Fun Friday: Daily Fantasy Sports Services Debate

The NY State Attorney General shut down FanDuel and DraftKings earlier this week, saying this:

Our investigation has found that, unlike traditional fantasy sports, daily fantasy sports companies are engaged in illegal gambling under New York law, causing the same kinds of social and economic harms as other forms of illegal gambling, and misleading New York consumers … Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country. Today we have sent a clear message: not in New York, and not on my watch.

So, let’s debate this in the comments and we can use the new Twitter polls to quantify the debate.


Comments (Archived):

  1. Adwate Kumar

    I have to say no, because the majority of the winnings are concentrated in the hands of few highly skilled players, like in poker, rather than more evenly distributed, like blackjack. This implies that a high degree of skill is required, differentiating it from gambling.

  2. Salt Shaker

    Using a strict criteria that fantasy sports is either a game of chance or skill is where the N.Y. AG and U.S. Justice Department’s def of gambling is flawed. It’s just not that black or white, like it isn’t w/ investing in the public (or private) markets. Fantasy sports is a combination of skill and chance, w/ far more emphasis on the latter. I say let’s just reap the tax rev and move on already.

  3. Noah Rosenblatt

    If lottery and race tracks are legal and not considered gambling, then I would put fantasy sports in that same category

    1. Tom Hessert

      Lottery and racetracks are considered gambling. The distinction is that they are approved forms of gambling.

      1. Noah Rosenblatt

        Your right i Should have put “illegal” in front of gambling. The point should be clear..if lottery and racetrack betting is approved forms of gambling then so should fantasy sports. I don’t see a distinction outside of the approved/legality between those two and fantasy sports.. Do you?

  4. markslater

    Call it what it is. These government officials are completely fraudulent. the fact that he uses the concept that “illegal gambling” harms consumers is laughable. You know it – we all know it. The state lottery has been engaged in harming its citizens for decades. But that’s ok as the house is the state.The argument should not be whether fantasy is gambling, It should shine a light on the complete hypocrisy and greed that has infected our government system.It literally makes me angry that he has the nerve to use words like “harming our citizens” and “illegal”.This shiester would be better served to look at the greatest rigged game on the planet. wall street.

    1. pointsnfigures

      Wall Street isn’t exactly rigged; but the distribution channel it uses could sure use some reorganization.

    2. Tom Labus

      I wish it was

    3. SubstrateUndertow

      hypocrisy and greed that has infected our government system

    4. Kevin Hill

      I was with you until that last sentence.

      1. andyswan

        Me too

        1. LE


        2. Rob Larson

          me too

      2. LE

        Your disapproval of the word “shiester” just gave me an idea.It’s for soundcloud.I thought “I want to upload the pronunciation of that word as a New Yorker would say it. “SheiiiiStah”. But I don’t have a souncloud account and quite frankly not going to set one up just to do that.But what if soundcloud had a way to simply and quickly create a link to a sound (from the mike on my desktop) or quick voice recording (under 20 seconds) that I could do without creating an account? Easy to create easy to embed would be great.

        1. Kevin Hill

          It wasn’t that part of the sentence, but I like the soundcloud-quick-link idea =)

      3. Richard

        High frequency trading being the exception

    5. LE

      But that’s ok as the house is the state.No, it’s ok because a law was passed that allows it.In NJ, by the voters for example:In 1974, New Jersey voters voted against legalizing casino gambling statewide, but two years later approved a new referendum which legalized casinos, but restricted them to Atlantic City. At that time, Nevada was the only state with legal casino gambling. Resorts Atlantic City was the first casino to open in 1978.

      1. markslater

        you mean the law that provide for the carve out in 2006 that essentially made what these guys are doing today technically LEGAL…..?

    6. CJ

      For the record, I think your last sentence is spot on as well. I’d just extend it to the entire financial industry.

  5. Salt Shaker

    How the NFL allowed Robert Kraft (owner of the NE Patriots) and Jerry Jones (owner of the Dallas Cowboys) to take an equity stake w/ fantasy sports operators is another interesting sidebar to this story. The obvious conflict of interest will force them to divest.

