If you watched any televised sports this weekend, you know that commercial blocks now function merely as holding spaces for the latest ads from DraftKings and FanDuel. These two fantasy sports websites have been pumping out “insane” levels of marketing spending for the past few months. They’ve also garnered huge venture capital investments and billion-dollar valuations. They’re even in cahoots with the professional sports leagues—the NBA, MLB, and many NFL teams have inked agreements, and on Tuesday the NFL Players Association signed a deal that opens the door for NFL stars to appear in DraftKings ads.
For those who’ve somehow avoided the onslaught of promotion and media coverage, a quick explanation: DraftKings and FanDuel are daily fantasy sports betting sites. In the morning, you wager real money and select a squad of pro athletes whose cumulative stats over the day will form your overall score. Then you win or lose cash at the end of the night depending on whether your score bests those of your online fantasy opponents.
Given all the dollars sloshing around, the assault on the TV airwaves, the participation of the pro leagues, and the hot-button issue of sports gambling, it was inevitable that at some point there would be a backlash. Earlier this month, a congressman called for a hearing into the websites’ legality. Last week, an ESPN anchor argued that daily fantasy sports are just old-school sports betting in disguise, and a Washington Post column dubbed them “sports betting on steroids.” And on Monday, Deadspin—a decent bellwether for smart-set sports fan emotions—casually referred to daily fantasy sites as “loathsome and exploitative.”
So what’s the problem? Part of the pushback is just that the sheer amount of ads is obnoxious and invites resentment. But there are more substantive concerns, as well. The major critique from daily fantasy haters has been that the average mook who wagers on fantasy sports is almost guaranteed to part with his money. Only a few megatalented, industrious bettors actually rake in winnings on these sites. One study found that the top 1.3 percent of daily fantasy players take 91 percent of the profits—everybody else is basically blowtorching hard-earned cash. (Sample Bloomberg headline: “You Aren’t Good Enough to Win Money Playing Daily Fantasy Football.”) The critics hold that we need to protect small-time fantasy sports sad sacks from themselves.
Do we? Some fantasy bettors surely play (and lose) too often. But any form of legalized wagering can and should find ways to prevent or minimize problem gambling, and there are some simple ways to do this for fantasy sports. Daily fantasy sites have already put some caps on players’ betting. (For now the caps are still quite lenient, but there are ways to ensure they are strengthened through legislation.)
The truth is that 80 percent of players on these sites lose less than $10 per month, a fair price to pay for entertainment, an occasional burst of adrenaline, and feeling more attuned to the sports they spend so much time watching on TV. How is paying for a full day of supercharged sports excitement any worse than buying government-sold lottery tickets?
Another pertinent comparison comes from the mainstream world of finance: online trading. Amateur stock picking is an equally effective way to hemorrhage cash, and online brokerages and fantasy sports betting sites are making the exact same pitch to consumers. Consider this ad for E-Trade. In it, a woman is so focused on spotting investment opportunities that she ignores the man standing next to her. There’s a reference to E-Trade’s “investing insights center,” the “guidance” portion of the site’s complex dashboard. The voice-over narration from actor Kevin Spacey is all about using your perceptive smarts to beat the crowd and reap stock picking rewards: “When others focus on one thing, you see what’s coming next. You see opportunity.”
Now look at this ad for DraftKings. In it, fantasy sports players are so focused on their squads that they ignore everyone around them. There’s a shot of a fantasy sports player looking at a complex dashboard. The voice-over narration from actor Edward Norton is all about using your perceptive smarts to beat the crowd and reap fantasy sports rewards: “There’s a game within the game that requires a different set of skills. … We train, and we win.”
These are identical come-ons, flattering folks into thinking they can outthink the competition and get rich doing it. Both mislead the minnows they are targeting, downplaying the risk of being swallowed by sharks.
The most commented upon fantasy sports shark, Saahil Sud, studied math and economics at Amherst College and spends up to 15 hours per day poring over spreadsheets to put together his fantasy team entries. He’s up against people who watched that DraftKings commercial and then filled out their lineups on the can during a 10-minute break at work.
Likewise, stock market sharks are likely to have degrees in math or economics or computer science, and will work long hours poring over research and making investigative phone calls. They are up against people who watched that E-Trade commercial and then made a bunch of hunch-fueled stock picks on their laptops while putting their kids to bed.
It’s always dangerous to make bets in an environment that requires skill, unless you’ve dedicated your entire life to mastering that skill. Middling fantasy sportsters who play too much will get creamed. Middling retail investors who make too many stock trades will get hammered.
So do we want to ban E-Trade along with DraftKings? It’s true that online brokerages aren’t just about day trading and market timing. Some minnows use them wisely, to buy and hold diversified stock indexes. But we don’t force everyone to use them that way—we just offer coaxing regulations, like increased taxes on capital gains from short-term holdings, to encourage prudent behavior. We can use similar inducements to shape the behavior of fantasy sports players.
The broader critique of daily fantasy betting is an older and more traditional one: that fantasy sports play is gambling, and gambling is bad. But the fact that some fantasy players consistently win demonstrates that if anything can be considered a game of skill—the technical loophole under which these forms of betting are considered legal—it’s fantasy sports. I’d even argue that traditional sports betting—e.g., taking the Cowboys against the spread—should be legal online.
Adam Silver, the commissioner of the NBA, agrees. He feels that we’ll never get rid of the desire for sports betting, and so it “should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.”
Countries like the U.K. have allowed online sports betting for many years, tweaking limits and safeguards over that time.
The issue doesn’t even appear to be particularly controversial over there. When I tried to suss out new Labour leader Jeremy Corbyn’s stance, I couldn’t find a single thing about sports betting on his otherwise detailed website. I did locate a few Corbyn votes for more regulation around the margins. But I also stumbled on a news story that suggested Corbyn had laid a 50-pound bet on himself as a 100-to-1 shot to win the next election.
Last I checked, there is still an England. Legalized sports betting didn’t lay U.K. society to waste. Nor will daily fantasy sports destroy America. Though I still wish they’d tone down the ad buys.