As business scribes, we’re dedicated to following the money. So as the daily fantasy gold rush exploded, we’ve been faithfully chronicling those developments. Found money aside, there are some larger issues we’d like to explore, even as teams and leagues are counting their unexpected new riches.
We’re not puritanical or necessarily pro or con when it comes to legalized betting on pro sports, and the question of whether paid fantasy games are gambling is one that’s both semantic and legal. Either way, we just want to call daily paid fantasy games what they are: an on-ramp to legalized gambling. We note that leagues and teams affiliated with the DraftKings and FanDuels of the world offer non-cash prizes, but that’s irrelevant.
“I know legalized gaming is coming and I know this is the first step,” said an NBA team president, who like most interviewed on this subject did not want his name associated with this topic. “Look at what the commissioner [Adam Silver] has said on this and he’s right, the more oversight and regulations we have on this, the better off we’ll be.”
“There’s no debating it — daily paid fantasy is a proxy for gambling,” said Mark Mariani, former president of sales and marketing of CBS SportsLine, who is now president and partner of VegasInsider.com, which includes daily fantasy games alongside its sports handicapping offerings.
Internet marketing veteran Geoff Reiss ran ESPN’s early online fantasy efforts and recalls not being able to convince the NFL to build a fantasy platform in the late ’90s.
“Daily fantasy is the gateway drug for consumers and sports properties,” said Reiss, now an independent consultant. “For leagues, it has finally meant a payday for fantasy, and all of them, especially the NFL, are still frustrated they haven’t been able to make much from the overall growth of fantasy.”
To this point, the fantasy companies had done a reasonable job separating themselves from the institutions lining the Vegas strip.
“That industry has done an effective job of setting off fantasy as a skill game rather than a luck game,” said Scott Rosner, associate director of the Wharton Sports Business Initiative. “The problem is one I’ve seen as [league] marketing restrictions have loosened on alcohol, lotteries and casinos. I appreciate the revenue pressure they are all under, but are they sacrificing something else at the altar of short-term growth.”
We’re not debating the merits or morals of sanctioned and legalized betting on pro sports, as much as we are calling for transparency. In the eyes of the industry, the genie was out of the bottle when the first paid fantasy sponsorship with a pro team was signed. If paid fantasy isn’t gambling, what follows will be.
“Widespread legalized pro sports betting is a certainty,” said the head of one of the country’s largest sports marketing agencies. “The question I’m asking now is whether legalized gambling in the traditional sense happens through these [daily paid fantasy] companies or are these companies just opening the floodgates for casinos and the like to exploit this opportunity?”
A tangential issue that bears scrutiny is how pro athletes figure into all this. Pro sports have long steered active athletes away from marketing alcohol and gambling brands. This is a developing — if not embryonic — area, so we won’t chastise anyone for this. Still, it’s interesting to note inconsistencies here, especially when compared to the long-standing prohibition on athletes gambling on their own sports.
The NBA, recently affiliated with FanDuel, says it has a policy and offered this: “[All] NBA personnel are prohibited from participating in NBA fantasy leagues that require payment of an entry fee or award prizes to participants.” Hmm … Los Angeles Lakers guard Steve Nash is a paid spokesman for DailyMVP.com and touts their games as a thinly disguised “librarian” alter ego in a TV ad. The NBPA said it knows nothing of the policy and suggested that it is subject to the CBA.
Patriots quarterback Tom Brady does a similar ad for DailyMVP. However, an NFL league spokesman tells us there is no policy preventing NFL players from participating in daily paid fantasy games.
As anyone with black socks in their drawer knows, MLB is the most gambling-sensitive league. MLB spokesman Matt Bourne says a policy is under development. “We are discussing the issue with the union and hope to have guidelines by Opening Day.”
The NHL also considers paid daily fantasy to be gambling.
“NHL players are not permitted to participate in sports betting as it relates to NHL games in any way, shape or form, as per provisions in the CBA and the Standard Players Contract,” said a league spokeswoman. “Gambling of any sort, as it relates to NHL games, is in violation of these provisions.”
Terry Lefton can be reached at tlefton@sportsbusinessjournal.com.
