The Pros and Cons of Daily Fantasy Regulation

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Wow. What a year.

We have lots to be thankful for, as daily fantasy sports players, but in some senses, we’ve gotten the short end of the wishbone. This might be the first year that Dan Back’s Year in Review podcast is a two-parter!

In order to break down all the legal ups-and-downs in daily fantasy, I thought we’d break out Jimmy Fallon’s Pros and Cons.

PRO: Consuming an appetizer, entrée, and dessert of daily fantasy ads during every commercial break might be coming to an end.

CON: That just clears more space to hear how Cialis makes it possible for our grandpas to make whoopee on the dock, in the hammock, in public and with a tire swing(?), if the “moment is right.”

The ads were too much. Too much. Even the owner of FanDuel, Nigel Eccles, intimated as much in an interview recently. The effect, in some cases, was so negative that people who probably would enjoy DFS if they tried it, instead went the other way, out of annoyance. It is note-worthy though, that with both of these major providers, as their ad spend went up, so did their user base. I look at it like eating Skittles. If you have a tiny bag, you might pick them out one at a time, cherishing every one. If you have a punchbowl full, you’ll probably take a handful, and not think twice if a couple fall on the ground in the process. The number of “Skittles” playing season-long fantasy football is enough to fill the Rose Bowl.

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PRO: Pending the ruling by the New York Supreme Court in the coming week or two, New Yorkers may finally be saved from DraftKings and FanDuel making them put their money on the site and play.

CON: Casinos, off-track betting, and lotteries are still all legal in New York, ready to force you to risk your money.

Our country has a very inconsistent stance on vices. We ban drugs. Weed too, unless you live in a select few states. With alcohol, we did ban it, until we realized people are going to drink anyway, at which point we made an amendment to undo an amendment. Now, we just tax and regulate it. With smoking cigarettes, it’s legal, except in every place that exists. Strip clubs are legal. Prostitution isn’t, unless you’re on a ranch in Nevada. Then there’s gambling. It is illegal. Unless you’re at a casino. Or an Indian reservation. Or Las Vegas. Or if you are playing the lotto. Or 50/50 raffles. Or pull tabs. Or the stock market. Then, there are things like off-shore sports books, March Madness pools and your neighborhood poker game, which aren’t legal, per se, but you know … maybe … well … you get the point.

PRO: When Nevada effectively pushed out all daily fantasy companies in October, it ensured their citizens wouldn’t be able to play daily fantasy, legally.

CON: Off-shore DFS sites are more inevitable than a Reggie Bush leg injury at this point.

As a state, when you can make it more likely that someone will not pay taxes, you have got to take that opportunity! As it stands, millions of people play daily fantasy, which is a fraction of the people betting on sports. If you push daily fantasy out into the fringes, you’ll just leave it up to them whether to report their earnings or not. While legal, people get 1099 tax forms from each daily fantasy sports site, reporting their winnings. Much like drinking in the 20s and 30s, people are going to play. The government then realized their best bet was to legalize it, regulate it, and make a few bucks along the way. You’d think this government would learn from the mistakes of their fore-runners, but … … Actually, that’s the best punchline I’ve got, right there.

PRO: Recently, both the Massachusetts Attorney General and NFL commissioner Roger Goodell have tried to separate season-long from daily fantasy.

CON: There are tons of other things that are illegal until you “just do them for a while,” to help support that precedent from a legal standpoint.

Like it or not, separating season-long from daily is a tricky proposition. Picking players and having the results based on the players’ performances is at the heart of both. It is also at the heart of the “game of skill” v “game of chance” debate, which drives legality in many of these states. I’m sure there are many, the NFL included, that would gladly cut ties with DFS, if it freed up their golden goose, season-long. If the court doesn’t see it that way, it might be like a 3-Man game on DraftKings: All or Nothing.

Even if states manage to separate the two, they need to be very specific about the language. Daily fantasy sprung up from the idea of using the fantasy football exemption in the Unlawful Internet Gaming Enforcement Act to “make things a little more interesting,” weekly. If these DFS companies have to create “four week leagues,” to get at the millions chomping at the bit to play, what’s to stop them? A legal battle? All the money that was going to advertising, do you think they are just going to bury it in the backyard?

PRO: Massachusetts has started the trend toward “regulation” of the daily fantasy sports space.

CON: If regulation in this industry is the same as it is in others, it will be as effective as Peyton Manning running the option.

When the mortgage industry was regulated, what did that do? Certainly banks were forced to restrict loans more, but for the consumer, what? Basically, it just meant that you had five extra forms to sign at closing. Do you remember them? Neither do I. In the financial industry, by and large, it means extra paperwork and scrutiny on certain transactions. Advertising regulations just mean job security for that guy at the end of commercials who reads the fine print at hyper speed. Healthcare regulations just mean you have to prove via DNA test who you are, in order to get access your own records.

There are things that regulation could improve in the daily fantasy space. Keeping out minors? Sure. Identifying high volume players? Absolutely. Making deposit bonuses and rake percentages more clear? Please do. Unfortunately, legislators think regulation will protect the “fish” from the “sharks,” which is where regulation misses the point, badly. The actual contests where players of varying skill-levels interact are these gigantic tournaments. In this style of game, where you can turn $20 into “Quit Your Job Money,” these weekend-warriors will gladly clash with the titans.

Ultimately, this must be understood by anyone helping shape the future of daily fantasy. The vast majority of players are willing to lose their money. It’s entertainment and unlike over-priced popcorn, these entertainment dollars give players a shot. It’s a shot to click in players in just the right spots and be the one who gets that big check. They know they don’t have the same sports knowledge base as the “pros,” as it’s a game of skill. But, on any given Sunday, they might be able to select just the right guys. And, if not, it’s still more entertaining than scratching off a ticket.

Legislators, as you determine the fates of millions who love daily fantasy, weigh the Pros and Cons. In PROtecting the players, CONserve the game. Realistically, all everyone wants is to have a shot.

About the Author

GiantBallofOil
Luke Louison (GiantBallofOil)

Luke “GiantBallofOil” Louison is a microstakes daily fantasy player and integral member of Team KillaB2482 (Ranked #2 in NFL, #13 Overall). You can follow Luke on Twitter @GiantBallofOil

“You know Darren, if you would have told me twenty-five years ago that some day I’d be standing here about to solve the world’s energy problems, I would’ve said you’re crazy… Now let’s push this giant ball of oil out the window.”