Fantasy Sports Sites Are Gambling

It’s been a bad couple of weeks for the daily fantasy sports gaming industry, as accusations of insider information coupled with growing questions of fairness and lax oversight put the industry’s two biggest sites—DraftKings and FanDuel—in the crosshairs of federal investigators. On Thursday, the Nevada Gaming Commission delivered a serious, if symbolic, blow to the sites by ruling them games of chance, not skill, and ordered them to shutdown operations in the state until they obtained a gambling license. DraftKings is based in Boston and FanDuel is headquartered in New York City.

While Nevada is only one state, its determination that the sites qualify as gambling is what the upstart world of daily fantasy sports is worried about. The industry has been able to thrive by sidestepping the 2006 Unlawful Internet Gambling Enforcement Act that outlawed online sports betting and poker. The distinction written into the law that allowed the sites to evade the same regulatory oversight as those forms of online gambling is that fantasy sports are, allegedly, games of skill, not chance.

Nevada regulators disagree and ordered the sites to shut down effective immediately in the state of Nevada, effectively prohibiting residents of the state from participating. While Nevada is not the only state to outlaw the practice (the games are legal in 45 states), nor the first state to investigate the industry, the state, as home to the casino industry does have a particular interest in having the sites shuttered, as the multi-billion dollar daily fantasy sports gaming industry has risen swiftly and significantly enough to become unwelcome competition for the state’s bread and butter.

“Lawmakers have been intensifying calls for federal regulation and inquiries into the industry,” according to the New York Times.

Is that good or bad news, I think it's bad!

Both DraftKings and FanDuel have already taken swift action to resolve issues, and continued competition may ultimately drive them to find an innovative approach to protect their users in ways regulators could never imagine. Intervening at this point will lock the industry in a world envisioned by whoever ends up writing the rules, rather than allowing reform to emerge from within these digital platforms. These firms know their users’ preferences better than a government agency could, and they also have a strong incentive to keep their users satisfied.

Is that good or bad news, I think it's bad!


Yes it is bad!!

NBA commissioner Adam Silver became the first head of a major sport to proved extended commentary on the recent daily fantasy sports controversy when he called for regulation of the online games.


DraftKings also issued a statement, though it did not comment directly on Silver’s position.

“We strongly believe the games on our site — and daily fantasy sports in general — are legal. We are seeing a number of state regulators and other authorities taking a reasoned and measured approach to the daily fantasy sports business and hope that trend continues along with due consideration for the interests of sports fans across the country who love to play these games.”

Pennsylvania may regulate fantasy sports. With Pennsylvania already asking people to drop their money on lottery tickets, slots machines and tables games, it might as well up the ante on this gambling thing. That's the bet state Rep. George Dunbar, R-Westmoreland, wants to make by having the state venture into the controversial, multibillion-dollar world of daily fantasy sports.

Under a Dunbar bill that's gaining support in a Legislature locked in a four-month budget stalemate with Gov. Tom Wolf, the state would ban the massive daily fantasy sports operations now run by the likes of DraftKings and FanDuel, turn them over to state-regulated casinos, and then tax them.

The move to take state control of fantasy sports leagues is one being made by at least five states, including Nevada, and one Dunbar said is needed to pull the reins of a growing industry that's come under fire in recent months.



Pennsylvania may regulate fantasy sports - The Morning Call

Are Fantasy Sports Interests Opposed to Online Poker?

Many parallels exist between Daily Fantasy Sports and online poker. From the large prize pool tournaments that each offer, to the spike in popularity they both received from mainstream television exposure, to the people that play the games and work in the industry, daily fantasy sports and online poker share many of the same attributes.

These apparent synergies are a contributing factor to the online poker world advocating for the rise of daily fantasy sports. Online poker players in the United States have flocked to DFS games, entrepreneurs in the poker industry have branched out into the DFS arena and many poker affiliate sites now heavily promote fantasy games.

Operators on both sides see the crossover opportunities. Amaya, owner of online poker giant PokerStars, recently acquired a second tier daily fantasy sports site and relaunched it as StarsDraft. Fantasy sports market leader DraftKings was a premiere sponsor of the World Series of Poker all summer, and for the past two years the company has provided its players an opportunity to satellite into the WSOP Main Event.

Despite these apparent crossovers, it is hard to argue that the daily fantasy sports industry is friendly to online poker. One might even say there are forces within the DFS industry that are aligning themselves against online poker.


forum-ixgames-com/skill-games-forum/32164-fantasy-sports-sites-gambling-html

New York says FanDuel and DraftKings are illegal gambling!

