Betting on one week football fantasy leagues has become big business. We now get a advertising tab every day or two encouraging us to join a one week fantasy football league for real money (and another to take all of our money out at the ATM. We don’t think they are connected). If we don’t love it after our first league we can get our money back. Steve Malanga has a good summary over at City Journal except for this:
Websites like DraftKings and FanDuel have benefited from the widespread perception that betting on fantasy sports isn’t gambling.
The confusion might come from this:
The fantasy leagues say they can operate in ways that traditional betting sites can’t thanks to an exclusion written into the 2006 Unlawful Internet Gaming Enforcement Act. The author of that act, former Iowa congressman Jim Leach, told ThinkProgress earlier this year that the industry lobbied him to make an exception for fantasy sports. He went along, he says, because he expected fantasy sports’ role in the gaming world would be “de minimus.” No one, Leach explained, imagined fantasy betting would evolve into what it’s become today.
There is little confusion on DraftKings and FanDuel being gambling sites. There is a legal exception for them but it does not change the meaning of the word gambling. The significant issues are that they have an exception that allows them to be legal gambling sites and they have created a new, successful gambling product, the one week league.
Two points: First Leach is wrong. The folks that lobbied for the exception thought it was important enough to convince him to grant them an exception. Second, we see the knowledge problem again. The folks making the rules and decisions cannot be as clever as everyone. The law put what seemed to be a reasonable exception for fantasy sports because they were “de minimus” at the time. The Congress did not want to have friends that put up a few bucks on a season long fantasy league be put in jail because it was run, as most are, on the Internet. Now that the gambling sites have driven a tank through the exception it is a little difficult to undo it.
A separate point is should we protect folks from the dangers of gambling? We are pro-gambling with some regulation. Really, MWG will be pro-regulation in at least one instance. Internet gambling is a problem because of the difficulty or regulation. More later.