    1. JimHirshfield

      Didn’t know that. Interesting.

    2. Matt Kruza

      Also espn is invested… in one of them i believe.. even more powerful.

      1. PhilipSugar

        You mean the $300mm invested by Fox Sports into Draft Kings which is their major sponsor and pays them HUGE rights fees for their pre-NFL gameshow.

      2. kellercl

        FanDuel is all over ESPN on Sunday Pregame. Disney loves gambling.

  6. LIAD

    back in 2005 I co-founded – my first online foray, and the first online real-money skill games platform (now owned by a public company and operated as a legal online casino)We were fans of poker and it was just taking off online. Our thesis was if people are happy to play that P2P game online for money, why not a bunch of others.We worked with a NYC software house and developed a platform where people could play lots of games of skill against others for money. Think backgammon, othello, rummy, chess, chequers, battleships etc. We, the platform, had no stake in the game itself, we merely facilitated the gameplay and transaction and took a rake for doing so. Much the same way the poker companies did.We took much advice at the time about the legality of facilitating the playing these games for money. Gambling is about a game of chance, whereas these games are games of skill. QED not gambling, and shouldn’t fall under existing or proposed new legislation.** side note**games of skill for money is inherently flawed business model. people gamble because it’s about luck. I may have lost the last 300 hands/spins etc, but hey, you never know the next one, might be mine. Games of skill are the opposite. namely the better player wins. Always. lots of fun for them, not so much for everyone else. Thus skill based games, ends up with a bunch of sharks gobbling up all the little fish. Resulting in – HUGE HUGE CHURN** end side note**I read everything I could get my hands on about the distinction and ultimately had the skill/chance discussion with loads of people during that time. Portals we wanted to do bus-dev deals with, Google and others we wanted to advertise with, payment companies we wanted to use as gateways etc.Push came to shove with the passing of the ‘Unlawful Internet Gambling Enforcement Act of 2006’. The US Govt decided to ban online gambling and very cleverly rather than fight each and every operator went straight for the payment companies. Every payment transaction is coded depending on the industry it’s in. Online gambling was 7995. The US Govt just told all gateways they had to stop processing those transactions. Wisely (most) complied and overnight the legal online gambling industry disappeared.We were euphoric!Why? We didn’t have that transaction code! We had previously managed to explain to the gateways the distinction between what we were doing and gambling and thus were coded differently! Our transactions would continue to be processed and all ‘competition’ had gone! Millions of hungry players and nowhere for them to play! Yeeeeha! Party time! Time to run the table!Alas, no.A day or two later we get an email from the gateway ‘yadda yadda yadda, even though you are not gambling, yadda yadda yadda, we’re scared, yadda yadda yadda, kiss goodbye to your business’.Our processing was stopped. Business died overnight.We never hit major scale or meaningful revenues, we were just a teeny startup. Nor did we ever look to outsmart the rules. We felt hugely wronged by the decision. It was easy to see we we’re fighting implacable opponents and didn’t have the resources or skills to ‘Uber-up’ to them. We did what we had to do and morphed our tech from a real money platform to a play money platform monetising through;dr errr, sometimes life serves you a shit sandwich. Try and eat it with a smile.</end-uber-long-cathartic-comment-rant>

    1. Salt Shaker

      The sports media company I worked for a few years back was accused by the U.S. Dept of Justice for aiding and abetting illicit offshore sports gambling houses by accepting their advertising. They couldn’t directly close down these offshore operators so they went after their promo engines. Along w/ several other executives of my company, I literally was served w/ a subpoena by two FBI agents. (Receptionist: “There are two FBI agents here to see you.” Me: “Say what?”) Our GC told us to ignore the subpoenas and my company ultimately settled w/ the DOJ for several million dollars.

      1. LIAD

        ouch. my take is even if you’re just on the periphery of something the govt is gunning for, best to pack up and move’s the exact reason i didn’t have the appetite to jump into previously regulatary unclear world of bitcoin

      2. falicon

        I built a number of systems in the early days of online fantasy…you learned to ignore/deal with cease and desist orders as just ‘part of the deal’ (part of the reason I ultimately got out too)

      3. CJ

        Sounds like a company of the canine persuasion.

