Daily Fantasy Sports and the Gambling Fallacy

Written By PlayPicks Staff on January 20, 2015 - Last Updated on June 27, 2018
Gambling

Dissension or misunderstanding of direction was evident at the FSTA this past weekend in Las Vegas. The center of our “gambling” universe was the backdrop for a discussion of two conflicting schools of thought. One seemed more traditional, rigid while the other more new school, more free flowing. The viewpoints of gambling came into clearer focus as traditional season long fantasy experts attempted to embrace the new found success of daily fantasy sports, and the moneytrain that it is currently ushering in.

 

It was evident from the get go, with the amount of nominations for those focused on the daily fantasy sports industry received, that the theme of the FSTA and FSWA awards banquet would be much more focused on the daily fantasy sports aspect. When the schedule of events and conference keynotes was released the exciting and talked about keynote presentations revolved around daily fantasy sports and the change that this is ushering into our fantasy world. The embrace of daily fantasy sports by traditional season long players and organizations was great to see but the misunderstanding on direction and how to best present daily fantasy sports to doubting outsiders seemed to provide more confusion then direction at the conference.

 

The opening remarks were given by Paul Charchian, President of the FSWA, in it he cautioned against any association of daily fantasy sports to gambling activities. Even calling out site operators and promoters for using the term “rake” in their advertising.

 

 

 

 This was the backdrop that was laid by the President of the FSTA at the beginning, that gambling concepts should all but be removed from advertising and other presentations of the daily fantasy sports product to the mainstream market. Once he was off the stage the comparisons of DFS to similar “gambling” games started up. The demographics of both were analyzed. Products were pitched to take more of the skill aspect out of daily fantasy sports. All in all the discussion led to a confusing conclusion, Are we embracing and comparing daily fantasy sports to other “gambling” games or chastised for doing so? It becomes clear that the confusion boils down to what really is the definition of gambling:    

 

From Webster:  

 

gam·ble

verb \?gam-b?l\

: to play a game in which you can win or lose money or possessions : to bet money or other valuable things : to risk losing (an amount of money) in a game or bet : to risk losing (something valuable or important) in order to do or achieve something

 

Game of Chance Vs. Game of Skill

 

 This is the bedrock for why DFS is legal and other games are not. There is a carveout in the UIGEA which exempts fantasy sports as a game of skill, where others are left as a game of chance. But what is the difference between a game of chance and a game of skill? And are all games of chance considered gambling whereas all games of skill are perfectly acceptable and legal by society? No, and that is the problem. The issue isn’t as black and white as gambling is wrong and daily fantasy sports are right. There is a lot more grey. A lot more grey then most traditional fantasy players would like to admit and make it far more complicated then to simply say gambling concepts should not be used when discussing daily fantasy sports. And because of this grey, the comparisons to gambling are paramount and important and sometimes indistinguishable to other gambling activities. Especially when you take a closer look at it on an individual game level as opposed to an entire game in a vacuum. See the argument for Game of Chance Vs. Game of Skill really isn’t the correct argument to have. Really it isn’t even the correct way to look at the argument.

 

The Fallacy

 

Mainly because, a game can be both a game of chance and a game of skill depending on the approach of the individual to that game. And this is really where the gambling fallacy comes into play in daily fantasy sports and most other “gambling” games as well. The fact is simple and straightforward and true that in order for there to be a winning player who can consistently beat the entry fee of the contest provider against the peers that he or she is participating in the game with, then there needs to be a certain subset of players participating in that game that are using it or viewing it as a game of chance or gambling on it. The point may be best illustrated in a head to head brand of daily fantasy sports. Say you participate in $5 head to head games of NBA DFS. In order to be considered a winning player capable of taking advantage of this game of skill, you would need to beat your opponents somewhere in the neighborhood of 56.5% in order to turn a profit. But not every player that participates in this pool of games has that big of a defined edge in their daily fantasy sports game. Whether they think too highly of their skills or some other detrimental downfall they really have no edge in the games that they participate in. So a game of skill still leads to an element of gambling for many participants. And that is the great gambling fallacy for games that are considered a game of skill, in order for it to be a game of skill, certain participants must make gambling related decisions where the odds are stacked against them in order to feed the profits of the more educated opponents who have an edge in the game and are being used as the examples for it being a game of skill. And this is the real reason why daily fantasy sports is so often compared to poker, sports betting and other “gambling” related activity, is because they are all extremely similar. The real confusion and downfall sets in when we try to hide that fact instead of using it to make daily fantasy sports better for all. So instead of rejecting and condemning all things and situations related to “gambling”, we should instead work with a correct knowledge of where we are and where we could be headed. 

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