Dan Morain

Dan Morain: Fantasy sports gambling gets a jolt of reality, but not in California


Assemblyman Marc Levine unleashed an especially vicious species of troll last month when he urged Attorney General Kamala Harris to shut down daily fantasy sports wagering sites.

“These games should be shut down in California until California law is made clear and consumers are protected,” Levine wrote in a Nov. 2 letter to Harris.

DraftKings Inc., one of the two major purveyors of Internet sports betting, reacted by emailing its followers: “Levine wants to outlaw daily fantasy sports in California. We can’t let that happen, but it will take fans like you speaking up to protect the game we love.”

Like drones, they inundated Levine with emails and tweets. One insipid note read: “Hahahaha you will become one of the most hated people in California.” Other messages were too disgusting or anti-Semitic to reprint.

Levine, a Marin County Democrat, could be forgiven if he was feeling vindicated on Friday. A New York judge had injected a much-needed dose of reality into fantasy sports betting by siding with New York Attorney General Eric Schneiderman, who had sued to shut the heavily advertised FanDuel and DraftKings in that state.

New York Supreme Court Judge Manuel J. Mendez noted that players pay entry fees of as much as $10,600 to enter the daily sports contests, clearly not chump change, and concluded that New York law is “broadly worded and as currently written sufficient for a finding that daily fantasy sports involves illegal gambling.” An appellate judge later on Friday allowed the sites to continue operating, temporarily.

Nevada Attorney General Adam Paul Laxalt reached a similar conclusion in October, finding that the fantasy sports sites were illegal because they were operating without a gambling license.

Levine, however, wasn’t crowing. Harris, our ever-cautious attorney general who’s running for U.S. Senate, is studying the issue. An aide issued a statement Friday, saying: “To protect the integrity of our investigation, we can’t confirm or deny investigations.” I guess that means there’s an investigation.

“I hate having California take a back seat on protecting consumers,” Levine said.

FanDuel and DraftKings are New York- and Boston-based corporations that in the past year have transformed the rotisserie leagues of old, in which fans would select fantasy teams of professional sports players and compete against friends during the course of a season.

Pumped up with venture capital, the sophisticated corporations have merged the rush of day-trading, the ease of the Internet and the addiction of sports fanaticism into a money machine.

They boldly claim that players don’t gamble but rather use skill to win pots of as much as $1 million. Sharks and fish will wager as much as $3 billion this year, and DraftKings and FanDuel rake in 10 percent off the top.

Comcast, NBC and Google are among the investors. Having long decried sports betting, sports leagues now hypocritically claim that fans who lay down tens, hundreds or thousands of dollars a day on “fantasy” teams are acting as if they were general managers and thus not gambling.

National Football League franchise owners have ownership stakes. Major League Baseball, which bans Pete Rose from Cooperstown because he bet on baseball games, encourages daily fantasy sports wagering. It is, after all, a game of skill.

The companies field an impressive team of lawyers that includes David Boies, who gained fame by leading the fight to legalize same-sex marriage, and Martha Coakley, a former Massachusetts attorney general who, by the way, donated $2,700 to Harris’ Senate campaign earlier this year.

“If you have somebody who pays an entry fee, and competes for a prize, and the outcome of that competition is determined by skill, that is not illegal gambling under California law today,” Boies said in an interview. “If that law is going to be changed, that law ought to be changed by the Legislature.”

In court, the companies’ lawyers argue that it’s a game of skill because a small number of players, the quants who become steeped in statistics and algorithms, win. What then of the advertisements that claim that it’s easy to win? Clearly, the ads tout a sucker’s bet.

Assemblyman Adam Gray, the Merced Democrat who chairs the governmental organization committee that is responsible for gambling legislation, will convene a hearing this week into fantasy sports. He has introduced a bill to regulate fantasy sports betting, though any protections in the bill would not take effect until 2017 at the soonest.

“I’m not interested in telling people what they can and can’t do,” Gray said. “It is clear that people are doing this and people like to do it. We need to make sure there are protections.”

In this bettor-beware national pastime, Keith Whyte, executive director of the National Council on Problem Gambling, told me of instances in which young men – young men and boys are most attracted to the games – have lost $50,000.

“We know it causes harm, gambling-related harm,” Whyte said. “It meets all the elements of gambling. There is prize, chance and consideration.”

On its website, DraftKings has a button that reads “responsible gaming,” the euphemism for what the rest of us call gambling.

You’re supposed to click on it if you have “concerns about your own gaming behavior or about that of a friend or family member.” It directs you to the National Center for Responsible Gaming, an organization funded by casino corporations and has a board that includes representatives of corporations that operate casinos and sell slot machines.

But, of course, fantasy sports is not gambling, or at least it wasn’t until Judge Mendez, like Levine, Schneiderman and Laxalt, stated the obvious, that gambling is going on. At some point, perhaps Harris will realize that she is shocked – shocked! – that gambling is going on.