports industry.

Rep. Frank Pallone (D-NJ) requested the hearing in the governing body that oversees professional sports and gambling Monday afternoon. He wants to scrutinize the difference in gambling on sports and playing fantasy and to examine the close ties between sports leagues and teams and the fantasy industry, including daily fantasy titans DraftKings and FanDuel.

DraftKings and FanDuel have received hundreds of millions in venture capital, money the daily fantasy sites used to purchase advertisements. Viewers this weekend were pummeled by commercials for the sites, which in part promoted Pallone’s request for a hearing.

“Anyone who watched a game this weekend was inundated by commercials for fantasy sports Web sites, and it’s only the first week of the NFL season,” Pallone said in a statement. “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result. Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed.”

http://www.washingtonpost.com/news/sports/wp/2015/09/14/draftkings-fanduel-could-face-first-significant-legal-challenge-after-hearing-request/

Sure seems like gambling to me.

[Hoppy]

1. N.J. wants to get into sports betting. The teams have been blocking N.J.

It can become a teat for that. Give N.J. sports betting and the teams can keep their income from fantasy leagues.

[oberliner]

4. True

I am sure the Congressperson from NJ has his own motivations for pursuing this. That said, I really do think it should be treated as gambling and dealt with accordingly.

[Vinca]

2. I thought, judging from the ads, that FanDuel was a gambling site.

So you gamble on fantasy sports and that's a game and not gambling? I'm confused.

[oberliner]

3. Exactly

They managed to find a loophole in the law, but it's definitely gambling in my book.

These companies are making obscene amounts of money and all the major sports leagues now are getting a cut of the action.

But for anyone to pretend that it isn't gambling is preposterous.

[ProfessorGAC]

5. While I Completely Agree. . .

. . .i'm also in the "big so what" category. If people want to bet on sports, let them.

[Hoppy]

35. The "so what" is that Krispy wanted to have sports betting in N.J. so he could tax it.

The sports teams blocked it in court.

[ProfessorGAC]

42. Not My Point

I get what you're saying, but i don't care if people want to bet on sports. They're doing it anyway and it's their money.

[Hoppy]

43. O.K. agree.

[trumad]

6. Wow---that didn't take long.

Sat and watched my Phins this weekend and did notice the numerous ads for these two companies. My wife---who knows very little about Football---asked---is this for Gambling. I said---yep....

Make no mistake---you pay money to make money with this type of scheme---it's gambling.

[oberliner]

9. Yeah it was pretty overwhelming

It seemed like a constant barrage of commercial promoting gambling on sports.

[frylock]

33. It's just as bad, if not worse on sports talk radio..

every commercial break during Jim Rome features a spot from each one of those outfits.

[Travis_0004]

7. It is gambling but it should be legal

I would much rather see some regulations put in place and it allowed then a ban.

If you ban it, it wont go away, it will just go oversees, and there will be even less regulations on them as a foreign company.

[oberliner]

10. I have mixed feelings

While theoretically I understand exactly what you are saying, I have personal experience with people whose lives were destroyed by gambling and wish there were more barriers in place for those who have addictive personalities. It seems now that if one is a potential compulsive gambler, watching sports would be close to impossible. It just seems so in-your-face and just way too easy to lose a ton of money with just a few clicks from home (and having the major sports leagues encouraging you to do so).

[Travis_0004]

12. I see your point, but I think in a lot of ways the cat is out of the bag

If you ban these sites, they are not going away, they will just move oversees, but still service US customers, and there will be even less regulation.

I faced a similar dilema when my state wanted to legallize casinos. Before they were legal, I could drive 10 miles, and go to a casino. If I had a gambling problem, my state had no gambling addiction funds, since gambling was illegal. Now that gambling is legal, there is money spend for people with gambling problems, and I can drive 20 miles to an instate casino. I realize for some people a casino was 1 hour away, and now its 5 minutes away, so that may not help everybody.

I ultimatly think its not the governments job to hold everybody's hand and tell them what they can and can not do. I think smoking should be legal, drinking should be legal, and gambling should be legals. As an adult it should be my choice. Just about anything that is legal, can be abused, and we need to have balance. I'm ok with a gambling tax to fun anti gambling initiatives. But I think the cat is out of the bag, and fantatsy sports gambling will not go away.

