The dark reality of fantasy sports
November 6, 2015
As incessant technological advancements continually replace the prevalence of interpersonal communication, they also replace human experience with a virtual reality. Technology, especially in the sports-gaming industry, gives us the opportunity to digitally encounter goals that we may only dream to accomplish: hit a homer in Game 7 of the World Series, hoist the Lombardi trophy in the Super Bowl, drain a game-winning jumper to win the NBA championship.
In a similar sense, fantasy sports, a multi-billion dollar industry, brings contestants to a mock front-office position through drafting top-notch professional athletes and wagering the success of individual teams in daily contests.
While one game could reap great rewards, another game may result in great losses. Fantasy sports, a highly profitable, global enterprise that involves “betting” money on professional sports games, borders illegal gambling.
Increased participation rates have led to a tremendous spike in the industry’s commercial activity, as companies set aside a large sum of money purely for advertisements.
For example, FanDuel and DraftKings, two of the most popular fantasy sports companies, have invested $131.4 and $74.5 million, respectively, in TV ads this year as of Oct. 5, 2015, and have collectively produced 19,239 national commercial airings over the past month, according to calculations using iSpot.tv, a site which tracks companies’ television presence. Other sites, such as Yahoo Sports, ESPN, and Draftpot, are formidable competitors as well.
As it is boldly written on their websites, FanDuel promises to dish out “$2 billion in real cash prizes this year” and DraftKings advertises “more than $1 billion guaranteed in 2015.”
Although millions of dollars are exchanged within these companies on a daily basis, most transactions occur without the requisite supervision and regulation. One major loophole exempts this industry from classification as illegal gambling.
Under the Unlawful Internet Gambling Enforcement Act of 2006, “the term ‘bet or wager’ […] does not include […] participation in any fantasy or simulation sports game” because “all winning outcomes reflect the relative knowledge and skill of the participants”.
While assembling a competitive lineup does require some knowledge of the game, factors like athlete health and relative skill of other fantasy opponents certainly fall in the shadow of luck and fortune.
In an interview with Fortune Magazine, FanDuel CEO Nigel Eccles commented on the controversy over the regulation of fantasy sports.
“We’re very similar to, say, a golf tournament or a spelling bee or a horse race,” he said. “There’s an entry fee and if you win it, there’s a prize. It’s not gambling because it’s the skill of an athlete that determines the winner.”
On the other hand, some argue that an easily-accessible and profit-driven outlet like fantasy sports requires at least some regulation.
In the recent Republican Debate, Jeb Bush provided his stance on the issue, proving that the fantasy sports controversy has found national attention.
“Effectively, it is day trading without any regulation at all,” Bush said. “And when you have insider information, […] where people use that information and use big data to try to take advantage of it, there has to be some regulation.”
According to a 2015 survey conducted by Eilers Research, which gathers market data on interactive gaming websites, 70 percent of daily fantasy sports (DFS) participants did not earn a positive return on investment (ROI), or profit.
While some may claim that fantasy sports provides a unique level of excitement and a creative way to view professional sports, others see the industry corrupting society if left unregulated.
The federal government seems to control activities that involve both a large number of participants and high risks for individual and societal health, such as gambling, drugs, alcohol and gun control.
Football game upsets already raise rates of domestic violence in the U.S. Since fantasy sports puts money on the line, domestic violence would reasonably rise if the industry was left to expand unregulated.
Whether or not fantasy sports falls under the definition of “gambling” is a legal matter. Although the government does not need to eradicate the fantasy sports sector or deem it as “immoral,” officials must regulate when the prospects of winning real money permeate and potentially cause social harm.
The adverse attention and effects of fantasy sports probably would not have existed if the business was only a superficial wound on society, but FanDuel, DraftKings, and other companies have now expanded their respective ranges on an international level. If more people join and more money is wagered, unregulated large-scale transactions could potentially lead to drastic societal consequences.
Looking past the numbers and dollar signs, the fantasy sports industry has gained popularity because of its appeal as a unique alternative to just watching sports. “Hiring” some of the best athletes in the world and competing against your friends may seem more interesting than plainly turning on the television and watching a basketball game. Yet, when competition involves an unregulated amount of participants and money, an exciting fantasy may turn into a bleak reality.