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Fantasy Sports Could Suffer the Same Fate as Poker

TAGs: Bill Beatty, daily fantasy sports, Editorial, fantasy sports, Restoration of America’s Wire Act

Daily Fantasy Sports has exploded in popularity over the past couple of years due to a lack of regulation, a fervent desire for people to gamble, it’s turned regular people into millionaires, DFS is touted as a game of skill and its presence seen and felt all over the sports networks, so much so that it has politicians and anti-gambling nuts up in arms calling for bans. DFS meteoric rise and its lack of regulation could force the US government to enact some sort of limits or ban that could crush the burgeoning industry.

Fantasy Sports Could Suffer the Same Fate as PokerDoes this sound familiar? If you’re an online poker player, it should.

The similarities between the rise of online poker and the dally fantasy sports industry is eerie. Both are clearly gambling, both are touted as games of skill rather than luck and both piss off the powers that be who would rather have a say on how allegedly free Americans can spend their entertainment dollars.

When the US Government passed the Unlawful Internet Gambling Enforcement Act back in 2006, there were carve outs for both horseracing and fantasy sports but it’s clear the politicos didn’t realize that fantasy sports would evolve so much to allow gamblers a daily fix of what is essentially sports betting.

Daily fantasy sports allows bettors to pick a lineup using a salary cap and enter into a pool against a single player or even several thousand other players. The payouts mimic the payouts from most online poker tournaments you’re familiar with. The winner gets the lion’s share and those next in line get a decreasing amount until you reach the bubble. The house takes a rake from the entrants to make it worth their while.

When those in the industry describe DFS as a skill game, they aren’t kidding. Sports bettors know the skill and research it takes to successfully handicap a game or a prop. If you’re a sports bettor who hasn’t tried DFS, it’s closest comparison would be betting on player performance props with a caveat that makes it much more difficult to win. Rather than betting on a single player and only having to beat the sportsbook’s number, DFS players must choose a team of several players and then bet against of other DFS players. Even though the industry isn’t as mature as poker, it’s already created a similar shark vs. recreational player dynamic that will eventually eat away at the daily fantasy sports eco-system, slowly killing it from the inside.

The external threats for the industry are very real, the regular anti-gambling folks are beating their drum against the industry.  Anti-Gambling extremist John W. Kindt is making the rounds to have his voice heard. He called for the UIGEA fantasy sports carve out to be closed if the Restoration of America’s Wire Act is to pass through Congress.

The major difference here is that unlike the poker industry that had very few allies (despite their efforts the Poker Players Alliance doesn’t have the cash to bribe err lobby government), the fantasy sports industry is very wealthy and they have some very wealthy and powerful allies. All four major North American sports leagues, along with Disney (owner of ESPN) have some sort of deal in place with companies offering DFS. The NBA, MLB and NHL all have league wide deals and the NFL has deals at the team level. This is support the American poker market never had.

When the poker industry started to boom, it was being run by scary international gambling companies regulated on some far-flung Island in the North Atlantic like the United Kingdom not good ole fashion American Companies. Industry leader Fanduel is actually a Scottish company and perhaps this is why Walt Disney has decided to back the number two company Draftkings with a $250 million dollar investment.

The heavy support from the leagues for daily fantasy sports further highlights their hypocrisy on sports betting. They all still support PASPA, they’re all still fighting legalized sports betting outside of Nevada but they’re all on board for the fantasy sports industry that helps drive interest in their games. Single game sports betting drives interest too, no one is watching a Buffalo Bills-Cleveland Browns game outside of those two cities unless they’re sick in the head or they have a few bucks on the game.

Is DFS gambling? You bet it is. Should DFS be legal? Of course, just like sports betting, casino games and poker. Should DFS worry about anti-gambling nuts convincing politicians to take down an entire industry? It’s happened before.

The DFS industry is living in the land of milk and honey right now but they’ll need to keep an eye out for threats both internal and external to keep the good times rolling.

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