DFS and the right to gamble – even a little bit

With the baseball season in high gear and football training camps due to open next week, we can expect another uptick in interest in fantasy-sports leagues and their controversial offshoot, daily fantasy sports (DFS).

The kerfuffle over DFS speaks directly to both our cultural and legislative ambiguity toward gambling. Fantasy sports wagering wasn’t a problem until it became daily. Only then did the nanny state bring the hammer down. Legislators who wrote the fantasy sports carve-out into the Unlawful Internet Gaming Enforcement Act (UIGEA), the 2004 law that made it all but impossible for U.S. residents to gamble online, now protest that they never intended it to be a springboard for DFS.

In fantasy sports, contestants pool their money and they each select a line-up of real-life players in a given sport—baseball, football, hockey, even golf and NASCAR. The performance of each player is tracked and the fantasy team is awarded points based on individual achievement—e.g., home runs in baseball and touchdowns in football. In the traditional version, points were accumulated over an entire season, with the fantasy contest winner determined only after the final slate of games were played. DFS sites like FanDuel and DraftKings introduced fantasy contests that cover just one day of game play (or, in the case of football, one week’s slate of games).

This sparked an explosion of popularity. According to the Fantasy Sports Trade Association, more than 41 million people played fantasy sports in the United States and Canada in 2014. That, plus a major promotional push by both companies last year, attracted attention from a number of states that saw it as a form of unregulated gambling. Response has varied. Nevada declared that DFS operators must have gaming licenses. Massachusetts Attorney General Maura Healey said DFS is legal gambling, but proposed a series of regulations.

New York Attorney General Eric Schneiderman, however, declared DFS to be illegal and ordered a shutdown of all DFS activity in the state – although soon after, the Empire State passed legislation permitting DFS. Mississippi, Missouri, Rhode Island and Tennessee are among states that also have legalized DFS, while it remains banned in Iowa, Louisiana, Arizona and Washington State. An up-to-date DFS legislative tracker can be found here.

The policy questions raised by DFS should force us to rethink the whole notion of gambling regulation. If, by regulation, we mean assuring games are fair, players have a means to press legitimate complaints and restrictions against underage play are enforced, most can get on board with that. What should be questioned are regulations that, in the same jurisdiction, permit one kind of gambling, such as lotteries and horse racing, yet prohibit others, such as poker, sports betting or, in our jeux du jour, DFS.

Moreover, for consumers, state-sanctioned games often offer much poorer odds than “illegal” games. Lotteries, for example, are a notoriously bad bet. DFS players, on the other hand, can be long-term winners if they have a head for probability, sufficient resources and discipline, and the time to learn optimum ways to play. It’s not easy, but as with poker and sports betting, it’s been proven possible.

This takes us to the specious “skill versus luck” question in gambling regulation. FanDuel and DraftKings say DFS is a game of skill; therefore it is not gambling, an argument that only makes sense in terms of the way some state laws are written. This, too, needs to change. In reality, many gambling games combine both. New Jersey, in fact, has passed legislation that allows “skill-based” machine games to be introduced in Atlantic City casinos.

In short, if some gambling is going to be legal, then all gambling should be legal, whether it’s done at a casino, racetrack, convenience-store lottery kiosk or online. Former President Barack Obama publicized his NCAA tournament bracket and even joked with late-night entertainer Stephen Colbert about making bets on the Super Bowl.

What does it say about our culture when a head of state, in a scripted (and therefore vetted) sketch, makes a joke about illegal sports betting? It’s a knowing wink that acknowledges that most everyone, at some time in their life, makes a bet. Heck, President Trump’s one-time ownership of casino properties was just another thing voters didn’t hold against him.

Lawmakers must stop limiting choice in the name of protecting consumers from themselves. In a free society, everyone has the right to decide what to do with their money, and that most everyone, even the president, likes to “place some action.”

An earlier version of this blog appeared on rstreet.org.