There has been a raging debate in USA over the past few months about the legality of daily fantasy sports (DFS) websites such as Draftkings and Fanduel. For the uninitiated, DFS websites allow players to create their own teams based on real life matches or athletic events. Teams created by players compete amongst each other and are awarded points based on the performance of the athletes or sportspersons in real life events.

Participants stake real money on the performance of their teams and are given cash winnings minus the commission or rake of the website. Of course the exact model and structure of competitions varies, but broadly, the DFS industry is based on the prediction of real life events. DFS websites in America have enjoyed tremendous popularity over the past few years, although the recent unprecedented booking of prime-time advertisement slots and tie-ups with national sporting leagues and teams has brought them into the limelight.

The online fantasy sports industry in USA is now said to be worth at least a couple of billion dollars, with top venture capitalists and investors actively pouring in money on DFS companies, particularly, Draftkings and Fanduel, the two biggest websites. Despite backing from top sporting leagues and media companies, a relatively small incident – a leak by a Draftkings employer releasing information about participants predictions - boomeranged into a major controversy.

The Nevada Gaming Commission recently held DFS to be illegal and the New York Attorney General also gave an opinion that fantasy games were violating the state’s gaming statutes. Additionally, a class action suit has also been filed against the two DFS companies in Florida and several other states are now contemplating either imposing stricter regulations or banning the activity altogether.

Indian and American gaming laws are similar in two respects: first, in both countries, gambling and betting is a state subject and therefore a gaming operator has to comply with at least 51 different laws in USA and 36 different laws in India. Of course, there are some federal regulations in both countries: for instance in USA there is the Wire Act as well as Unlawful Internet Gambling Enforcement Act (UIGEA) which prohibits telegraph or telephone use for the purpose of betting or wagering and prohibits banks from allow gambling or wagering transactions.

Similarly in India, rules laid down under the Information Technology Act bar Internet Service Providers (ISPs), hosting websites or other intermediaries from allowing content relating to or promoting gambling. Similarly, there are foreign exchange regulations prohibiting transmission of foreign currency for the purpose of gaming. However, the issue of criminal liability for running a gaming operation in both India and America hinges on the wording of the specific state legislation.

The second similarity between the two countries is that most states differentiate between games of skill and chance. However, some states do not create that distinction- for instance Assam and Odisha in India.

DFS websites started their online operations, while disallowing residents from states like Washington, Louisana, Montana, Arizona etc. on the assumption that their business models would fulfil all criterion laid down for being classified as a game of skill. These websites argue that the federal UIGEA created an exemption for fantasy sports and therefore the same wording would be imported to state legislations.

It is important to note though that UIGEA only prohibits banks and other financial institutions from accepting payments in connection with gambling and has nothing to do with gaming operators or participants’ criminal liabilities. Presumably, DFS operators’ strategy while commencing operations was to brazen it out and be prepared for legal battles when the time comes.

In India as well, a large number of online poker, rummy and fantasy sports websites have mushroomed under the assumption that all these are games of skill. The burgeoning online skill games industry is said to be collectively raking annual revenues of more than $100 million and is expanding at a rapid pace.

However the legal situation is not entirely clear. While most states exempt games of skill, there is no clarity on what games constitute games of skill and secondly whether commercial online models profiting through rake or commission from such games would be granted the benefit of this exemption.

Nevertheless there have been some favourable judicial precedents and legislative guidelines which online gaming operators rely on. For instance, West Bengal clearly exempts the games of poker, rummy, bridge and snap from the ambit of gambling. Some judgments of High Courts indicate that playing poker might be legal while High Courts and Supreme Court precedents indicate that the game of rummy is one involving substantial degree of skill.

Clouds of uncertainty still loom large over the online skill games industry despite some piecemeal reliefs. Earlier this year, the Supreme Court declined to get into the exact modus operandi of online rummy websites and dismissed their petitions, stating that the websites have to first approach lower courts. The North-Eastern state of Nagaland has already initiated the process of introducing a new law to regulate and license online skill games, including rummy, poker and fantasy sports and some other states may soon follow suit.

The entire DFS controversy has important lessons for the online skill game operators: a single and unimportant incident can lead to a massive controversy and crackdown by regulators- especially in an industry which is perceived to be associated with gambling, a vice frowned upon in Indian society.

One never knows when the controversy could erupt or what could be the spark for such controversy (to give just one recent example, top Swiss packaged food producer Nestle is engaged in a protracted legal battle