You can’t escape it. Advertising for Daily Fantasy Sports (DFS) is everywhere.Put in some cash. Create a team – or multiple teams – on any given day. Root for your guys. Win big. It’s a compelling story told thousands of times in 30-second vignettes of “ordinary guys” netting millions. And it makes for great ads.In just one week in early September – the seven days leading up to the start of the NFL regular season – industry leaders DraftKings and FanDuel สมัครแทงบอล combined to spend nearly US$30 million on television advertising alone, in addition to massive ad buys on radio and online. By the end of the NFL season, that television number is expected to reach $200 million.‘I’ve deposited a total of $35 on FanDuel, and won over $2 million.’Where is all this money coming from? That’s easy. DFS have millions of users, millions in revenue, and the backing both of major sports leagues and broadcasters.Bloomberg recently reported that new investment rounds brought in $426 million for DraftKings and $363 million for FanDuel, raising their valuations to more than $1 billion each. It’s the kind of money that buys a lot of advertising.With all of the advertising and all of the money, attention is sure to follow – and not all of it has been good.Lawmakers and law enforcement officials at all levels of government are asking the obvious questions: isn’t this gambling? And isn’t this kind of gambling illegal?50 states, 50 sets of rulesAs it turns out, this a surprisingly difficult question to answer. America’s gaming laws are enormously complex. Most regulation occurs at the state level, with each state free to create its own set of rules regarding legality, administration and enforcement.Layered on top of these state gaming regulations are federal statutes that help enforce state laws by addressing the use of interstate banking and the rise of offshore and online gambling.Complicating matters even further is a federal law that specifically targets sports gambling by prohibiting states from legalizing wagering on the outcome of sports contests. (A few states, such as Nevada, are exempt.)Given this complexity, the more important question may not be whether DFS are legal, but rather whether DraftKings and FanDuel can sustain their business models without knowing the answer.Chance or skill?The way the regulatory system is constructed, it is up to each individual state to define what does and doesn’t constitute gambling.
In most states, gambling is defined as a contest in which participants pay a monetary entry fee (consideration) to compete for a prize (reward), with the winner determined primarily by chance rather than skill. And any contest meeting this criterion is either outlawed or very tightly regulated. This can include anything from poker and casino games to bingo and raffle tickets.Nigel Eccles, CEO and cofounder of FanDuel, speaks during an interview in New York. Brendan McDermid/ReutersApplying this definition to DFS, where consideration and reward are a given, it is this last element – chance versus skill – that dominates the gambling analysis.But using the same basic definition for gambling doesn’t mean that every state reaches the same conclusion. It’s one thing to draw a distinction between chance and skill. But how do you apply that distinction to a game that includes elements of both?For instance, successful DFS managers possess considerable knowledge of the prior statistical performance of individual players and teams, as well as the skill to apply that information as a predictor of future performance in a particular context.Yet certain elements remain beyond the knowledge and predictive abilities of even the most savvy manager – elements such as injuries, officiating, games plans and components of performance for which there is no statistical measure.How much weight does each of these elements carry in determining the winner of a DFS contest? And is it the elements of skill or the elements of chance that dominate?There is simply no one answer as to whether DFS are a game of chance or a game of skill. Instead, there are multiple and contradictory answers, each carrying the same weight of authority – that of the state in which that particular definition applies.So far, five states have affirmatively banned DFS as a form of illegal gambling, and attorney Daniel Wallach, an expert in sports law, has identified at least eight other states where DFS are likely prohibited under current law. It just hasn’t yet been challenged.However at least two states (Kansas and Maryland) have moved in the opposite direction, expressly legalizing fantasy sports games. Many others, while not directly addressing the issue, have simply shown no inclination to apply existing gambling regulations to DFS.This state-by-state approach creates immense commercial uncertainty for the entire DFS industry, which includes high-profile investors like Fox Sports, the NBA and the private equity firm Kohlberg Kravis Roberts.