A skillful decision on daily fantasy sports
Shift in thought
As this gaming industry grows, more states ask if it is worth probing how much players rely on skill versus chance. A Massachusetts panel has given good advice.
—Daily fantasy sports has boomed into a $3 billion industry in recent years. Yet many states still haven’t decided if this online contest between imaginary rosters of real athletes in professional sports is a game of skill or gambling. A handful of states have banned it while 14 states simply regulate it, mainly for the tax revenue. About 20 more are deciding what to do. Amid this national debate, a state commission in Massachusetts has issued a decision that may help clarify the issue.
The panel says daily fantasy sports is online gambling – no matter what the level of skill. A wager placed on an uncertain event as a form of amusement is still a wager. And it deserves strict controls to prevent all the potential abuses of any gambling enterprise.
The lengthy decision is upsetting for DraftKings and FanDuel, the two companies that dominate this industry. They don’t want other states to accept this reasoning as it will mean licensing and taxes similar to those imposed on casinos. The two firms contend that fans of daily fantasy sports rely mainly on their knowledge to win money. The Massachusetts panel, however, decided that there can be no balancing test between chance and skill for such a game. Its opinion will now be considered by state legislators.
Trying to use statistics to determine the level of skill for a game played for money – as many courts have tried to do – ignores the fact that even the most skilled can lose and the less skilled can win. In professional sports, an unexpected bounce of a ball can defy a statistician’s prediction.
Waging money in fantasy sports is akin to betting with a friend on the point spread of an NFL game. And in most states, sports betting remains illegal.
What really worries some state officials, however, is that any form of recreational gambling, whether real or fantasy, can have negative social consequences, either in a rise of crime or for problem gamblers. Even before this decision, the Massachusetts attorney general imposed strict rules last year on daily fantasy sports. People under age 21 are not allowed to play, college sports cannot be included, and players must be limited in how much they can bet.
A deeper concern is that states which allow or even promote gambling are also reinforcing a belief in luck as a path to prosperity instead of education and hard work. The Massachusetts panel gets it right. Any amount of “chance” in a commercial game deserves government scrutiny. Humanity has made too much progress in understanding the underlying causation of events to keep embracing “luck” as a driving force.