Talk about a bad beat and a headache straight out of “The Hangover.”
Las Vegas publisher Anthony Curtis’ latest offering, “Fantasy Sports, Real Money,” goes to press next week. Written by award-winning journalist Bill Ordine, it’s the inside story of how fantasy sports exploded into a multibillion-dollar enterprise in a few short years. That’s the good news.
The bad news? The computer-driven sports betting for the millennial generation is being forced to reboot following this week’s Nevada Gaming Control Board conclusion that daily fantasy sites such as DraftKings and FanDuel are facilitating illegal sports gambling. With investigative articles published Friday in The New York Times that included the headline, “The Dark Reality of Online Sports Betting,” and included Nevada’s new working definition of fantasy sports, it’s an understatement to say the business model is in jeopardy.
Nevada authorities are yanking the plug in an act reminiscent of the federal effort to corral unregulated poker and gambling sites on April 15, 2011, in the infamous “Black Friday” raids. The sweeping Times report, focused in large part on online sports betting, went into great detail to state what many observers have thought pretty obvious: A 2006 federal law prohibiting online payoffs on illegal bets has been an abject failure, and a legal exemption for “fantasy sports” pleased the National Football League but gave rise to the current regulatory headache involving the wildly successful DraftKings and FanDuel. FanDuel Chief Financial Officer Matt King boasted to the Times that the company’s business model was aimed directly at millennials who were comfortable with the online world and had produced “several million paid players and that’s growing every day.”
I’m guessing that growth is on hold, and King’s confidence must have been shaken by recent revelations that some highly successful fantasy players used inside information. If the fantasy sports scandal follows the investigation involving the Poker Stars and Full Tilt online operations, there will be a big price to pay.
Fantasy sports received a gift from Congress in 2006 when no one in charge had the foresight to see the business potential, but the idea that FanDuel and DraftKings are simply providing “entertainment” to millions of fist-bumping 20-somethings with their caps on sideways is laughable. This is bookmaking and sports betting for the 21st century.
Gambling expert Curtis doesn’t buy the current “insider trading” comparisons to the apparent information hacks at FanDuel, but he knows the score.
“The insider trading analogy is really a bad one,” Curtis said. “But I’ve said from the start DFS is absolutely gambling. It’s not even close, not a subject of debate. I think that this was the perfect opportunity for big gaming to put the clamps on it. They don’t want this unregulated entity out there that’s doing essentially what they’re doing. This is a form of sports gambling that should not be unregulated. It’s been in big gaming’s craw for a long time. The perfect opportunity came with the ‘scandal.’ It was a big opportunity to fire away.”
And they did.
“Therefore, since offering DFS in Nevada is illegal without the appropriate license, all unlicensed activities must cease and desist from the date of this Notice until such time as either the Nevada Revised Statutes are changed or until such entities file for and obtain the requisite licenses to engage in said activity,” Control Board Chairman A.G. Burnett wrote in his notice to licensees.
Where does that leave avid fantasy sports fanatics?
As likely as not, back at their local sports book chasing proposition bets.
“What’s bad about it is there’s a load of people in Nevada who love playing daily fantasy sports, and now they can’t do it,” Curtis said. “That sucks.”
Contrary to the fantasies of the bosses at FanDuel and Draft Kings, their unregulated business model was bound to evolve. And the millennial sports betting market obviously holds huge potential for the gaming industry.
Down at Huntington Press, Curtis reached for the aspirin bottle and pressed his bet that Ordine’s new book will be a big winner.
“All this news could be a blessing in disguise down the road,” the publisher said, scrambling to add a new chapter to a rapidly evolving story.
John L. Smith’s column appears Sunday, Tuesday, Wednesday, Friday, and Saturday. Contact him at 702 383-0295, or email@example.com. On Twitter: @jlnevadasmith