Daily fantasy sports should be state-regulated

By Editorial Board

Some play fantasy sports for fun and bragging rights, but others take it more seriously, registering for online daily fantasy sports leagues in hopes of winning large sums of money. Unlike traditional fantasy sports, players in daily fantasy sports leagues compete during the course of a week or a single day, rather than an entire season. Registering to compete in a daily fantasy sports league requires entry fees, which go toward prizes. Players have won hundreds of thousands of dollars in prizes. 

In the past, fantasy sports have not been considered gambling in the illegal sense in most states. DraftKings and FanDuel, which collectively control 95 percent of the daily fantasy sports market, argue fantasy competitions are games of skill, while gambling is classified as a game of chance. However, daily fantasy sports are banned in five states via gambling laws. On Oct. 15, Nevada authorities outlawed daily fantasy sports websites running without a license, claiming they promote a form of gambling. The websites must apply for licenses through the Nevada Gaming Control Board, which both websites have yet to do. 

In recent weeks, federal authorities and state legislators have been evaluating the legality of daily fantasy sports. On Oct. 27, Rep. Michael Zalewski (D-IL), proposed legislation that would require players to be at least 18 years old, as well as require the daily fantasy leagues to undergo state audits. State attorney generals in New York and Massachusetts have launched investigations, and legislators in Minnesota have proposed laws classifying daily fantasy sports as gambling. 

DraftKings and FanDuel make their case that the competitions are games of skill both on their websites and in the media. At a Sept. 29 Global Gaming Expo panel, DraftKings CEO Jason Robins said “[Players] do their homework. It’s like the stock market. They enjoy looking at something and trying to figure out something someone else doesn’t see.”

One can study players, patterns and statistics in professional sports games. However, professional sports’ outcomes are still left up to chance.

The “game of skill” argument was also commonly used by those defending online poker against allegations of gambling. Online poker was outlawed as a form of gambling in 2011, but several states have legalized online poker and heavily regulate the games. 

Furthermore, online fantasy sports can be subject to corruption. In October, a DraftKings employee was accused of insider trading after he won $350,000 in a FanDuel competition. An internal DraftKings investigation determined the employee had obtained access to DraftKings data after submitting his winning roster. Nevertheless, DraftKings has received a subpoena from U.S. Attorney Preet Bharara of New York City, whose office is investigating the legality of daily fantasy sports, according to an Oct. 21 Wall Street Journal article. 

Even if the federal investigation comes to the same conclusion as the internal one, there might be other forms of corruption and questionable behaviors occurring. An estimated 3–4 million people participate in daily fantasy sports, according to Eilers Research. If daily fantasy sports are not currently classified as gambling,  the behaviors are certainly similar, such as wagering money and betting on chance outcomes in addictive competitions.

Daily fantasy sports have exploded into a multi-billion dollar industry where people are wagering all amounts of money on the chance outcome of professional sports. Regulations such as requiring licensing, audits and background checks would ensure daily fantasy sports can continue to operate fair and safe competitions.