DFS Skill Game Argument May Be Harming Its Cause

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Monday, November 30th, 2015 | Written by Shane Larson

Daily Fantasy Sports (DFS) betting has come under increasing fire over the past few months, as the aggressive marketing strategies of sites such as FanDuel and DraftKings, and their partnerships with professional sports leagues and sports networks, has got lawmakers questioning the legality of the industry. Debates about daily fantasy sports betting center on whether or not placing a wager on the sites amounts to gambling.

More and more people outside of the industry are taking the position that the sites are a form of online gambling, while the DFS industry maintains daily fantasy sports betting is a game of skill and therefore not gambling. But is this argument actually benefiting the sites? Maybe not.

A Matter of Point of View

Most people who take a position on whether or not daily fantasy sports betting is gambling can come up with evidence to support their stances. Those who say daily fantasy sports betting is not gambling can point to the fact that those who have the right information available to them and enough skill to put together the best team will eventually win, so it’s not a game of chance. At the same time, people who argue that it is gambling can point to the fact that someone could conceivably win big by choosing players at random because factors outside the person’s control like weather, injuries and referees’ decisions influence results.

Because there is ample evidence to support both arguments, most people are not likely to become dissuaded by a case from the opposition. By focusing on arguing that daily fantasy sports betting is a game of skill rather than on preparing themselves for what will likely be inevitable regulation, sites aren’t following a winning strategy.

The Question of What Constitutes Gambling

Each state has its own set of laws regarding gambling and the definition of what does and does not constitute gambling varies from place to place. When evaluating whether or not daily fantasy sports betting is gambling, states are likely to consider:

1. Just how much skill does it really take to win at daily fantasy sports betting?

2. How much skill is needed to succeed with other forms of gambling like poker?

Answering these questions isn’t easy. It’s impossible to pin down how much is left to skill and how much is left to chance when you place a wager on a daily fantasy sports betting site or sit down at the poker table.

Current Situation

In the U.K, DraftKings received a gambling license in August, while FanDuel made its application in November. While this may seem a contradictory approach from companies insisting that their business is not gambling, DraftKings’ chief international officer Jeffrey Haas sees no conflict in the decision, insisting that regulators in different jurisdictions view their games of skill differently.

In the U.S, however, the state of Nevada has already ruled fantasy sports to be a type of gambling, while FanDuel and DraftKings have also received cease-and-desist letters from New York Attorney General Eric Schneiderman. That has not stopped the companies from seeking a court order permitting them to continue their operations in New York State pending a ruling by State Supreme Court Judge Manuel Mendez on whether to grant Schneiderman’s injunction request. One of the companies arguments is that simply because a game has an element of chance in it does not make it gambling under the law, otherwise “there would be no such thing as a contest of skill.” Nevertheless, industry experts still point out the contradictory stance of both FanDuel and DraftKings, with Shergul Arshad, the founder of UK-based DFS site Mondogoal, stating:

“It’s pretty naive to go get gambling licenses in the U.K. and expect people to believe you’re not gambling. You can’t come to a state that bans you and say it’s not gambling and then have a U.K. gaming license. It’s hypocrisy.”

What We Should Be Asking

Instead of fighting about whether or not daily sports betting is gambling, both those in the industry and those who criticize it should instead be examining the best way to allow the industry to flourish while protecting the interest of consumers. Daily fantasy sports betting is profitable, and many companies now have a vested interest in its success. At the same time, state and federal lawmakers do have a legitimate reason to be concerned about the impact of betting on the sites. By looking beyond the argument about whether daily fantasy sports betting is a game of skill or gambling, sites will have the best chance to have a say in what regulations are passed.