Americans love gambling and sports. It only makes sense to combine the two. Any NFL fan will no doubt have seen the endless advertising by Draftkings and Fanduel, who were able to form a lucrative partnership with the NFL. This business was launched on the basis that fantasy football is a skilled form of gameplay, not one based on chance or luck.
The gaming sites proved that their winners were based on one’s knowledge of the sport by awarding a large sum of their prizes to employees who used inside information to gain an unfair edge on the general public. These were no small prizes either as the amounts range from hundreds of thousands to millions of dollars, with the sites pledging to award over 3 billion in prizes alone this year. This would be great if, as their ads imply, the prizes are fairly distributed, however this insider trading scandal brought their legal status into question. The New York Times reported that yesterday the New York State attorney general Eric T Schneiderman, ordered a cease and desist on the two online gambling giants demanding that they immediately stop taking bets from New Yorkers, under the premise that their operations constituted illegal gambling in the state of New York.
In his press release Schneiderman accused Draftkings and Fanduel of being “leaders of a massive, multibillion-dollar scheme intended to evade law and fleece sports fans across the country.” He goes on to say that these sports fantasy sites are “marketed as a game that anyone can win but in fact distributes the vast majority of winnings to a small subset of experienced, highly sophisticated players. These winners constitute roughly 1% of all players on the two sites.”
This is the latest blow to fantasy sports legal standing. Last month Nevada regulators ruled that online fantasy sports are considered gambling, requiring these sites to cease operations until gambling licenses are acquired. Draftkings and Fanduel have openly strongly disagreed with Schneiderman and will pursue all legal options available to them. In the meantime they will continue to operate in the state of New York.
These online fantasy sports businesses, while relatively new, have substantial backing both by sponsors and fans alike. It is already a multibillion-dollar industry and will undoubtedly throw its weight around when pushed. Draftkings estimates they have over 500,000 participants in New York alone. They have sent emails to these customers asking them to defend their right to play fantasy sports.
NFL is a big deal in this country and has millions of loyal followers who also happen to love betting on the game. If Draftkings and Fanduel are able to leverage these fans against their state legislators they might come out on top. States like Kansas, Maryland, Massachusetts and New Jersey have already taken a pro stance on fantasy sports. At the end of it all it will be whoever can sway the masses that will be victorious.