Should online daily fantasy sports be considered illegal?

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By: Brett Levenstein

Copy Edited by: Lizbeth Yorio and Sean Cotnam

Research Edited by: Sean Cotnam

Format edited by: Arthur Carlton-Jones

One of the most hotly debated laws in recent memory is the Unlawful Internet Gambling Enforcement Act of 2006  .[1] This internet gaming bill, signed into law by President George W. Bush, made most online gambling, such as online poker, illegal. An exception was made for online daily fantasy sports because lawmakers concluded that these games require skill rather than luck. This exemption became controversial as many do not believe this allowance should have been permitted.

This debate was sparked by a 2015 scandal involving two of the major online daily fantasy websites, DraftKings and FanDuel. It was revealed to the public in print, broadcast, and electronic media that these two websites employed workers who, “were placing bets using information not generally available to the public”.[2] These employees would take inside knowledge that they collected from working for one of these companies, and use it to place bets on a rival company’s website. Having access to which players were most selected for lineups provided the employees with a huge advantage when wagering on a competitor’s website.

This fraudulent activity lead to outrage across the country regarding whether or not these fantasy sports websites should, in fact, be legal under  .[3] In addition, many others are infuriated that a majority of the money won from fantasy gaming websites is claimed by the top 1% of players.[4] If such large sums are claimed by a minority of players, should these websites be legal?

Why should they be legal?

Fantasy games require skill to be successful. It takes a lot of work to select the perfect lineup. Each player’s strengths and weaknesses must be evaluated to determine if each player should be selected to start— past performances, injuries, team records— among other things that need to be considered. This is why there is such a large gap between who wins and who loses at fantasy games. Those who conduct the most research and take the most factors into account when forming their teams, tend to win the most. While those who only pick fantasy players, based upon their favorite or home team, tend to lose. Therefore, it would make sense that the top percentage of money makers continue to win the most, as these users tend to be the most skilled at selecting players.

But what about the luck involved?

There is a huge part of online daily fantasy games that involves luck. The person who is placing the bet has no control over the outcome. They are completely relying on other people’s performance in sports to win them money. There is also the possibility that someone could select a lineup full of random players and still win. This circumstance would obviously demonstrate a lucky guess rather than skill. These situations all support the idea that online fantasy games are games of chance, and thus should be considered illegal under current gambling law.

The major caveat

There is one major caveat to the entire scenario. Currently, online daily fantasy games run without congressional regulations. The online gaming websites have the ability to police themselves. Self-regulation leads to the possibility of more improper conduct, similar to the scheme that emerged in 2015. Many congressmen, including Senate Minority Leader Harry Reid, have argued that the lack of regulation in this industry is dangerous, and leaves the door open for insider trading and cheating.[5] Congress is considering regulations to make sure that fantasy gaming websites fall under their control to prevent further scandals.

The bottom line:

Online daily fantasy sports are a game of skill, and consequently legal under The Unlawful Internet Gambling Enforcement Act of 2006. While there is a component of the games that is random luck of the draw, it takes skill in order to select the best possible lineup in order to consistently win.

 

 

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