    2. Matt A. Myers

      I have a few friends that paid for school playing Texas Hold’em. They weren’t fun to be in a hand with..

      1. CJ

        Learn the rule of 4 and 2. Learn about position and starting hand values. That will help you a lot in a home game or casino. Online is all sharks now – well mostly anyway – so you need to skill up to succeed there in the US.

  7. awaldstein

    The comments are already interesting and point on.A survey as a tool is so narrow that it will capture almost none of this.Old world tools for new world problems and nuanced opinions.

    1. ErikSchwartz

      Yup. Twitter polls is not designed for discussion of anything more complex than sound bites. (but really neither is twitter)

      1. awaldstein

        The value is in the subjective comments where people redefine the question and answer it from their own experiences.Survey do just the opposite.Not a fan.

  8. Tom Labus

    With or without them people will bet on sports. Except the Jets on Thursday night

    1. fredwilson

      that game totally killed me.we sucked for the first 2/3, then crushed it, then returned to sucking at the very end.

  9. andyswan

    This prosecution brought to you by the New York Lottery– “hey, you never know”

    1. JimHirshfield

      Oh snap! You beat me to it swannie.

    2. LissIsMore

      Bingo! I was going to go there – but you were quicker on the draw.To paraphrase Nixon: “It’s not illegal if the State does it.”

    3. SubstrateUndertow

      always look on the bright side of life !At least the State Lotteries are a voluntary tax :-)The New York Lottery contributed $3.11 billion in fiscal year 2014-2015 to help support public education in New York State, or 14 percent of total state education funding to local school districts. The New York Lottery continues to be North America’s largest and most profitable Lottery, earning over $54.7 billion in education support statewide since its founding over 47 years ago.

      1. Jess Bachman

        correction, a voluntary addiction.

      2. LE

        A tax on poor hopeful shmucks made legal by shiesters.

      3. andyswan

        Oh yes of course THE CHILDREN!!! How can I argue against the CHILDREN and their NEED?

        1. LE

          Note how everything comes down to mafia values. [1] If I knew more about history I could probably point to something hundreds or thousands of years ago where this behavior was rampant as well.[1] Turkeys at Christmas and you can get away with anything. Also the reason corporate types are all involved in their community (apparently it’s some fucking requirement at many companies..). Make friends with others, be able to protect the corporation if needed.

          1. Rob Larson

            Interestingly, the mafia’s “numbers game” illegal lotteries that were shut down decades ago had far better payout percentages (the house took a much smaller stake) compared to state-run lotteries….So the states shut down unregulated lotteries to “protect the consumer” from high rakes, and then established state-run lotteries which have far higher rakes.

        2. SubstrateUndertow

          come on give it a try 🙂

      4. CJ

        A voluntary tax that preys on those least able to afford it. It’s WORSE for that, not better.

    4. LE

      Lottery is legalized gambling. A law was fought over and passed that allowed that activity. Just like casinos in NJ and Nevada and now many states. And it’s tightly regulated as well.You just can’t decide you want to open a casino on the corner with slots and complain that others are allowed to operate within the law. Same with prostitution. Only allowed in certain places in Las Vegas.Ditto for Alcohol. The fact that some can sell it doesn’t mean the ones that can’t are getting shafted by “the man”.

      1. Kevin Hill

        How about this re-wording of the above quote:’State run lottery systems are neither victimless nor harmless, and it is clear that the State of New York is the leader of a massive, multi-billion-dollar scheme intended to fleece desperate individuals across the state’

      2. markslater

        so is DFS. made legal by the bill passed in 2006.

      3. Richard

        “a small number of professional gamblers profit at the expense of casual players. To date, our investigation has shown that the top one percent of DraftKings’ winners receive the vast majority of the winnings.”Why companies try to hide anything today is a mystery?One could argue that if would be better for draft kings to have this in the center of their Landing pageIt wouldn’t turnoff the weekend gambler and would would allow for a much more defensible position

        1. Jeff Jones

          ‘A small number of professional gamblers profit at the expense of casual players’ this sounds exactly like the stock market today with algorithmic trading.

