Rob Manfred has read the law, and delivered his verdict.
The commissioner of baseball says online daily fantasy play is a game of skill, not chance. He declared it legal this week, even though a few states explicitly ban it as gambling and others may move to do the same.
No great shock there, since Major League Baseball has a stake in DraftKings, the biggest player in the daily fantasy industry. There’s money to be made in the industry, and Manfred signaled on the eve of the World Series that baseball will go after its share.
“I’m quite convinced it is a game of skill, as defined by the federal statute,” Manfred said. “And I’m comfortable with the idea that it’s not gaming.”
No matter that the former congressman who authored the 2006 federal law Manfred is referring to says daily fantasy is indeed gambling. Former Rep. Jim Leach told The Associated Press earlier this month that the intent of the law was to stop online gambling, not turn it into “today’s cauldron of daily betting.”
That, though, is precisely what daily fantasy has become, on a scale rivaling the best sports books in Las Vegas. It lures players in with promises of big payouts, but to the average player that is mostly a fantasy by itself.
Those incessant ads you see on TV air for a reason. The playing field is so tilted against the small players that new customers must constantly be found to replace those who reach their credit card limits or just tire of constantly losing their money.
Add in the threat of insider trading, no outside regulation and no guarantee that anyone’s money is safe and it’s the kind of potential cesspool the major sports would be wise to think twice about before jumping in.
But jump baseball has, and the sport is not alone. The NBA has a piece of FanDuel, the NHL has an investment in DraftKings, and some NFL teams have their own deals with the two major sites.
Indeed, it’s hard to watch a game or go to a game and not be reminded in some way about the cozy relationships between the major sports and the fantasy sites. The tie-ins haven’t just bolstered the bank accounts of FanDuel and DraftKings, but given them some powerful friends when it comes to the debate over the legality of their contests.
Make no mistake, that debate isn’t over. Earlier this month, Nevada became the latest state to ban unlicensed daily fantasy play, and other states are taking second looks at their laws in the wake of the explosion of betting. The NCAA says it won’t allow FanDuel and DraftKings to advertise during NCAA tournaments and has asked them to stop using college players in their games.
Meanwhile, the biggest online poker company in the world pulled its fledgling fantasy site from all but four states where the law is clear on the legality of the industry. Amaya Inc., a Canadian company which operates PokerStars as well as the StarsDraft fantasy site, said it would wait for the industry to be regulated before re-entering the market in those states.
The fantasy industry this week said it would begin regulating itself, appointing former acting U.S. Secretary of Labor Seth Harris to head what it said would be an independent agency to create a “strict, transparent and effective system of self-regulation” for the online gambling sites.
Up until now the Fantasy Sports Trade Association had been using a charter for daily sites to follow. The charter cautions sites not to market their games as fantasy sports gambling or fantasy betting, advising them to use terms like “entry fees, prizes and commissions” instead of gambling terms like bets, wagers or vig.
Whatever it’s called, this isn’t your father’s season-long fantasy league with friends. There are millions of dollars at stake every weekend, with the entry fee for some contests higher than any bets a Vegas sports book would accept on any given NFL Sunday.
The insider trading scandal that erupted earlier this month has put a spotlight on an industry not understood by most. There could be some rough times ahead for the sites as states begin making their own decisions on their legality, and there’s no guarantee the daily fantasy industry will come through it all intact.
For now, though, DraftKings and FanDuel can find comfort that MLB and the other leagues have their back.