[oberliner]

15. I see yours as well

I guess maybe I am just asking for some kind of restrictions on the advertising. Like, for instance, you don't see cigarette commercials on television anymore - and you do see many PSA's talking about how dangerous smoking is, discouraging people from doing so.

The way things looked this weekend - it was just a steady barrage of commercials for the these fantasy sports websites, not only during the commercial breaks but also within the game itself, since they were sponsors.

[AngryAmish]

8. rhis is none of anybodies business.

If you don't want to pkay fantasy sports, then don't. I think 8nk it is a waste of time but it is none of my business.

[fishwax]

11. there is a pretty clear exception for games of skill/knowledge

Last edited Tue Sep 15, 2015, 10:04 AM - Edit history (2)

It was written, in part, to specifically exempt fantasy sports. At the time, daily fantasy leagues weren't really a thing, but they still pretty clearly fit the category, it seems to me. The difference is that while in a regular fantasy league a few members may pool their league dues for a season-long prize, daily fantasy makes it possible to play (and pay and win) on a daily or weekly basis, so there is a lot more opportunity for money to flow, as well as for much larger fields of participants.

[oberliner]

16. Poker is a game of skill, Sports betting requires knowledge

I'm not really seeing how daily fantasy sports is different in that regard. A daily fantasy sports player is betting that X group of players will score more points than Y group of players. It seems basically the same as betting that team X will beat team Y.

[fishwax]

22. fantasy sports are specifically excepted

My earlier post wasn't particularly well composed (i was trying to do it on my phone) so I apologize for some unclear wording. My point was that the law which governs online gambling includes an explicit reference to fantasy sports. (See below.)

I think fantasy sports differs considerably from betting on an individual match. The role it plays in the sport is different, since one of the concerns about allowing gambling on games is the potential for corruption through point-shaving, etc. The mechanism isn't really the same either, since a fantasy sports player isn't really choosing between x and y, but rather expecting that he can assemble a more productive lineup within the constraints of the system than his opponent (or than the majority of his opponents) can.

In the definition of bet or wager, it specifies that the term does not include

(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:
(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.
(III) No winning outcome is based—
(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.

[oberliner]

24. Right

I get that the law is written that way and I take all of the points you raise.

I agree that these companies are not in violation of the law as it currently stands.

I'm not sure I would agree that there isn't potential for corruption, similar to point shaving. Individual players, in fact, have even more control over their individual statistics than in the outcome of the game. I could imagine a scenario where someone who would win a lot of money if a player had a huge "fantasy" day could bribe said player to alter their decision making based on increasing their chances to pad their stats. Or on the flip side, an unscrupulous person could bribe a player who would be widely owned to play poorly thereby getting a low fantasy score. And on and on.

[fishwax]

27. I don't think those scenarios are particularly plausible

Players in daily fantasy leagues don't know what players any of their opponents have on their teams until the contest starts. There are a few different structures for games, including some in which you compete head-to-head against a single opponent and others in which you compete against a much larger pool. Either way, bribing a player to take a dive isn't going to be much use because you won't know which (if any) of your competitors will have that player on their roster.

Additionally, unlike a wager on a point spread, which is an either-or scenario, there are many other variables which determine victory. If you talked a high-profile QB into taking a dive, for instance, it might hurt all the fantasy owners who selected Stud QB, but it still would far from guarantee you could beat them, since (a) every team with Stud QB would have eight other players who could still perform very well; (b) the performance of your nine players is entirely independent Stud QB; and (c) assuming you're not playing a head-to-head game, everyone else in the pool who doesn't have Stud QB is going to benefit to the same degree that you do.

[oberliner]

29. Here's the thing

As I wrote down thread:

There are tournaments that have only 15 entrants with the winner getting something like $150,000 (with an entry fee of $20K)

There are also countless one-on-one tournaments for pretty high stakes. If I know that obscure RB3 is going to get fed the ball on the goal line and potentially score a bunch of TDs and no person would own said player under normal circumstances, I can get a pretty significant edge.

[fishwax]

31. you think a Tom Brady will risk losing a game for a partial cut of a far-from-guaranteed 150K?

