At their annual meeting earlier this week, the hot topic among D1 athletic directors was the rise of daily fantasy sports, and what—if anything—the NCAA can or should do about it. The early returns from the meeting indicate that the NCAA wants daily fantasy to be considered gambling, and thus ban players from participating, but the law isn’t nearly so cut-and-dried.
Oliver Luck, the NCAA’s vice president of regulatory affairs, told the assembled ADs that the organization believes daily fantasy falls under the NCAA’s existing gambling rules, and as such would carry an automatic loss of a year’s eligibility (and if a player wagers on a team from his own school, a lifetime ban):
That would seem to be backed up by the anti-gambling pamphlet the NCAA distributes to its athletes. In language that mirrors NCAA bylaws, it defines illegal wagering as “putting something at risk (i.e., money, entry fee or tangible item) for the opportunity to win something.” That is daily fantasy to a T, but it also would cover regular, season-long fantasy sports. And that’s where things get tricky.
Daily fantasy providers have pointed to the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 as proof of their legality. The language of the bill very clearly excludes fantasy sports from gambling legislation, as a contest that
“has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participant’s individual performances in such sporting events.”
The author of the bill now says he never intended it to exempt fantasy sports, and that at the time no one could have predicted the emergence of daily fantasy, which occupies a much grayer area on the fantasy-betting continuum.
After “a number of Members indicated they couldn’t support it if it didn’t make a minor exception for fantasy sports,” former Rep Jim Leach (R-IA) said he reluctantly agreed to add the exemption “on the assumption that nothing in the endeavor could be used to incentivize corruption of any actual sports contests being played.”
The major sports leagues all strongly supported the passage of the bill: here is a letter to Congress signed by executives from the NFL, NBA, MLB, NHL, and the NCAA. The exemption for fantasy sports was important to them—even before the leagues seriously attempted to monetize fantasy, they understood that fantasy’s existence was good for exposure and interest in their sports. (The NFL, particularly, would not possibly be as big as it is today without fantasy sports.)
But daily fantasy represents a more direct gravy train for the sports leagues. MLB, which bans its players from playing daily fantasy under its anti-gambling rules, owns an equity stake in DraftKings. So does the NHL and MLS. FanDuel has received financing from the likes NBC Sports, Comcast, and Time Warner, so at least part of the money sports league receive from their television contracts comes via daily fantasy.
Just this last weekend, Pac-12 commissioner Larry Scott said the FBS commissioners had sent a letter to DraftKings and FanDuel asking them to stop fantasy contests that include college athletes. That hasn’t stopped the Pac-12 Network from running ads for both companies.
It is a tricky situation. Daily fantasy, by any measure of common sense, is gambling. But it’s a completely unforeseen version of gambling that it specifically exempted by Congress, and without a change in the law (something a growing number of legislators are calling for), it’s completely legal. And why is sports betting so bad anyway? At their meeting yesterday, NCAA ADs considered that their current bylaws might not stand up in the face of federal law, and may need stricter and more specific language before they face a test case.
If fantasy sports look nothing like they did a decade ago, when they were first being legislated, it’s a safe bet that the landscape is going to be even more radically changed in the next few years. In the meantime, the daily fantasy providers, their investors, and the sports leagues themselves are going to try to make as much money as they can before the laws change—all while trying to head off the inevitable scandal.