Difference between revisions of "Daily Fantasy Sports"
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===Games of chance v. Games of skill=== | ===Games of chance v. Games of skill=== | ||
| + | [[File:DKmap.png|thumbnail|right|Map of DFS activity in the US ]] | ||
A game of chance can be defined as a contest where the outcome depends to a “material degree” on an element of chance. <ref name = UCLA> University of Cincinnati Law Review:https://uclawreview.org/2016/04/06/daily-fantasy-sports-game-of-skill-or-game-of-chance/ </ref>. The Supreme Court of Washington has determined DFS to fall under this heading, by ruling “the outcome of a football game may depend on several chance factors including: the physical condition of the athletes; the psychological mindset of the athletes; the weather; and any sociological problems between and among the members of a team”<ref name= "UCLA"/>. Furthermore, Gambling is roughly defined as staking or risking something of value upon the outcome of a contest of chance. <ref name="UCLA"/> Sports gambling is illegal in 46 US states <ref name="BI"/> | A game of chance can be defined as a contest where the outcome depends to a “material degree” on an element of chance. <ref name = UCLA> University of Cincinnati Law Review:https://uclawreview.org/2016/04/06/daily-fantasy-sports-game-of-skill-or-game-of-chance/ </ref>. The Supreme Court of Washington has determined DFS to fall under this heading, by ruling “the outcome of a football game may depend on several chance factors including: the physical condition of the athletes; the psychological mindset of the athletes; the weather; and any sociological problems between and among the members of a team”<ref name= "UCLA"/>. Furthermore, Gambling is roughly defined as staking or risking something of value upon the outcome of a contest of chance. <ref name="UCLA"/> Sports gambling is illegal in 46 US states <ref name="BI"/> | ||
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===Individual State Rulings=== | ===Individual State Rulings=== | ||
| − | States have been divided on this issue. The majority of states currently allow daily fantasy sports to operate within their borders <ref> Legality Map: https://www.dailyfantasycafe.com/academy/undergraduate/is-daily-fantasy-sports-legal/</ref> However states of Arizona, Iowa, Montana, and Washington do not allow DFS to be played within their borders <ref name= "UCLA"/>. As these states prohibit gambling and have determined daily fantasy sports to be gambling. | + | States have been divided on this issue. The majority of states currently allow daily fantasy sports to operate within their borders <ref> Legality Map: https://www.dailyfantasycafe.com/academy/undergraduate/is-daily-fantasy-sports-legal/</ref> However states of Arizona, Iowa, Montana, and Washington do not allow DFS to be played within their borders <ref name= "UCLA"/>. As these states prohibit gambling and have determined daily fantasy sports to be gambling. |
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==References== | ==References== | ||
Revision as of 20:28, 20 February 2017
Daily Fantasy Sports (DFS) is a subset falling under the broader umbrella of fantasy sports. These games follow the same model as traditional fantasy sports, in which players compete against one another in assembling teams of professional athletes in a specific league and ultimately earn points based on the statistical performance of these players in their real-world competitions. Daily Fantasy Sports differ from traditional fantasy sports in their time span. Daily Fantasy Sports competitions are much quicker, often spanning just a single day or week, as opposed to the full season [[1]]. The Daily Fantasy Sports market features two main companies, the Boston based Draft Kings and the New York based Fan Duel.
Contents
Gameplay
Daily Fantasy Sports features contests for a variety of leagues including: NFL, MLB, NBA, NHL, and even less popular leagues like MMA and CFL. [2]
There are two main categories of daily fantasy sports: cash games and tournaments. [3] In cash games player’s who outscore at least 50% of the competition are deemed as winners. These winners receive a payout of roughly double their entry fee. On the other hand tournaments typically pay out only entrants who score in the top 20%. But the tournament prizes often exceed million dollars. [3] [4] In both cases, entrants who are below the winning threshold lose their entire entry fee.
In each of these play styles; entrants assemble a team of professional athletes who have been assigned a cost. These entrants must strategically assemble a team that does not exceed the “Salary Cap” constraint; which is the maximum sum of a team's player costs. [5]
Background of Major Companies
Two companies currently capture 95% of the US daily fantasy sports market: Draft Kings and Fan Duel. [6]
Major Companies
Fan Duel
Fan Duel was launched by the web based prediction market Hub Dub in July 2009.[7] Fan Duel has raised $363 million in funding.[8] FanDuel has a partnership with the NBA.[9]The New York City based company has most recently been valued at $1.2 billion dollars.[8]
Draft Kings
Draft Kings was established in January of 2012 by former Vistaprint executives Jason Robins, Paul Liberman and Matt Kalish. [7] Draft Kings has received $776 million in funding.[8] The MLB and NHL have formed partnerships with Draft Kings.[9] The Boston based company has most recently been valued at $1.2 billion dollars.[8]
Merger
In November of 2016, FanDuel and DraftKings reached an agreement to merge. Similar regulatory and legal challenges were cited as reasons for the competitors decision to join forces. [10] DraftKings Chief Executive Jason Robins will serve as CEO of the new company, while FanDuel chief Nigel Eccles will be chairman.[10] Robins stated that merging will allow the companies to pursue innovative ideas by freeing up capital.[10] Pending approval by the Federal Trade Commission, the merger will likely close in late 2017.[10]
Data Scandal
In October 2015 a DraftKings employee, Ethan Haskell, won $350,000 in a FanDuel contest. Haskell earned this prize by placing second in FanDuels’s NFL Sunday Millions contest. [11]
It is believed that Haskell was able to win these contests, in part, because of his access to player ownership data [11]. This means he may have seen which NFL players had been selected by DraftKings users, and by how many users. This information would have given him an advantage on Fan Duel because the two sites work very similarly and typically have the exact same price for each player in a given week.
