Fan Duel/Draft Kings Stumble in New York

The Fan Duel/Draft Kings fantasy/gambling sites are shutting down in New York. Billions, literally, are at stake. Attorney General Eric Schneiderman has determined that there is gambling in Casablanca, and will have none of it. The fantasy sites and their billionaire owners are apoplectic. But the New York battle will likely determine the national outcome. You know, if you can’t make it there, you can’t make it anywhere.

First, the law. States generally decide what’s gambling and what’s not, subject to a series of federal laws which apply everywhere. The federal law in question allows for games of skill, as opposed to games of chance. What constitutes a game of chance is different state to state. In New York, if there is a “material degree” of chance, it’s gambling. It’s going to be very hard to argue that there is no “material degree” of chance in the fantasy sports world. Weather, injury, bad bounces, game situations, strategies, field conditions and the unknowns that govern an athlete’s performances are not within the knowledge or control of players. It’s chance, to a large degree, that determines outcomes and winners and losers.

Schneiderman has made a second legal argument which has been largely ignored in the debate. It’s stronger even than the “material degree” argument. He points to the advertising blanketing the airways. He says it is misleading. The bulk of the fantasy site winnings go to 1 percent of the players, real professionals, and often site employees. That’s not what the ads talk about. The overblown advertising campaigns will be the best evidence of both a separate violation of law (misleading advertising) and the fundamental questions (is it gambling?).

Next, the hypocrisy. The owners of sports teams who are piously against gambling are big investors in fantasy sites. The sports talk networks, both radio and tv, have made a fortune on fantasy ads and shows, and don’t even acknowledge the conflict of interest it causes (a notable exception is WFAN’s Mike Francesa).

Next, the smaller problems. Even if fantasy sites are legal, they pay almost no attention to issues of integrity and transparency. How many site employees are winning how much? Can you “past-post”, in racing parlance, and place bets after games begin? Who monitors for honesty? What are the real odds of winning?

And the big question: who cares? When this issue was properly raised at a Republican presidential debate, it was pooh-poohed as a small irrelevancy. It’s not. Big money is at stake. The way the Internet undermines accepted law and practice is at stake. The limits on hypocrisy in public life, and professional sports, is at stake. The right of average dopes and geniuses to gamble is at stake.

Because the site owners went too fast, too far, too fake and too phony the whole house of cards is ready to tumble.

The world doesn’t end when there are friendly wagers, like Super Bowl pools. Big, misleading cash cows are another deal entirely. Schneiderman will either stick to his guns, or fold. Wanna bet which?

Richard Brodsky is a Demos Fwllow and a former New York State Assemblyman.

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