Again, I don't find the scenario particularly plausible.

Yes, if you own an obscure RB3 and you know that he's going to get fed the ball on the goal line and potentially score a bunch of TDs and you can reasonably be sure that you'll be the only player who will pick him, then yes, you have an advantage.

But how does one know all this? Aside from all the random and completely unpredictable stuff one would have to know in advance (how do we know there will be goal-line opportunities? how do you know the obscure running back will convert?) there is the even bigger issue of how you will arrange for that player to even be on the field? (That decision isn't in Tom Brady's hands, so I guess you'll also be bribing backups to pretend to be hurt or offensive coordinators to risk losing their jobs by putting an inferior player in during a crucial situation.)

[oberliner]

34. Probably not

I am just suggesting that there are ways that players could manipulate the numbers to give an advantage to those in the know. The example I gave probably wasn't great. But a lot of QB's call their own plays/audibles and if they are given a financial incentive to hand off rather than pass in order that someone may make some serious fantasy money, I can see a scenario where they might do that.

I would point out that these websites also have tournaments for NCAA Football, not just the NFL. There are loads of college QBs who will never make the NFL and could be more easily motivated to help out an unscrupulous gambler by handing off rather than passing for TDs when the opportunity arises.

You can also play "fantasy golf" and "fantasy NASCAR" and so forth which also seem manipulatable.

[Nye Bevan]

13. These sites are clearly exploiting what they perceive as a legal loophole to allow sports betting.

However, my guess is that by this point they will have accumulated so much money in profits that they can more than afford to effectively bribe lawmakers into letting them stay in business.

[closeupready]

14. Gambling or not, I'm fine this. Frankly, I think the UK model of gambling regulation

is a better (bettor?) way to approach it.

[oberliner]

17. Do they allow this extent of tv advertising in the UK for gambling?

It just seemed so extreme and so obviously to be promoting gambling - with the NFL being complicit. I guess there is no stopping it, but it seems like it will create more compulsive gamblers and destroy many lives and families. I know that people need to take responsibility for their actions and you can't ban every vice - I just wonder if at least maybe the advertising can be limited, like with smoking.

[closeupready]

18. I don't believe the NFL is complicit; to the contrary, I believe it is the NFL

is a primary opponent of nearly all kinds of sports betting, including fantasy forms.

The UK allows a good deal of advertising, but I believe they've recently changed their laws so that only gaming entities which have made an official 'white list' are allowed to advertise in the UK. Not 100% sure of that, but they have tightened up on the Wild West character which used to be the norm.

[oberliner]

19. DraftKings Announces Sponsorships With 12 NFL Teams To Kick Off 2015-16 Season

BOSTON, Sept. 15, 2015 /PRNewswire/ -- DraftKings, Inc., a leading daily fantasy sports destination, today announced wide-ranging sponsorships with 12 NFL teams that will further enhance their football offerings for the 2015-16 season. The company has forged new sponsorships with the Atlanta Falcons, Carolina Panthers, Dallas Cowboys, Denver Broncos, Kansas City Chiefs, Miami Dolphins, Minnesota Vikings, New York Giants, Oakland Raiders, Pittsburgh Steelers and Tennessee Titans and has renewed a deal with their hometown team, the New England Patriots.

http://www.prnewswire.com/news-releases/draftkings-announces-sponsorships-with-12-nfl-teams-to-kick-off-2015-16-season-300143170.html

FanDuel signs with 15 NFL teams

FanDuel has signed a multi-year partnership agreement with 15 National Football League (NFL) teams.

The deal with FanDuel marks the first time that the league has allowed teams to sign multi-year sponsorship deals with a daily fantasy sports company.

FanDuel has signed up around half of the league's teams to deals that generally include stadium signage, radio and digital advertising, and other promotions in exchange for an undisclosed fee.

http://www.sportspromedia.com/news/fanduel_signs_with_15_nfl_teams

[Baclava]

20. You're not gambling on the outcome of games, just that you're better than the next average Joe

He's just stirring the pot because he wants a slice of the pie of the real Vegas bookie action for his state.

[oberliner]

21. You are gambling on something else

Namely that the group of players you choose will score more points than the group of players someone else chooses. Isn't that still gambling?

