We are on the cusp of the largest expansion of gambling
September 09, 2014 3:01 AM
by Robert Turner
The passage of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) marked the beginning of the end of the online poker boom in the U.S. What many people may not realize is the bill specifically exempts fantasy sports games that meet certain criteria.
Especially true is the requirement that winning outcomes reflect the relative knowledge and skill of the participants. This “carve out” language has helped fuel its explosive growth.
In January of this year, Forbes published an article called “Fantasy Sports Legal Issues Will Remain a Hot Topic in 2014,” which notes there are grey areas yet to be resolved. However, for the most part, fantasy sports is legal under federal law. As Marc Edelman writes, the fantasy sports industry is “overall in a far safer legal position than online poker, sports books, and many other types of online contests that involve both chance and skill.”
A few states have passed laws against pay-to-play leagues, but fantasy sports from a federal viewpoint is legal as long as the prize is not tied to a score of the contest but is predicted on statistics. Also, the prize has to be published before the contest starts.
This nation loves to bet, and fantasy sports has the potential to be bigger than any gambling platform the world has seen. Seeing the potential for monetizing fantasy sports and realizing the loophole lawmakers have created, everyone from individuals to media giants like ESPN, CBS Sports and Yahoo see the future and want a piece of the action.
According to Tony Miller, director of race and sports at the Golden Nugget Hotel and Casino in Las Vegas, “Fantasy sports has taken off and exploded into a whole new genre of sports wagering.”
With competition from online gambling, casinos are always looking for new revenue streams. Fantasy sports couldn’t have come at a more critical time. And it is only going to grow. Even Wall Street has taken notice.
Just last week the New York Times reported that FanDuel, an online fantasy sports site, raised $70 million while DraftKings, its rival, raised $41 million from investors. According to FanDuel’s chief executive, Nigel Eccles, his company will pay out an estimated $400 million in prize money this year. Last month, a fantasy baseball championship held in Las Vegas paid out $1 million to the winner, and the size of the pots will grow as more players compete.
They have essentially taken a game that has been ruled a game of skill with a fan base of 150 million people and turned it into pure gambling. If you are gambling on the Internet, even if a state has a problem with some of the contest rules, who is going to be the enforcement agency? The problem is there is no turning back now; the genie is out of the bottle.
Even the major league sports teams are trying to get in on the action. The new Commissioner of the NBA, Adam Silver, said legalization of sports betting in the U.S. is inevitable.
The potential for mainstream gambling on sports is a hundred times bigger than poker. Casino gambling could really benefit from the world’s appetite for sports betting. I envision a day when sports terminals will be as common as ATM machines.
One day in the not-too-distant future ATM machines will even connect to your fantasy sports accounts at companies like FanDuel or DraftKings to make hourly bets, deposits and withdrawals possible.
We are on the cusp of the largest expansion of gambling in our country’s history. Anyone 18 and over with a cell phone can bet daily on any conceivable contest or sporting event. Lottery terminals like the ones in Montana for betting on sporting events will become common place.
Whether it’s right or wrong is another question. Fantasy sports is the next big thing in gambling. Bet on that.
Robert Turner is a legendary poker player and billiard marketing expert, best known for inventing the game of Omaha poker and introducing it to Nevada in 1982 and to California in 1986. In the year 2000, he created World Team Poker, the first professional league for poker. He has over 30 years experience in the gaming industry and is co-founder of Crown Digital Games. Twitter @thechipburnerRobert can be reached at email@example.com.