Editorials

The reality is fantasy sports need to be regulated

Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at his station at the company’s offices in Boston. New York’s attorney general has sent letters to daily fantasy sports websites DraftKings and FanDuel demanding they turn over details of any investigations into their employees.
Len Don Diego, marketing manager for content at DraftKings, a daily fantasy sports company, works at his station at the company’s offices in Boston. New York’s attorney general has sent letters to daily fantasy sports websites DraftKings and FanDuel demanding they turn over details of any investigations into their employees. The Associated Press

On any given Sunday, millions of Americans will go online, assemble a team of professional athletes, place a wager and wait for the outcome of the day’s NFL games. Many will lose their money. Some will win – and win big. Maybe even millions of dollars.

This will happen even though the companies that run these gaming websites are subject to zero government oversight and have admitted to insider trading. They also have questionable alliances with more than a dozen NFL teams, as well as the NBA, MLS, MLB and NHL, and have stakeholders that include owners of the Dallas Cowboys and New England Patriots.

But it’s not gambling, the NFL and other professional sports leagues aren’t complicit in encouraging the sports betting they’ve long said they abhor, and the companies that run these sites are trustworthy corporate citizens that don’t need to be regulated.

Talk about living in a fantasy world.

It’s time for a reality check on the rapidly growing industry known as daily fantasy sports gaming. In short order, it has become a multibillion-dollar industry, with investors including hedge funds and media conglomerates.

The concept itself has been around for years. Its roots lie in plain old fantasy gaming, in which friends or colleagues in an office pool compete against one another, picking athletes from various teams and tracking them over an entire season to determine a winner.

The websites and smartphone apps that have taken it up a notch have been around for about six years. Pushed early on by the NBA and MLB, they let people try to beat out strangers much more often. People pay an entry fee of up to $1,000 and pick a team of athletes that they hope will outperform other players’ teams.

Those not inclined to risk their hard-earned money might know of industry leaders FanDuel and DraftKings from their endless TV commercials. During Thursday night’s matchup between the Indianapolis Colts and the Houston Texans, for example, five DraftKings ads aired in the second half alone. And the game was on the NFL Network.

The jackpots are eye-popping. FanDuel vows it will pay out $2 billion to winners this year and DraftKings another $1 billion.

Still, the industry swears fantasy gaming isn’t gambling because it’s based on skill, namely a person’s knowledge of sports. We say that’s semantics. An untold, but surely massive amount of money is changing hands each day as people place what are essentially bets on how well athletes will perform in a game. It’s no different from betting on horses before a race.

We would prefer if DraftKings, FanDuel and their ilk didn’t exist at all. Gambling, when it becomes an addiction, can seduce the poor and bankrupt the middle class. It destroys lives.

But with nearly 57 million fantasy sports gamers in the United States and Canada – up nearly 40 percent from 2014, according to a recent survey – we also accept the fact that, like casinos, it’s not going anywhere. So it must be regulated.

In California, Assemblyman Adam Gray has introduced AB 1437, which would require fantasy gaming companies to register with the state and follow certain rules, such as impossible-to-enforce age restrictions for players. While we applaud Gray’s gumption in taking on this issue, stronger regulations are needed to ensure transparency and eliminate any hint of insider trading.

We’d also prefer national legislation. That could come from U.S. Rep. Frank Pallone Jr., D-N.J., who recently requested a hearing to explore the relationship between fantasy sports and gambling.

Whatever is proposed, though, must close the loophole in a 2006 federal law, which fantasy companies are now exploiting. That law banned online poker, but allowed then-small-ball fantasy gaming to flourish.

It might have been hard a decade ago to imagine what the industry would become today. But reality is impossible to deny. It’s time to bring daily fantasy sports gaming back down to earth.

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