Company Response
In response to the scandal, Draft Kings and Fan Duel released a joint statement:
“Nothing is more important to DraftKings and FanDuel than the integrity of the games we offer to our customers. Both companies have strong policies in place to ensure that employees do not misuse any information at their disposal and strictly limit access to company data to only those employees who require it to do their jobs. Employees with access to this data are rigorously monitored by internal fraud control teams, and we have no evidence that anyone has misused it.” [11]
False Advertising
The New York attorney general Eric Schneiderman began investigating both Draft Kings and Fan Duel; after he discovered evidence that the companies were misleading customers through advertisements.[12] Schniederman claimed that the companies’ advertisements led potential players to believe they had a real shot at winning; when few players win money over time.[12]This is centered on the idea that a subset of contestants termed "Grinders", who utilize automated computer scripts and sophisticated statistical strategies, reap massive payouts at the expense of casual users.[13]
Penalities
Draft Kings and Fan Duel each agreed to pay $6 million to settle the false advertising violations cited by the New York Attorney General.[12] Also FanDuel and DraftKings are now required to provide information about the distribution of winnings on their respective websites.[12] These statistics show that, over the past six months on Draft Kings the top 1% of players have claimed 44% of the available winnings. [2]
Legality
Internet Gambling Enforcement Act
In 2006, the federal government passed the Unlawful Internet Gambling Enforcement Act.[14] This Act established fantasy sports as “games of skill” and not “games of chance”. The law says a contest is legal if it:
- (I) Is not dependent solely on the outcome of any single sporting event or any singular individual performance in any single sporting event.
- (II) Has an outcome that reflects the relative knowledge of the participants. [14]
Games of chance v. Games of skill
A game of chance can be defined as a contest where the outcome depends to a “material degree” on an element of chance. [15]. The Supreme Court of Washington has determined DFS to fall under this heading, by ruling “the outcome of a football game may depend on several chance factors including: the physical condition of the athletes; the psychological mindset of the athletes; the weather; and any sociological problems between and among the members of a team”[15]. Furthermore, Gambling is roughly defined as staking or risking something of value upon the outcome of a contest of chance. [15] Sports gambling is illegal in 46 US states [14]
To avoid the title of “gambling”, DraftKings and FanDuel argue that DFS are games of skill. The companies contend that a contestant chooses the players for his/her team by skillfully analyzing player statistics and contestants must also monitor and assess other conditions such as the opposing team’s defense in the real life game, which may factor into an athlete’s production[15] .
Individual State Rulings
States have been divided on this issue. The majority of states currently allow daily fantasy sports to operate within their borders [16] However states of Arizona, Iowa, Montana, and Washington do not allow DFS to be played within their borders [15]. As these states prohibit gambling and have determined daily fantasy sports to be gambling.
References
- ↑ Wikipedia Page: https://en.wikipedia.org/wiki/Daily_fantasy_sports
- ↑ 2.0 2.1 Draft Kings Site https://about.draftkings.com/
- ↑ 3.0 3.1 Rotoworld Guide http://www.rotoworld.com/articles/nba/48892/425/cash-games-vs-tournaments
- ↑ Guaranteed Prize Pool http://dailyfantasysports.codes/basics/daily-fantasy-basics-what-is-a-guaranteed-prize-pool-gpp/
- ↑ Salary Cap Explanation http://venturebeat.com/2015/09/10/how-to-make-a-killer-daily-fantasy-sports-football-roster-on-draftkings-and-fanduel/
- ↑ Advertising Age Publication: http://adage.com/article/media/draftkings-fanduel-spe/300658/
- ↑ 7.0 7.1 History of Daily Fantasy Sports: http://dailyfantasynews.com/the-complete-history-of-the-daily-fantasy-sports-industry/
- ↑ 8.0 8.1 8.2 8.3 Comparison: http://www.legalsportsreport.com/3832/fanduel-or-draftkings/
- ↑ 9.0 9.1 Partnerships http://www.legalsportsreport.com/dfs-sponsorship-tracker/
- ↑ 10.0 10.1 10.2 10.3 Merger Report: https://www.wsj.com/articles/draftkings-and-fanduel-agree-to-merge-1479479405
- ↑ 11.0 11.1 11.2 Scandal Report: http://fortune.com/2015/10/07/draftkings-fanduel-scandal-timeline/
- ↑ 12.0 12.1 12.2 12.3 False Advertising Report: http://adage.com/article/digital/fanduel-draftkings-agree-pay-6-million-amid-false-advertising-claims/306477/
- ↑ How casual users are being tricked: https://www.nytimes.com/2016/01/06/magazine/how-the-daily-fantasy-sports-industry-turns-fans-into-suckers.html
- ↑ 14.0 14.1 14.2 Business Insider Report: http://www.businessinsider.com/why-draft-kings-and-fanduel-are-legal-2015-4
- ↑ 15.0 15.1 15.2 15.3 15.4 University of Cincinnati Law Review:https://uclawreview.org/2016/04/06/daily-fantasy-sports-game-of-skill-or-game-of-chance/
- ↑ Legality Map: https://www.dailyfantasycafe.com/academy/undergraduate/is-daily-fantasy-sports-legal/