          1. Richard

            HFT is a problem

      4. Mark Lussier

        How about stock trading ? Isn’t that gambling as well ?

        1. LE

          Of course cloaked as “investing”. You know “do your homework” and all of that bullshit.But here is the thing. You can’t point to something that is grandfathered as a reason to approve of something new. I mean you can try and people do and idiots believe that type of argument all of the time.We found this with marijuana. All people did was point to alcohol as actually being worse. Therefore pot is ok because it’s “not even as bad as alcohol”. This is a childish argument. Like when your kids wants to do something because either their sibling is allowed or a friend is allowed.

          1. Mark Lussier

            With the advent of technology, trading stocks which once was considered investment is now a gambling haven. I believe day-trading is the mother of all gambling. It is a criminal activity in my opinion as it leads to herding, money hoarding resulting in an unprecedented increasing in valuations. And these fund managers aka brokers are the legitimate thieves.

          2. Matthew Perle

            How is it childish to point out the hypocrisy of certain regulations? The fact that marijuana is less harmful than alcohol and tobacco is a pretty sound argument. That’s why it’s working.Pointing out the hypocrisy of allowing lotteries and stock trading but not sports betting is in the same vein. It should be regulated, but saying it involves less skill than the Mega Millions is silly.

          3. LE

            The fact that marijuana is less harmful than alcohol and tobacco is a pretty sound argument. That’s why it’s working.It’s working because the majority of people have simplistic ways of looking at things. [1] Why should it matter if pot is “less harmful” at all? Why can’t it be a totally separate risk and evaluated as such without regard to anything else that someone might do that is risky? Essentially my point and why I say “childish”. What if it was 15% more harmful? Then it would be “only a bit more harmful so it’s ok…”.And I am not saying it’s childish to point out hypocrisy. However it’s childish to believe that one discreet thing that is already allowed should have anything to do with another risk. People love comparisons I agree. I would use them if they benefited me as well no doubt.Try to convince someone to walk alone at night through Central Park by telling them the risk and danger is less than getting struck by lighting or dying in a plane crash (arbitrary to prove a point don’t know the actual risk).The reason alcohol is allowed is that it can’t be repealed and many people enjoy it and we’ve learned to kind of sweep under the table the downside. [2] First because anytime you might try to do that people will point to prohibition which failed as a reason not to even go there. But there are many towns that are dry in the US (Ocean City NJ as one example). But allowing something new (like pot) is not the same as prohibiting something that isn’t already grandfathered, correct?[1] Not that you can’t find many Einsteins that buy into that logic. My guess is that if they do though they have a horse in the race (they smoke pot in other words).[2] Same with Coke and all sugar water. Anyone catch the tiff between Warren Buffet and the hedge fund manager over that hypocrisy?…“I have a problem with Berkshire’s ownership of Coke,” Ackman told an audience of about 200 people. “Coca-Cola has probably done more to create obesity, diabetes on a global basis than any other company in the world.”

          4. Stephen Voris

            So, arguably the argument they’re really using is “marijuana is less harmful than alcohol, and they occupy the same ‘slot’ in people’s lives – that is, that marijuana use and alcohol use aren’t independent variables”.

          5. LE

            Interesting point. However I am sure we could prove that wrong and that they are either 2 slots or certainly over 1.8 slots, right?

          6. Stephen Voris

            At a social-sciences level of proof, maybe; thing to measure would be “percentage of people who use neither”, but I don’t know that there are any dry counties with legal marijuana to complete the square, so to speak.

          7. Matthew Perle

            It can’t be a totally separate risk because context matters. If you’re using the logic that something is a harmful substance to ban marijuana, you can’t just abandon that logic when it comes to allowing other substances. That’s not good policy.The question is not whether it’s risky for someone to do something (like walk in Central Park), but whether it should be illegal for them to do it. The fact that alcohol has long been legal should have no bearing on whether it continues to be legal, unless there is an argument that the benefits to society outweigh the drawbacks. That same argument should be applied to marijuana, sports betting, etc. when deciding whether/how to legalize/regulate those as well.

