532 Comments

Attacking Legalization of Sports Gambling While Endorsing Fantasy is NFL’s Greatest Hypocrisy

| February 3rd, 2014

x

Each weekday afternoon, at 5:00 PM EST, the NFL Network airs something. I hesitate to call this something a television program because, you know, The Twilight Zone was a television program. All in the Family was a television program. CBS Evening News with Walter Cronkite was a television program.

NFL Fantasy Live is not just sixty minutes of daily recorded garbage. It is also a symbol of the shield’s greatest hypocrisy: embracing the eh, we’re fine with it gambling of fantasy football while using their legal infantry to thwart the sorry, can’t have it gambling of point spreads, over/unders and the type of wagering that greatly helped build the NFL into the athletic superpower its become.

HOW DOES THE NFL VIEW FANTASY?

I began to write this column a few months ago but stalled due to my nagging believe that nobody wants to read another column thrashing Roger Goodell and the NFL ownership group holding the strings of Uncle Roger, their transparently prevaricating marionette. Then the thirty million dollar a year phony spoke on that bastion of sports journalism known as CNBC. From ProFootballTalk:

While addressing the league’s aversion to all forms of gambling, Goodell was asked about fantasy football.

“Fantasy’s a different issue for us,” Goodell said.  “We see families getting together.  It’s not about wagering.  They’re competing against one another.  And it’s a fun forum for our fans to engage in the game.”

Fantasy football: bringing families together since Roger Goodell said so.

One does not need to spend six months navigating the Dewey Decimal System to discover the fraudulence of Goodell’s assertion. It is impossible, truly not possible at all, that Uncle Roger believes his own words.

THE FANDUEL PROBLEM

What is FanDuel, you ask? I’ll let them tell you.

It is customary for all sites, let alone gaming sites, to display a readily available legal disclaimer. FanDuel’s header for that disclaimer, Is FanDuel Legal, spells out clearly the fear they have when it comes to the user experience. On their legal page they provide a short and long answer to the question. Here is a piece of the long:

According to a 2007 study, fantasy sports is played by 29.9 million people in the US and Canada. In fact 22% of US males aged between 18 and 45 with internet access have played fantasy sports. It is estimated that fantasy sports has a $3-4 billion annual economic impact across the sports industry and it is now supported by all the major leagues.

Studies by the Fantasy Sports Trade Association (of which FanDuel is a member) have estimated that around 73% of fantasy sports players play paid fantasy games (i.e. games with an entry fee). To meet this demand, major networks such as CBS, NBC and Fox all offer pay to play fantasy sports games.

The laws relating to fantasy sports varies by state however in the vast majority of them fantasy sports is considered a game of skill and therefore legal. In most states a game of skill is classed as game where skill is the predominant factor in determining the winner. The states where our lawyers believe the law is unclear or questionable about the legality of fantasy sports are Arizona, Iowa, Louisiana, or Montana. Therefore we do not offer paid entry games to residents of those states.

Other sites have varying figures but its almost certain that 65-75% of fantasy football contestants are playing for money. FanDuel (and its competitors) are entirely about the “wagering” Mr. Goodell denies. From an article in Forbes:

The daily fantasy sports site also intends on introducing new features to its daily fantasy games, which last 1 day and pay out prizes to participators as soon as games finish.  Those games are currently experiencing an average of over 250,000 line-up entries per week.

Nope, fantasy football is not about wagering, Roger Goodell. But there’s a quarter million confirmed individuals wagering on it each and every week. Instead of gambling on Denver’s ability to beat Kansas City by 6.5, the player gambles on Peyton Manning’s ability to have a productive afternoon.

And that difference, according to the federal government, is a huge one. Back to the FanDuel legal page:

Yes, fantasy sports is considered a game of skill and received a specific exemption from the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA 2006). FanDuel uses exactly the same rules as any other season long fantasy sports game, the only difference is that our games last only a day.

THE “SKILL” EXEMPTION

It is called the Unlawful Internet Gambling Enforcement Act of 2006 and is just as exciting a read as you’d expect. (You can read the entire document by CLICKING HERE.) It’s relevance is simple. It lays the ridiculous groundwork that allows fantasy football to be considered a game of skill, not chance, and thus relinquishing the “gambling” label.

