New DFS Research Study Pours Salt In Sports Betting’s Old Wounds

Juan Carlos Blanco May 2, 2018 633 Reads
DFS Research Study

The disparity would be downright amusing if it wasn’t so frustrating to legalized sports betting advocates.

It was reported earlier this week that a forthcoming academic study arrives at the conclusion that daily fantasy sports are not games of chance and should therefore be exempt from a gambling designation when being considered for legalization. The analysis – which involved data derived from both FanDuel and DraftKings contests — was conducted by Todd Easton, professor of industrial and manufacturing engineering at Kansas State University, and Sarah Newell, a private sector engineer.

The sample size of contests utilized in the study — which included a modest figure of 35 MLB Double Ups on DraftKings- may come under scrutiny in some circles for being too small overall, but that’s a whole other topic of discussion.

There’s actually a bigger-picture takeaway from this development for legalized sports betting stakeholders. Namely, that it’s symbolic of the markedly contrasting paths that DFS and sports betting – “first cousins” in many ways – have encountered on their respective journeys to general acceptance and legality.

DFS and sports betting have walked two distinctly different paths

To be clear, the DFS industry and its lobbyists deserve a substantial amount of credit for what they’ve been able to accomplish on the legislative front over the last several years.

Faced with a sudden and significant bombshell in October 2015 due to a contest data leak, both DraftKings and FanDuel got right to work on the task of dealing with immediate legal questions in multiple jurisdictions. Even more important, they’ve subsequently lobbied successfully for express legalization of the industry in 18 states.

Meanwhile, sports betting has encountered a completely different set of circumstances. Whereas DFS was able to leverage the federal law that presented a potential obstacle – the UIGEA (Unlawful Internet Gambling Enforcement Act) — sports betting has, up to this point, been unable to shake its own legislative albatross, PASPA (Professional and Amateur Sports Protection Act).

The primary reason is that the two laws establish two distinctly different baselines, with the UIGEA giving DFS an advantageous running start. That piece of legislation already contains a “carve-out” for paid fantasy sports, even if it’s been pretty well established over the years that it was intended for season-long leagues. Regardless, it’s enough of a loophole to have served as an important component of the industry’s arguments for legality.

Conversely, PASPA is, in its very essence, prohibitive — it’s prevented any state outside of Nevada from regulating single-game sports betting. There’s been no real keyhole to slip through. Consequently, the only choice has been to try and kick down the door, which has resulted in a prolonged and expensive war.

In fact, the lone soldier in that battle, New Jersey, has already expended nearly $9 million in legal fees in its near-decade-long fight against the sports leagues in Murphy vs. NCAA. And that just sums up the struggles of one state, albeit the pivotal one in the entire situation.

Progress, but plenty of catching up to do

Granted, a reportedly favorable result from Dec. 4 oral arguments in front of the SCOTUS did finally kickstart unprecedented legislative discussion across the country regarding the legalization and regulation of sports betting.  However, the effort continues to run into a variety of challenges, including:

  • The sports leagues’ continued demand for integrity fees and data licensing fees.
  • The lingering negative perception of sports betting – and the general expansion of gambling – in certain states.
  • Potential conflicts in certain states with Indian tribes that have gaming interests.

The divergent roads each industry has taken is even more confounding when considering the increasing degree of similarity between the two:

  • Skilled, serious DFS players and sports bettors often research similar team/matchup statistics before making their lineup/wagering decisions.
  • A number of other metrics traditionally associated with sports betting – including projected point totals, point spreads and individual player props, to name a few – have been long been utilized by DFS players in lineup construction.
  • DraftKings and FanDuel have both been offering single-game slates for multiple sports for several months, a format that is arguably close to single-game betting at the individual athlete level.
  • Sites like Boom Fantasy and USFantasy run contests based on what are essentially traditional individual player prop bets with a fantasy scoring component attached.
  • Both activities clearly require a tangible degree of skill in order to succeed at them over the long-term.