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Daily Fantasy Sports Being Used ‘To Rip Off Fans’ Says New York Post

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The New York Post pulled no punches in a scathing column about daily fantasy sports, saying sports leagues and DFS operators are basically jointly running sports betting operations.

Here is the core takeaway of columnist Phil Mushnick in the story, entitled Leagues and big-time networks use DraftKings, FanDuel to rip off fans:

The millions in prizes won’t be coming out of investors’ pockets. It will come from the pool filled with buckets of money lost to the house. And so the leagues and their TV networks are now in the business of not only urging sports fans to bet — every day, too — but also to lose their money so fantasy league backers can rake their cut of the action.

A barrage of negative portrayals

It’s not the first in a growing trend of calling daily fantasy sports a form of gambling, but it is the latest, and the most vociferous. How accurate the story is in its portrayal of the industry is almost secondary to its tone, although there are several quibbles on that front (see below).

(This analysis of this NYP story is done through the lens that the Post is a tabloid, and as such is mostly concerned with having loud, sometimes controversial opinions and takes. At the same time, hundreds of thousands of people read the Post, so it has a place in setting public opinion.)

Some of the other “greatest hits” from the story:

  • DraftKings, FanDuel, et al are referred to as “sports gambling sites.”
  • Fantasy later is equated to traditional forms of gambling: “And this “fantasy” is predicated on a lot more real money being lost than won — as in casinos, racetracks, lotteries, bingo and bookies in boiler rooms.”
  • The story brings up the issue of underage players using DFS sites: “How do you police the ages of Internet gamblers?”

But how accurate are the DFS claims?

On the accuracy front, the story says “there are an estimated 55 million fantasy leaguers — gamblers.” With the material presented in the rest of the story, one would take that to mean there are that many people playing DFS, which is far from the case (at least right now). The vast majority of that figure play season-long fantasy, and they often do so in friendly pools with their friends and families, not “against the house” at DFS sites, as the article terms it.

The story also portrays DFS as a “house banked” game, which is not really an accurate portrayal, either. Yes, DFS sites take a percentage of every entry fee (you can see how much rake DraftKings, FanDuel and Yahoo take in their contests at the the Super Lobby). To win money in the long term, a player does have to beat the rake, but most DFS sites are not house-banked games like traditional sports betting. (Some DFS sites do actually run “fantasy” games where you are playing against the house, but that is not the case at DK, FD, and most large DFS operators.)

The article’s questions regarding underage DFS play also don’t delve into “know your customer” protocols in place at the vast majority of DFS sites. A longer, well-researched piece at Think Progress details DFS sites and their KYC measures, and the story notes that there are not any public cases where a “vulnerability” has been “exploited” on this front.

Also, the leagues aren’t necessarily getting rich directly from the actual DFS contests being played, as the story implies. For starters, neither DraftKings or FanDuel is profitable, yet.

The leagues are making money from DFS sponsorship and partnership deals — both with the leagues themselves and individual teams. Three of the top North American leagues — MLB, NBA and NHL — have an equity stake in either DraftKings or FanDuel. At the same time, the leagues benefit indirectly from the fan engagement that DFS provides in terms of increased viewership of their product.

Not winning on the narrative front

The New York Post story is also a continuing sign that the industry is losing the battle in setting the narrative, at least in the court of public opinion and in the media. Far from being called a “hobby” — the terminology the Fantasy Sports Trade Association likes to use regarding DFS — or a “game of skill,” there is a growing appetite to call DFS gambling or sports betting.

For example, when Yahoo launched its DFS platform, many media outlets equated DFS to gambling or betting.

Another recent example? This CNBC piece where DraftKings CEO Jason Robins is interviewed, and the interviewer seems unconvinced that DFS is not gambling:

“Why is this a game of skill, and not gambling?” the anchor asks. That’s followed by “But aren’t you just betting on what other people are going to do?” The entire first part of the segment is pretty contentious on the topic.

Of course, more important than what the media and the average American thinks of DFS is the opinion of politicians who make the laws and government attorneys in charge of enforcing them — two groups that may have a growing appetite for regulating it or examining its status as a skill game under individual state statutes (see Nevada).

And the more often we see stories like the New York Post’s latest effort, the more likely scrutiny for the DFS industry is to follow.

 

Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.
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