New York Times: Daily Fantasy Sports and Hidden Costs of Weird U.S. Gambling Laws
The New York Times on Thursday discusses how some odd piece of legislation, the Unlawful Internet Gaming Enforcement Act, has helped to facility today’s boom in Daily Fantasy Sports, the very activity it was likely trying to prevent.
Online gambling diehards know the legislation well and by its abbreviated form UIGEA.
That law, passed in October 0f 2006, was designed to prevent online gambling via bank transactions. However, powerful lobbying groups such as representing Horse Racing, the state lotteries and fantasy sports managed to successfully push through an exception.
And there you have it with the later, Daily Fantasy Sports, or as some would call it, gambling via fantasy sports.
An entire industry has emerged out of a legal loophole for something that looks a whole lot like sports gambling, writes Neil Irwin of the New York Times.
The very complexity and opacity that make daily fantasy sports legal also make it more likely that the casual fan will lose money. There is a truism in investing that complexity favors the big guy and disadvantages the little guy, and it applies here as well. If securities laws were like gambling laws, it would be illegal for people to buy shares of Google or a United States Treasury bond, because that would be gambling, but legal for them to invest in currency swaps that pay a return if the Swiss franc, Argentine peso and Vietnamese dong together outperform the Swedish krona, Mexican peso and South Korean won.
The fantasy sports industry argues that its service is not gambling at all, but rather a game of skill. It’s the sort of game specifically allowed by most state laws and by a 2006 federal law restricting online gambling that carved out protections for fantasy sports leagues. The industry is right about that much. It is a skill, and it unquestionably rewards those who apply dogged analytics to assembling their fantasy lineups.
Irwin suggests that, in some respect, Daily Fantasy Sports are the very worst form of gambling there is.
If you walk into a Las Vegas sports book and put money on a game in some sport you know nothing whatsoever about, you may not win, but you will almost certainly get fair odds relative to the risk you are taking. Playing daily fantasy sports, you will probably get your hat handed to you unless you deploy lots of computing power and analytical techniques that most of us don’t have the time, inclination or skill to use.
- Don Shapiro, Gambling911.com