[hifiguy]

23. Yeah, but you're gambling on a collection of players from different teams

which is likely why the NFL is OK with it. You're not betting on any one team, but on a WR from the Cowboys, another from the Packers, a running back from the Eagles and a QB from the Patriots, say, that make up your particular fantasy team.

There's no way or incentive for the fantasy gamblers to affect the outcome of any particular game because all of his players are on different teams and every bettor has a different assortment of players. Therefore there's no threat to the "integrity of the game." And no one knows who has what players except the fantasy sites and they could care less who wins. They're just a clearinghouse that the bettors have to pay to join. They make their money with no care at all for who wins actual games.

So yes, it's gambling, but a very different kind of gambling from laying a couple hundred bucks on any one team to win/cover the spread.

[oberliner]

25. What about this scenario:

An unscrupulous gambler bets huge sums of money on a fantasy team that includes a QB who isn't widely owned, because another much better QB is also playing (Let's say it's just a 2 game slate, such as last night's MNF). So if over half the players in a given high stakes tournament have the same QB, the unscrupulous gambler could take a very low-owned QB (such as the QB of the Niners in last night's game). Said unscrupulous gambler could then pay off the high-owned QB to tank his stats (which he could easily do while still winning the game for his team). So all the people who owned the popular QB would fare poorly in the tournament, and the small minority who took the low owned QB with this unscrupulous gambler would have a greatly increased chance of winning or at least faring well in the tournament.

In practical matters, if it's a 4-game slate and Tom Brady, for instance, is the most highly owned QB by a wide margin, I could take one of the other QB's and "persuade" Tom Brady to hand off rather than throw for a TD whenever he is at the goal line which would drive his point total down and help me get an edge on all the players who took him as a QB expecting him to throw for multiple TDs.

Edit to Add: I could also "persuade" him to hand off to a secondary RB or to throw to an obscure TE that less than one percent of tournament players own, but I do.

[hifiguy]

26. It's theoretically possible, I guess,

but the fantasy bettors these sites are angling for are the zillions of guys (and some gals) who want to try and make a small killing off a stake of $100-500.

It would be awfully difficult to do, but probably not impossible.

[oberliner]

28. There are smaller tournaments that cost over $20K to enter

They have only 15 entrants with the winner getting something like $150,000.

Again, I do see your point and understand that it's not the same, but I do think it isn't all that far fetched to try to game the system in this way.

There are also countless one-on-one tournaments for pretty high stakes. If I know that obscure RB3 is going to get fed the ball on the goal line and potentially score a bunch of TDs and no person would own said player under normal circumstances, I can get a pretty significant edge.

[Baclava]

36. You don't bet on fantasy teams, you play your players against others - that's all

It has nothing to do with "sports betting"

[oberliner]

40. You are betting that your collection of players will score more points than others

Seems strange to claim that it has nothing to do with sports betting. It very clearly has to do with betting and it very clearly has to do with sports.

[Baclava]

44. You think it's sports betting? Try calling your bookie to make a fantasy bet. ha ha

Fantasy points, fantasy line-ups, that's why they call it fantasy.

[Baclava]

37. Like the lottery is gambling - why don't states make that illegal?

Anytime somebody other than the state house makes money some dipshit gets upset if he can't get his greedy hands on it.

[oberliner]

41. There is some hypocrisy there certainly

And I am not suggesting they ban this, I am saying that they treat it as gambling and don't pretend that it's not.

[benld74]

30. IMHO - average person who wishing to win $$$ off these sites

has BETTER chance playing the fantasy leagues in their home neighborhoods. Winning Millions? Yeah right,,,,,

[frylock]

32. I back whatever legislation it takes to stop the endless stream of commercials on TV and radio..

I'm going to throw a brick at my teevee if I have to see that overwrought douche on the Draft Kings commercial all season.

[Baclava]

38. Buy a DVR - I haven't watched any commercials on any programs I want to watch for over a decade

I FF through everything. It's easy.

[frylock]

39. I have friends that do that..

invariably, after two or three beers, the person working the remote slacks off, and forgets to FF. Then I have to remind them that we're watching recorded commercials. In any case, that won't work down at the bar.