When Fantasy Becomes Reality

For those of you who are unaware, Fantasy Sports is when someone drafts a hypothetical team with real players on it and competes against others who do the same thing.  The person whose collection of players performs best in real life wins the Fantasy League they are in with the other competitors.  Prior to the easy-to-manage Fantasy sites online (Yahoo, ESPN, etc), people in Fantasy Leagues actually tracked the statistics using box scores in the newspaper each day.  This was a bit before my time, but I enjoy hearing stories about those good old days.  With the technological advances of the Internet, Fantasy Sports really started to rise to prominence just after the turn of the century, and for many years, groups of friends would create Fantasy Leagues online in which to play against each other.  Sometimes it was just for fun, but usually there would be some amount of money involved.  Congress even passed an exemption for Fantasy Sports to make sure that this sort of thing would not be considered illegal betting.

Fast forward about a decade and suddenly whenever we are watching a sporting event, we are inundated with advertisements for these one-day Fantasy team sites, such as FanDuel and DraftKings.  Huge amounts of money are involved.  New millionaires are made every week.  Hundreds of millions are spent on advertising and endorsements.  And, predictably, there are those who are now calling for the whole operation to be shut down and classified as illegal gambling.  Welcome to America.

Who's trying to shut this down?  It looks to me like the people who aren't getting a slice of the pie.  Government, owners of gambling establishments that view this as competition, people who lost money trying it and are pissed off, and probably some number of people on the far right who believe the Fantasy Sports is immoral, against their religion, and thus should be illegal.

Several states have disallowed these one-day Fantasy Sports sites from operating there.  Not surprisingly, Nevada is one of them.  When people think of Nevada, they think of Las Vegas, and when people think of Vegas, they think of gambling.  I'm sure the gambling lobby is strong there, so why not snuff out any competition they can?  The Nevada Gaming Commission ruled that Daily Fantasy Sports is a form of gambling and would need a license to operate, though these sites have continued to insist that it is not gambling.  It seems to me that this is just the start of a long, large fight on a National level, because it won't surprise me if special interest lobby groups in Washington, D.C. line the pockets of Congressmen in order to get them to outlaw these sites.  Business as usual in the U.S.A.

Here are my problems with this.  Making Daily Fantasy Sports sites illegal would be both hypocritical and government overreaching.  The government is cool with state run lotteries, because they get a ton of money from that, and that is a crystal clear means of pure gambling, where no skill or knowledge is needed whatsoever.  Gambling in casinos is legal in some states if you get a license, and others if you're on an Indian Reservation.  In those cases, some number of influential and already-rich people are continuing to make even more money.  But DraftKings and FanDuel?  It's the startup owners of those sites making moneys, along with some number of regular sports fans every week, and it's become a wildly-popular multi-billion dollar industry.  So clearly, some number of influential and already-rich people want to put a stop to this.

The one thing I agree with in this whole thing is that there needs to be some sort of regulation on it, which would prevent employees of any of these sites from using information not available to the public to their advantage, increasing the chances that they will be able to make money that way.  This is akin to insider trading on the stock market and must not be allowed.  And while I think gambling in general should be legal, and Daily Fantasy Sports is a form of gambling, I DO NOT believe it should be classified as such.  The stock market is gambling too, and it's the closest comparison for Daily Fantasy Sports.  People aren't screaming that, because insider trading can happen, the stock market ought to be shut down.  That's no reason to shut down this industry either.  And the similarities go much deeper than that.  In stocks and Daily Fantasy Sports, you need some specific knowledge to do consistently well.  And that doesn't guarantee that you'll always do well either.  Sometimes someone with little to no knowledge will do better than you, but usually those with more knowledge will do better than those with less knowledge.

If I had my mom pick my Fantasy Football team for me, it probably wouldn't go too well.  If I had my friend's two-year-old pick stocks for me, that probably wouldn't go too well either.  But it might.  You never know.  In the Daily Fantasy Sports world, players ARE the stocks.  And the government needs to leave us, the lay-people, the fans alone.  Seriously, just stay out of it, unless it's to make a law that Daily Fantasy Sports can operate anywhere in this nation.  Because, you know, it's a free country.  At least it used to be.

In the mean time, maybe I'll get lucky and set an amazing lineup, or maybe I'll make some poor choices and lose the entirety of my small deposits, but I'll probably be roughly even.  I started playing several weeks ago and I'm up $13 on FanDuel and down $13 on DraftKings.  That's a difference of $0 to my net worth.  But it's fun.  Play responsibly.