          8. LE

            The fact that alcohol has long been legal should have no bearing on whether it continues to be legalOf course it should. Why? Need to be pragmatic. Practical considerations such as the cost to unroll the legacy behavior (and economic impact) and actually do battle with opposing forces. Cost benefit analysis.Let’s take “pump your own gas”. Still not legal in NJ. Can’t get that passed (and that would seem to be an easy one). Otoh, imagine the battle to take away “pump your own gas” in states that already allow it? Totally different situation.

          9. Matthew Perle

            Agreed, practical considerations should be taken into account. Although I don’t think many people would argue that pumping your own gas (or not pumping it) has much of any detrimental effect on society. Conversely, tens of billions of dollars are spent each year on drug enforcement and millions of lives are affected by either being in jail or not having access to medical marijuana.Similarly, more money is spent each year on the lottery than almost all other forms of media combined. The fact that the odds of making your money back are essentially zero would seem to be a pretty good incentive to allow people to find better ways to gamble.

          10. LE

            The fact that the odds of making your money back are essentially zero would seem to be a pretty good incentive to allow people to find better ways to gamble.There is an entertainment factor to playing the lottery. There is the thrill that you get from thinking you may win, the thrill of buying the ticket, and even the thrill of thinking about buying the ticket and having hope that your life might change. Or take a game of bingo at the church. It’s not all about the money that you win. There are other benefits (separate from helping the church I mean let’s say it was in someone’s house) and intangibles that the little old lady gets for the money that she spends.It’s difficult to estimate the rise people get out of things that may not appear on the surface. For example I still get a kick from getting a check in the mail, even if it’s a check for a small amount of money that a customer is paying. No question I get more mental bang than I do from getting a wire payment, paypal or ACH.

          11. sigmaalgebra

            There is some classic axiomatic utility theory that says that for a destitute person playing the lottery is rational behavior.

          12. ShanaC

            why is pumping your own gas not legal in jersey?

          13. Oliver Tran

            you tell.

          14. Elia Freedman

            Oregon too. There are multiple potential reasons, although none are known for sure. I’ve heard environment, jobs, and other reasons here.

          15. sigmaalgebra

            I know a guy, good mathematician, bright, bright wife, also a mathematician, and they had a daughter, pretty, bright, on her way to her freshman year at Princeton. She was taking a train.Somehow the guy running the train had been smoking pot, wasn’t doing his job, crashed the train, and killed the girl. Bad situation.I’ve never smoked pot, “never touched the stuff”, nor any other illegal drugs, nor any illegal use of legal drugs. I have no sympathy for legalizing pot or any other drugs.I don’t want the DEA, FBI, etc. anti-drug efforts going all fanatical (enough damage has been done along those lines) being worse than the disease, but going after the big drug dealers should slow down the drug usage and also not threaten our society with the DEA and FBI running around like the Brown Shirts or SS.Ah, for the first time in years, I have had some wine, about 5 ounces with dinner. So, while playing the first CD of Calas, etc., in Tosca, I put some olive oil, a 3 pound bag of onions, diced, and garlic in a pot, cooked, added salt, pepper, bay leaves, parsley, basil, oregano, tomato paste, peeled, canned tomatoes, crushed tomatoes, cooked it, got 7 1/2 quarts of nice tomato sauce, got some huge, skinless, boneless chicken breast halves, each over 1 pound, floured and browned them in hot olive oil, cooked them in some of the tomato sauce at about 175 F for several hours, and for a dinner boiled 7 ounces of spaghetti, added to a 2 quart, heavy glass casserole dish, added half of one of the breast pieces, pulled,, added the tomato sauce, covered, warmed in microwave, topped with freshly grated Pecorino Romano cheese, started a movie on YouTube,poured out about 5 ounces of a dry, red wine, and had dinner. The 5 ounces is enough — I feel no effects from the alcohol, and that’s good because I don’tlike the effects of alcohol.But somehow some people are eager to cram into their bodies nearly anything that will give them a buzz, high, trip, incapacitation — looks like ugly self-destruction to me.Wine? It’s very, very old stuff. Can’t stop alcohol. Apparently can’t stop a lot of illegal drugs. So, try to slow them down. Then, for people who insist on ruining their lives, try to arrange that they don’t hurt others, too.