This was not the first relevant discussion of the topic. From a piece by Chris Smith in Forbes:

The legal question of skill versus chance was finally put to fantasy football specifically in the 2007 New Jersey District Court case Humphrey v. Viacom, Inc. A 2007 article from the Illinois Business Law Journal details that case, in which a Colorado lawyer sued three pay-for-play online fantasy sites, and its result:

The court disagreed [with the plaintiff], however, and dismissed the case. In doing so, it indicated that fantasy sports are games of skill because players actively manage their teams, employing their sports knowledge and making strategic decisions.

So there are three elements here, presented by the court, defining skill:

  • Actively managing team
  • Employing sports knowledge
  • Making strategic decisions

Let’s eliminate the final two elements right off the bat as neither the employment of sports knowledge nor the making of strategic decisions is exclusive to fantasy football over any other form of sports gambling. (Nor is it actually NECESSARY for either, but that’s an entirely different story.) So is the court claiming the management of a team/roster is enough action to dictate labeling fantasy sports as skills competitions?

The answer is simple. Yes.

Why did the NFL allow this exemption to go unchallenged? Why did a league, that spends so much time and so many resources to keep sports gambling out of the forty-nine other states for reasons of athletic sanctity (The BlackSox! The BlackSox!) allow for an exemption that would impact its sport far greater than any other?

Can’t an argument be made it is FAR easier to corrupt the performance of an individual football player (fantasy) than the performance of an entire team (point spread)?

But alas, I come not to demonize fantasy sports and relegate it to the land of illegality. Instead I come to make the argument that it is time the NFL vacate its hypocritical stances and fight for the legalization of sports gambling across the country – a legalization that would help cities and states dig out of cavernous financial holes but simply making an action that ALREADY TAKES PLACE IN BARS AROUND THE COUNTRY and making it safer.

HOW MUCH IS SPORTS GAMBLING WORTH?

From an article by Chris Sieroty in the Las Vegas Review-Journal:

Eamonn Toland, president of Paddy Power North America, argued that the “only way to stamp out corruption is to have a legal sports betting market.” He estimated illegal sports betting is a $300 billion business in the U.S.

“It’s an enormous source of money,” Toland said. “We want to make it legal and regulate it. In Europe, we tend to work hand in glove with the sports leagues. It protects the leagues.”

Paddy Power may not be a well-known sports betting brand in the U.S. Based in Dublin, Ireland, Paddy Power is a publicly traded bookmaker with $4 billion in market cap.

In Nevada, casino visitors wagered more than $3.4 billion on sports last year.

paddy-power-ad-obama-black-390x285

(I live in a predominantly Irish neighborhood called Sunnyside, Queens and my last name is Hughes so I’m quite familiar with Paddy and his Power. I lost $1,000 on Super Bowl Sunday. I bet Bubba Watson to win the Waste Management.) An article at Sports on Earth cites a belief that more than $500 billion is wagered on sports in the United States.

Side note: It is foolish to assume all of the money illegally gambled on sports in this country will suddenly be gambled legally due to a law change. Legal gambling will require bettors put up the cash at the time of the wager. Illegal gambling thrives on credit. Lose a fortune at 1:00 pm, try to make up for it at 4:00 pm, go all-in for the Sunday nighter. You can’t do that with real money unless you’ve got a shitload of real money.

This is an industry that will not benefit states in the millions. This will benefit states in the billions. And why does it not exist? From a piece by Joe Asher at USNews.com:

So, why is sports betting illegal? The National Football League is the biggest reason. The NFL led the charge to outlaw sports betting and fights any efforts to legalize what everyone knows is going on. Their professed reason is that wagering affects the integrity of the game. But, that ignores that it is going on anyway, and legal sports books would be the first to report anything shady.

So it makes total sense. Because wagering on NFL point spreads is not a skill, the NFL uses their legal might to keep nearly 400 billion dollars out of the coffers of desperate state houses. Because families don’t gather at the Sunday evening dinner table and discuss the over/under for Ravens v. Steelers, Goodell’s NFL can’t endorse the act.

