One of the most haunting questions around fantasy sports: Is wagering on fantasy sports an exercise of skill or an exercise of gambling, particularly in consideration of daily fantasy sports contests?
The carve out at the federal level for fantasy sports requires “All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominately by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.”
In simpler language, each participant in a fantasy sports event picks athletes to form a team, under the rules of the contest, and the combined statistical results of the participant’s selected athletes forms the basis for scoring, and the participant with the highest score wins.
Sounds simple enough, but let’s go through a couple of examples:
1) If I pick three players and you pick three players for a daily fantasy contest, and after the picks are locked and the sporting events have started, the coach of one of my players, for any number of reasons, benches him/her. If I then lose to you in the contest, did you win from skill or did I lose from bad luck? Conversely if my remaining two active players outscore your active three players, did I win from skill or did you lose from bad luck?
2) I pick ten players for a daily fantasy contest, you pick ten players for the contest, and a “bot” on behalf of another participant selects 50 combinations of ten players for the same contest. Then to make it more interesting, a minute before all the picks are locked and can’t be changed there is news about lineup changes, injury reports, discipline benching, etc., that impacts everyone’s picks. The “bot” is the only one that can change its 50 lineups before the picks are locked.
If the “bot” then wins, did the owner of the “bot” win with their human skill or a preponderance of picks or a computerized algorithm, or did you and I lose with bad luck or because we just had too few picks in the pool to have a chance?
By the way, a “bot” is a software application that performs tasks at an incredibly faster rate than a human can, and their use is in question regarding fairness and human skill. Is there skill in the use of “bots” though? If I have three darts and you have three darts and the “bot” has a thousand darts to throw at the dart board and can make automated corrections is that skill or foul?
In poker a superior knowledge of math and human behavior can greatly enhance a player’s edge and over time a skilled poker player will outplay an unskilled player. But on any given hand it generally remains the luck of the cards as to who will win the hand. So it is with fantasy sports. Any one event is filled with the human factor of performance, injury, game strategy, weather, etc., which equates to the volatility or luck factor. But over a longer period of time, such as a season-long contest, where the singular day event variables can average out, the skill factor of the fantasy participant will emerge.
However, for Nevada, skill or not is of no relevance as Nevada law is very clear in its definition of both “Wager” and “Sports Pool.” In Nevada wager means a sum of money or representative value that is risked on an occurrence for which the outcome is uncertain and sports pool means the business of accepting wagers on sporting events or other events by any system or method of wagering.
Add to this that the federal law, which most all fantasy sites reference as the authority for their existence, UIGEA, clearly states, “No provision of this subsection (meaning the act itself) shall be construed as altering, limiting, or extending any Federal or State law…prohibiting, permitting, or regulating gambling within the United States.”
All of which simply means the Nevada Gaming Commission has the right to call any provider of fantasy sports in Nevada forward for licensure. Does the Nevada Gaming Commission have the appetite to do so and deal with the probable ensuing political malady from the larger professional sports leagues? That is a question only that fine body of appointed folk can answer.
The Analyst is an experienced gaming industry executive who offers insight each week on events and issues affecting the industry. Email: The Analyst at [email protected].