Anyone with a fantasy football team knows much fun it can be. You study for days leading into your late-summer draft, you feverishly check your matchups every few minutes on Sundays, you trash talk your opponent in victory and claim “Who cares? It’s all random” in defeat. You have an excuse to keep in touch with family, friends and former coworkers. And there’s no doubt that fantasy football has changed the way we watch the NFL. Daily Fantasy Sports (DFS) sites have taken the fun of casual fantasy sports and combined it with the excitement of sports wagering and have had instant success.
But there’s a catch: casual DFS players like you and me don’t often win big, because we’re playing against a stacked deck. Remember the online poker boom of the early 2000s? It was a good time to be a professional poker player. These pros feasted on all of the 9-5ers playing casual $10 hands at a virtual table, fresh off a viewing of “Rounders” on cable.
The DFS boom is no different. Professional sharks enter dozens or even hundreds of lineups (often exactly the same) per pool in order to increase their odds of winning big off of casual players. Bloomberg News reported that one such shark, Saahil Sud, commits an average of $140,000 to DFS every week with a weekly return of about 8%. Players like this greatly tilt the field against casual players.
And now there’s this: The New York Times reported recently that employees at certain DFS sites used confidential information (knowing which players were being overvalued and undervalued by the market to fleece casual bettors at rival DFS sites. There is currently no regulation against this, though most DFS sites claim that they do not allow it.
DFS sites have long maintained that any action on their sites is not “gambling”; because they insist that DFS requires skill, they prefer the ludicrous term “skill-based games,” which, unlike most sports betting, is perfectly legal. But after the Times expose, the Nevada Gaming Control Board ordered all DFS sites to cease operations in the state until they obtain a gaming license. Other states are following suit. And Congress is now investigating the matter.
Whatever they choose to call themselves, it seems pretty obvious that DFS is, in fact, gambling. And it’s just as obvious from the sites’ popularity that Americans, like people in most countries around the world, want to bet on sports. The way to deal with the problems noted above is not to shut down DFS sites but to regulate them. And the government can’t regulate them if they’re not legal. At the moment, sports wagering is legal in only a few scattered states. The federal government should legalize sports wagering, regulate it and tax it. Until then, entrepreneurs will find a way around the system.