Difference between revisions of "Daily Fantasy Sports"
| Line 43: | Line 43: | ||
Draft Kings and Fan Duel each agreed to pay $6 million to settle the false advertising violations cited by the New York Attorney General <ref name="False"/>. FanDuel and DraftKings are now required to provide information about user’s success rates on their respective websites<ref name="False"/>. "These agreements will help ensure that both companies operate honestly and lawfully in the future," Schneiderman added <ref name="False"/>. | Draft Kings and Fan Duel each agreed to pay $6 million to settle the false advertising violations cited by the New York Attorney General <ref name="False"/>. FanDuel and DraftKings are now required to provide information about user’s success rates on their respective websites<ref name="False"/>. "These agreements will help ensure that both companies operate honestly and lawfully in the future," Schneiderman added <ref name="False"/>. | ||
| − | Legality | + | ==Legality== |
===Internet Gambling Enforcement Act=== | ===Internet Gambling Enforcement Act=== | ||
| Line 50: | Line 50: | ||
• (II) Has an outcome that reflects the relative knowledge of the participants, | • (II) Has an outcome that reflects the relative knowledge of the participants, | ||
<ref name="BI"/> | <ref name="BI"/> | ||
| + | |||
| + | ===Games of chance v. Games of skill=== | ||
| + | A contest of chance can be defined as a game 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>]. 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= "UCLA"/>. | ||
| + | |||
| + | To avoid the title of “gambling”, DraftKings and FanDuel argue that DFS they are games of skill. The sites argue 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 play a factor in an athlete’s production<ref name= "UCLA"/> . | ||
| + | |||
<references/> | <references/> | ||
Revision as of 03:02, 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
Gameplay: Daily Fantasy Sports are offered for a variety of leagues including: NFL, MLB, NBA, NHL and even less popular leagues like MMA or 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. Tournaments typically pay out entrants who score in the top 20% [[3]]. In both cases, entrants who are below the given threshold lose their entire entry fee.
In each of these play styles; entrants assemble a team of professional athletes who have each been assigned a cost. These entrants must strategically assemble a team that does not exceed the “Salary Cap” constraint; which is the maximum amount a team’s player cost can sum up to [[4]].
Background of Major Companies
Two companies currently capture 95% of the US daily fantasy sports market: Draft Kings and Fan Duel [[5]].
Major Companies
Fan Duel
Fan Duel was launched by the web based prediction market Hub Dub Hub Dub , in July 2009. FanDuel has partnerships with the NBA and multiple individual NFL/NBA clubs [[6]]. FanDuel generated $1.8 billion in Revenue over 2015 [[7]].
Draft Kings
Draft Kings was established in January of 2012 by former Vistaprint executives Jason Robins, Paul Liberman and Matt Kalish. Draft Kings has partnerships with the MLB, NFL Players Association, MLS, NHL , and many individual teams [[6]]. DraftKings generated 1.6 million in revenue in 2015 [[7]].
Merger
After facing similar regulatory and legal challenges, FanDuel and DraftKings reached an agreement to merge [[8]]. DraftKings Chief Executive Jason Robins will serve as CEO of the new company, while FanDuel chief Nigel Eccles will be chairman [[8]]. Robins stated that merging will allow the companies to pursue innovative ideas by freeing up capital [[8]]. Pending approval by the Federal Trade Commission, the merger will close in late 2017 [[8]].
Data Scandal
In October 2015 a DraftKings employee, Ethan Haskell, won $350,000 in a FanDuel contest [[9]]. Haskell gained this money by placing second in FanDuels’s NFL Sunday Millions contest.
It is believed that Haskell was able to win these contests, in part, because of his access to player ownership data [9]. 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 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 [9]:
“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.”[9]
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 [[10]]. Schniederman claimed that the companies’ advertisements led potential players to believe they had a real shot at winning; when in reality, "most players lost money over time." [10]. This was centered on the fact that casual players were at a severe disadvantage when pitted against “grinders”, who use automated computer scripts and sophisticated statistical strategies to reap massive payouts [[11]]
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 [10]. FanDuel and DraftKings are now required to provide information about user’s success rates on their respective websites[10]. "These agreements will help ensure that both companies operate honestly and lawfully in the future," Schneiderman added [10].
Legality
Internet Gambling Enforcement Act
In 2006, the federal government passed the Unlawful Internet Gambling Enforcement Act[[[12]]] . 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, [12]
Games of chance v. Games of skill
A contest of chance can be defined as a game where the outcome depends to a “material degree” on an element of chance [[13]]. Furthermore, Gambling is roughly defined as staking or risking something of value upon the outcome of a contest of chance. [13] Sports gambling is illegal in 46 US states[13].
To avoid the title of “gambling”, DraftKings and FanDuel argue that DFS they are games of skill. The sites argue 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 play a factor in an athlete’s production[13] .
- ↑ Wikipedia Page: https://en.wikipedia.org/wiki/Daily_fantasy_sports
- ↑ 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
- ↑ 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/
- ↑ 6.0 6.1 Partnerships http://www.legalsportsreport.com/dfs-sponsorship-tracker/
- ↑ 7.0 7.1 Revenue Report: http://dailyfantasynews.com/fanduel-collected-600-million-more-in-entry-fees-than-draftkings-in-2015
- ↑ 8.0 8.1 8.2 8.3 Partnerships http://www.legalsportsreport.com/dfs-sponsorship-tracker/
- ↑ 9.0 9.1 9.2 9.3 Scandal Report: http://fortune.com/2015/10/07/draftkings-fanduel-scandal-timeline/
- ↑ 10.0 10.1 10.2 10.3 10.4 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
- ↑ 12.0 12.1 Business Insider Report: http://www.businessinsider.com/why-draft-kings-and-fanduel-are-legal-2015-4
- ↑ 13.0 13.1 13.2 13.3 University of Cincinnati Law Review:https://uclawreview.org/2016/04/06/daily-fantasy-sports-game-of-skill-or-game-of-chance/
