Just a Roll of the Dice, or Skill of the Player?

Mr. Johnson's Fantasy College Football Team Bench
Mr. Johnson’s Fantasy College Football Team Bench

by Critt Johnson and Darius Whitehurst

Daily fantasy games are expected to generate roughly $3.72 billion in entry fees and $370 million in revenue this year, according to industry consultants Eilers Research. By 2020, they are expected to reach about $17.7 billion and $1.77 billion, respectively, according to the Wall Street Journal.

Fantasy games are games where players make virtual teams with real players from real professional teams and compete with other players who do the same.

FanDuel and DraftKings are the two major fantasy game services that are daily and have multiple sports leagues in which one can play. New York-based Fanduel, started up in 2009 and  raised $11 million in financing from venture-capital companies in 2013. The following year it raised another $70 million. The Boston-based DraftKings, founded in 2012, quickly became the rival of FanDuel after aggressive marketing and fundraising, according to the Wall Street Journal.

“There is a little bit of luck involved, it’s like poker, but it’s mostly based on skill, because you have to make predictions, just like a financial stock broker would have to make decisions on certain stocks. A player is a ‘stock’ and you have to see whether he is going up or down; you have to look and make a prediction,” said senior Michael Boone who has played fantasy football for multiple years for little or no money in leagues consisting only of friends.

According to Forbes, playing daily fantasy for money is legal by federal law in the United States and Canada. Fantasy sports are, according to federal law, a game of skill, therefore they are not considered gambling.

“I think fantasy football, like DraftKings and FanDuel, could be considered gambling in some states, depending on if that app is regulated by the state, because of how much money they are bringing in and on how much money they are paying out. But I think that when you have 12 people, I just don’t think that it’s that big of a deal.  I have a lot of leagues where I have no money in them, it’s more for fun,” said Bishop Sullivan assistant football coach Joe Habit.

The law declaring fantasy sports legal was first introduced in 1999 and the last action on it took place in 2006. The title of the law is the Internet Gambling Prohibition and Enforcement Act.

The outline of rules of the Act are:

  • All prizes and awards for the players need to be made known to the people playing in advance of the game and the value of the prizes cannot be changed due to the number of players or the fees paid by the players
  • All the winning outcomes are from the knowledge and skill of the players and are statistical result of the performance of the athlete in different real-world sporting
  • No winning outcome is based on the score, point-spread, or of any single real-life team or based solely based on the performance of one single athlete on any real-world sporting team.

Montana, Louisiana, Washington, Iowa, Arizona, and Nevada have ruled that online fantasy games are gambling according to The New York Times.

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