        2. Richard

          Purchasing equities is not gambling for the simple reason it does not need the definition of gambling. Options and futures on the other hand could arguably be considered gambling

          1. Mark Lussier

            Please see below. Not just options and futures, day trading is the most intense form of gambling.

        3. Richard

          Nope; there is no promise of a return.

        4. jason wright

          venture capital is gambling. all those “bets” 🙂

      5. jason wright

        speaking of lottery, the UK lottery (operated by a private company with the lottery rights licenced from the UK government) recently added 10 more numbers to the pot (originally 49 numbers, and now 59 numbers). to win you need to have all the six numbers on your ticket. the odds went from something like 1 in 15 million to one in 95 million overnight. that is a super tax. the main shareholder is a Canadian pension fund (Ontario Teachers’ Pension Plan). UK citizens funding Canadian pensioners… via would be an irony if said pension fund is an LP directly or indirectly in a VC fund of note.

        1. LE

          My guess is that a bigger pot attracts more dreamers (participants) than a smaller pot even if the odds favor the smaller pot and even greatly. But they will know the math pretty well before making a switch like this, right?Related: I saw a similar phenomena with advertising with regard to ad pricing.. You can get “Mr small businessman” as one example to buy an ad for $50 which reaches 1000 people quicker than spending $500 to reach 20,000 people or even maybe 50,000 people. (Arbitrary to prove the point). Reason is he rationalizes it as “$50 and if I get one sale it pays for itself”. Otoh $500 is “a high price to pay for a small chance for getting a customer”.Also note that when you lose money at a casino you do it a little bit at a time.

          1. jason wright

            it attracts the eternal optimist lacking a thesis.OTPP’s latest acquisition;

    5. LE

      Speaking of “prosecution” [1] if I was the defense attorney I would do the following.Hire someone to go to another state where these sites are kosher and do this test.1) Setup and recruit groups, one who knows a great deal about sports and one who knows nothing at all about sports.2) Have the two groups place bets with real money supplied by the covert operator working on the behalf of the attorney (someone like me for example).3) Evaluate the results4) If the results favor the sports knowledgeable people, use that data in your defense and public relations campaign to support game of skill. If they don’t, ignore and don’t use.[1] Segue to post this under your top rated comment.

      1. andyswan

        It’s already happened everywhere. These companies have the data in hand. A small group of people are winning consistently. It’s very much like poker.Given the distribution of winnings, it is literally impossible to argue that it is a game of pure chance.

        1. bsoist

          Correct. Sports betting doesn’t have to be pure chance – similar to blackjack, poker. and betting on horses.

        2. markslater

          Oh – its gambling…..

          1. andyswan

            Of course it is. Just because skill is involved doesn’t mean it’s not gambling.

        3. LE

          With any of these things though is that there is a skill component and a luck component. Even with slots. (Where machines are located in the casino I’ve heard as one factor in payouts..”).Anyway for example I could continuously bet on sports (not knowing anything about sports) and I might win, similar to what would happen at the slots or a table game. So the fact that some are more skilled at it doesn’t necessarily take away the “gambling” aspect of the game. Like with Poker. Involves skill and chance.As far as “a small group of people” that’s the the reason for the somewhat blind test if you want to call it that. My guess is that where there is “a small group of people” we don’t really know how much skill enters into it (what I would counter if I was on the side of the prosecution in other words..) After all anyone using these sites most certainly is a sports fan which was my point. I am sure my dead uncle is not using these sites and that would be a true test.

          1. CJ

            You could also buy things on sale all the time but it wouldn’t necessarily mean you’ll always get the best price. The fact that some choose to remain uneducated doesn’t remove the element of skill, it just means that those people are ‘gambling’…but we typically call those educated and uneducated choices.

