If you’re a sports fan or sports gambler in the UK, odds are by now you’ve grown used to the concept of daily fantasy sports. But for those who may still be unfamiliar with this particular concept, the idea is that you pick a day or week of competitions, pay money to enter a league or contest, and choose a lineup of players from the competitions for that day or week alone. Based on those players’ performance you can either make money or lose your entry fee for that particular contest. Daily fantasy (often abbreviated DFS) first became prominent when British company FanDuel hit it big in America. It’s turned into a thriving industry driven by FanDuel and its chief competitor, DraftKings (which now operates in England as well).
One of the reasons DFS has become such a big deal is that it offered an activity related to sports betting to a U.S. audience that is still unable to bet legally on sports. That, plus the fact that an enormous number of people in the U.S. and Canada already play fantasy sports, made for something of a perfect storm for the likes of FanDuel and DraftKings. It got to the point that an analysis at Forbes predicted daily sites will earn $2.6 billion in revenue this year, and potentially closer to $14.4 billion by 2020. Those are sensational numbers, and they’ll only be bolstered by the fact that most major sports in the U.S. are actually getting more popular.
But if you’ve seen the news coming from America, you know that the unstoppable force of DFS has reached a somewhat surprising hurdle. As covered by Deadspin, the Nevada Gaming Control Board recently ruled that DFS constitutes gambling. The ruling came on the heels of an alleged scandal in which a DraftKings employee won $350,000 in a FanDuel contest, conceivably with some inside information on player usage. In other words, if he had access to data about which players were being used most, he could model his lineups in a competitively favourable manner against those commonly used options. The Verge revealed that the same employee was ultimately found innocent of any wrongdoing, but nevertheless the issue sparked an investigation into the legality of DFS and Nevada—the same state that hosts worldwide gambling mecca Las Vegas—made the ruling.
But is DFS really gambling? And if so, what does this ruling mean for the future of mobile gambling and casino gaming in the U.S., when many believed it was inevitably going to be legalised?
The argument that the Nevada Gaming Control Board made was that DFS involves “wagering on the collective performance of individuals participating in sporting events,” and is therefore able to be defined as a gambling activity. This falls in line with the popular argument that choosing a lineup of players to bet money on isn’t ultimately much different than choosing a team to wager on—which in the U.S. is still an illegal activity online.
Also of note is the fact that popular DFS sites operate in very similar fashion to online gaming sites, having clearly modelled some of their basic practices after the casino industry. Betfair’s casino promotions provide a virtual outline of some of the welcome options you might find at DraftKings or FanDuel. For example, the option to have your initial deposit matched up to 200% is almost exactly replicated at both sites, which offer 100% matching bonuses with initial deposits of up to $200 on FanDuel and $600 on DraftKings. These bonuses are meant to incentivise players to deposit larger sums and thus play more games, and in this regard the DFS sites have made very apparent efforts to follow a proven gambling model.
The model isn’t enough to have DFS declared a gambling activity, however, and there’s one popular argument that still holds up against the recent ruling in Nevada. Time Magazine articulated that argument as a simple discussion of skill versus chance. DFS sites have defined themselves carefully as games of skill, in which a player’s knowledge of sports and strategic setup of a lineup come into play every bit as much as the chance outcomes of the actual sports. It’s an understandable position founded in sound logic, though it may be a moot point if the Nevada ruling holds up and spreads across the country.
The idea that what’s popularly understood as a game of skill may be ruled to be a gambling activity could be devastating to the potential future of mobile gambling in the U.S. With three of the 50 states already allowing for online casino gaming, many have been under the impression that more would follow. One of the main arguments used in favour of limited casino gaming in the U.S. is that some games—poker, blackjack and the like—incorporate skill. But if the precedent is set that DFS relies too heavily on chance, it’s extremely difficult to imagine casino games having better luck.