NBA Commissioner Emeritus David Stern considers one-day fantasy sports to be a form of gambling.
Stern offered that opinion on CNBC’s Squawk Box during a conversation concerning current NBA head Adam Silver’s embrace of legalized sports betting.
“I think I agree with Adam,” Stern said.
“Once daily fantasy became an acceptable exception to the law against gambling, I think that’s gambling – so now I think the best approach would be, as Adam Silver has advocated, is for there to be federal regulation.”
Daily fantasy’s perception problem
Stern’s comments illustrate one of the core challenges facing the one-day fantasy sports industry.
To most casual observers, the activity reads like gambling.
But the industry’s continued existence relies on an exemption from the UIGEA, an exemption that implies DFS is not gambling, but instead a game of skill, and that the entry fees involved in DFS should not be considered bets or wagers.
The problem for the industry is the tension between that exemption (which only applies to the UIGEA and does not speak to other federal laws, let alone state laws) and common perception (as expressed by Stern.
The presence of that tension raises the possibility – however remote – that lawmakers may feel compelled to resolve it – and that said resolution may not be favorable to daily fantasy sports operators.
Stern’s words could echo as industry grows
Right now, the one-day fantasy sports industry is relatively small in terms of total revenue.
But that’s expected to change dramatically by decade’s end.
As the money and players involved both continue to skyrocket, so will the frequency and volume of the debate over whether or not daily fantasy sports is gambling – especially as the state level, where the legal ambiguity is much greater.
Stern’s words – especially as someone publicly connected with the NBA, a major partner of daily fantasy sites – could prove useful fodder for those seeking to nudge DFS into the same legal classification – a game of chance – that has stymied the growth of regulated online poker in the U.S. for over a decade.