Fantasy football: Is it gambling?

Congress may reconsider the $15 billion fantasy sports industry’s exemption from an anti-gambling law. 

Nam Y. Huh/ AP
NFL Commissioner Roger Goodell signs autographs before a game between the Chicago Bears and the Green Bay Packers during the first weekend of the 2015 NFL season. Sports leagues and fantasy sports operators are eager to clear up fantasy leagues' legal status, but may face a fresh challenge in Congress.

Ante up, play a game, and win – or maybe lose. It’s a basic description of gambling, one that lies uncomfortably close to fantasy sports.

Since their US debut in 1997, fantasy sports leagues have taken off astronomically. The industry’s legality is predicated on a clause of the Unlawful Internet Gambling Enforcement Act (UIGEA) that exempts ‘skill-based’ games, but not ‘chance-based’ betting. Now, Representative Frank Pallone Jr., D-NJ, is crying foul, requesting that Congress reconsider the leagues’ legal status.

As the National Football League literally kicked off its 96th season last weekend, recovering from the emotional and legal trials of ‘Deflategate,’ fans were once again surrounded by ads for fantasy league operators like FanDuel and DraftKings, whether on the couch or in the stands.

Their pitches are hard to resist. The FanDuel homepage blares “Chris Prince from Detroit has won over $724,938! ‘Playing a game in one day and getting paid the same day is awesome.’” It works, at least for the operators themselves. FanDuel is home to over a million ‘team owners,’ who battle each other using made-up teams of real-life players, competing for increasingly large purses after they pay a typically small entry fee. DraftKings promises “Daily Fantasy Sports for Cash!” and reassures users “More than $1 billion guaranteed in 2015!”

In total, league operators, many of whom partner with the major leagues themselves, have attracted more than 57 million players in the US and Canada, according to the Fantasy Sports Trade Association (FSTA).

They spend more than $15 billion, the majority on football, and tend to also generate more revenue for the actual leagues, since, at least in theory, more dedicated game-watching will improve their fantasy results: in the world of fantasy sports, the success of a player’s ‘fantasy’ version is based on their real-life performance.

This is central to fantasy’s exemption from anti-gambling laws. A clause of UIGEA reads, “All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of multiple real-world sporting or other events.” Gambling, on the other hand, is defined as a game of chance, in which talented pros can be upset by, say, a roll of the dice.

It’s a fine line, and has left fantasy sports in uncertain legal territory, despite the industry's wild commercial success. On Monday, Rep. Pallone submitted a letter to the Congressional Energy and Commerce Committee, asking them to reconsider the leagues’ legal status.

Meanwhile, FanDuel and DraftKings have teamed up in anticipation of a legal fight in Florida, where they have hired lobbyists to clear their businesses’ questionably-legal names. Fantasy sports could survive in one of two ways: by revising the language of the UIGEA to clear up fantasy-vs.-gambling, or by legalizing sports betting.

Peter Schoenke, president of the FSTA, has called fantasy sports “our country's new national pastime.” One group who hopes he’s wrong? Addiction counselors.

Forbes reports that fantasy sponsors have argued their business actually prevents gambling, protecting “the traditional American values [sports] should represent,” but gambling specialists say they’re one and the same. A ThinkProgress report argues that fantasy sports, particularly in their new, popular one-day-play format (versus an entire season), are “probably addictive, potentially illegal and completely unregulated.”

FanDuel and DraftKings claim to use software that can identify and interrupt potentially-compulsive team owners, but counselors observe that that’s not enough. So long as fantasy sports are not technically considered gambling, there’s no pressure for operators to address addiction. Keith Whyte, executive director of the National Council on Problem Gambling, tells ThinkProgress that operators don't need to be "a counselor." But, he adds, "it is their role to say that if you have a problem, get help." 

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