NFL VS. NJ

nj

New Jersey’s governor, the artist formerly known as presidential candidate Chris Christie, made the state’s economy his primary initiative from the day he took office in Trenton. In 2010 Christie halted the construction of a second Hudson River commuter tunnel between NYC and NJ – America’s largest public works project at the time – for a very simple reason. From NJ.com:

“It’s a dollars and cents issue. I cannot place, upon the citizens of the state of New Jersey, an open-ended letter of credit,” Christie said.

It was the second time the governor killed the tunnel this month. He scrapped the project on Oct. 7, saying his advisers were projecting overruns of $2.3 billion to $5.3 billion beyond the $8.7 billion tunnel price tag.

Like it or not, Christie has stayed consistent with his economic approach: if NJ can’t afford it, NJ can’t have it.

In Christie’s mind, NJ can have and should have legalized sports gambling. But the power of the NFL and other sports leagues thwarted those efforts this past autumn, winning in the U.S. Court of Appeals in Philadelphia 2-1. From a Bloomberg story:

The law, which would permit betting on professional and college sports at racetracks and Atlantic City casinos, is pre-empted by the 1992 Professional and Amateur Sports Protection Act, a federal statute that restricts sports gambling, a U.S. Court of Appeals panel in Philadelphia ruled today 2 to 1.

“We are not asked to judge the wisdom of the PASPA or of New Jersey’s law, or of the desirability of the activities they seek to regulate,” the court said. “We speak only to the legality of these measures as a matter of constitutional law.”

Later in the same piece, the dissenting judge laid out the true issues which will lead to PASPA’s eventual decline:

U.S. Circuit Judge Thomas I. Vanaskie today partly disagreed with his colleagues’ conclusions, saying, “I respectfully dissent from that part of the majority’s opinion that upholds PASPA as a constitutional exercise of congressional authority.”

“By prohibiting states from licensing or authorizing sports gambling, PASPA dictates the manner in which states must regulate interstate commerce and thus contravenes the principles of federalism,” and “conscripts the states as foot soldiers to implement a congressional policy choice,” Vanaskie wrote.

Lesniak, a Democratic senator, said of Vanaskie’s dissent that for the first time a judge backed New Jersey, and “that gives us hope.”

New Jersey has hope. So does every state in the country who would like to be able to legally generate revenue from an act being performed illegally in the barrooms across their state. From a piece in the Washington Times:

“That is the folly of the leagues’ argument — that somehow if you legalize it, take it out of the hands of criminals, that somehow you are destabilizing the leagues. I mean, only the commissions of these leagues and the NCAA can make that argument with a straight face,” Mr. Christie said.

AND SO WHAT HAPPENS NOW?

Roger Goodell was asked about this very issue during his state of the league address on the Friday before Super Bowl XLVIII. PFT detailed the response:

“As you know, we fought legalized gambling, sports gambling, for a long time, most recently here in New Jersey, and I would see our position in the same vein going forward,” Goodell said.

Goodell’s response stemmed from a question about the league’s support of fantasy football and distaste for sports betting.

“We don’t put fantasy football in that category at all,” Goodell said, referring to gambling.

Goodell relayed a story of a father and teenage daughter bonding over fantasy football and playing in the same league.

“Fantasy has a way of people engaging more with football, and they do it in a fun, friendly, in this case, a family manner,” Goodell said.

Here is what the NFL knows. Fantasy football requires the player invest in ALL THE GAMES and thus makes the value of each of their television packages worth more money. Folks are tuning in to the awful collection of Thursday Night Football affairs because, yes, they love the NFL but mostly because of a wide receiver or running back or kicker on theirs or their opponent’s roster. Fantasy football makes the NFL millions of dollars. (Why do you think the Red Zone Channel exists?)

And fantasy football is played by ten year-old kids! The NFL is not only cultivating the next generation of football fans. They are cultivating the next generation of gamblers!

The NFL fights against the legalization of sports gambling because they don’t know how to profit from it. That’s why they’ve fought so hard. That’s why they’ll continue fighting so hard. It has nothing to do with the integrity of the game. It has everything to do with the ONLY thing NFL owners care about: finding new methods to line their pockets.

Tagged: , , , , , , ,

© Da' Bears Blog