        4. JaredMermey

          IMO, all of this shows a lack of either (i) understanding or (ii) respect for probability. Poker is the best analogy. Players make decisions (i.e, how to play a hand or bet it vs. how to fill a lineup) that affect an event (i.e., poker hand vs. a week’s round of DFS). Those decisions affect your probability of winning — they never guarantee you win that one hand.In the long run, people who are better at making decisions will win most of the time. In the short run, luck comes into play.If I get my money in with AA to someones lower pair, I am going to win 80% of the time. Twenty-percent of the time, they will win and it will be what most people consider “luck.” They observe the one instance where the odds do not hold and they say we were gambling. But if we played that hand 100 times, they would realize what was happening. Unfortunately, not enough people play out the 100 hands (or have the financial wherewithal to do so[1]) and cannot observe the probability.Filling out a DFS roster is the same thing. When filling out a roster, you are actually determining your hand. How you do so, improves/worsens your chances of winning. Unlike poker, however, the probability of one hand beating another is not fully known because the relationship between the hands (i.e. different entrants’ rosters) are not known/yet determined. But it is safe to say that those who know what they are doing are often improving their odds. They accept they might lose a given week, but as the data shows they will win more often than not (and enough to overcome the 10% vig the house takes).For what it is worth, the same analogy can be made for VC or PE…probably can be made for the public markets as well.Borrowing @LE’s syntax here…[1] I do not think the argument that people might not have the financial wherewithal to play with the frequency to observe the probabilities to play out is a sufficient argument because:(a) they are generally low enough stakes that people can play within their means(b) the same thing can be said about any purchase. People buy goods all the time they cannot afford and it does not define whether the car industry or furniture industry or whatever industry is legal

          1. andyswan

            totally agree. This is just a power grab. It’s what mafias do. They’ll be fine with it once the DFS sites are kicking up a piece to the boss…. for the children, of course.

          2. JaredMermey

            I do wonder what would have happened if Poker’s Black Friday happened a few years later when Twitter/FB etc were around. I wonder if Online Poker was just too far ahead of its time and got put to sleep before an inflection point where the demand side could lobby/voice themselves.

          3. CJ

            Very good points in this post and the other.

      2. Richard

        The NY AG has closed down illegal gambling for 100 years. The internet won’t change this. At least the neighbors I had with phone banks and satellite dishes were discrete.

    6. aminTorres

      I don’t always agree with Andy but when I do. 🙂

    7. PhilipSugar

      Of course, but who started this??? As somebody that has software in 80% of Vegas Sports Books, I’ll give you the answer: Nevada. Why? They want to tax it.Is that bad? I would say as a big investor in the stock market we should put some taxes on that to share back to the companies stocks who are traded as well.I am not opposed to all regulation. I hate the size of government, and that is a word I do not use lightly. There are some things that need to be controlled. This is one.

    8. fredwilson

      i totally agree with you. we either make gambling legal (like the UK) or we don’t. but letting some folks (states, indians, etc) run gambling operations but not others doesn’t make sense to me.

      1. Richard

        Feds have little jurisdiction over state gambling, save Indian gambling which has a larger gross than Vegas. We could have have slot machines on every street corner or we can restrict them to designated areas. Seems like designated areas make more sense. Think of NYC with casinos in every retail property, doesn’t seem that appealing.

  10. JimHirshfield

    Never mind.

  11. famolari

    Other questions that might help put this in context are:(1) Is season-long fantasy (CBS, Yahoo!, ESPN) a form of gambling?; (2) Is DFS a game of skill?; and (3) Should fantasy sports be banned, regulated or left alone?

  12. Paul M

    Gambling always brings out the best of irony in state government. As a poker player, I’ve never been a moralist on the subject but the existence of state-run sucker games like lotteries and horse racing always pissed me off. I will admit I have not studied the math of DFS and how big a drop the operator is taking, but I don’t kid myself either: they are spending hundreds of millions of $$ on advertising, and those $$ don’t come from winners. True gamblers (the pros, not degenerates or compulsives) have always had a great ability to see the world the way it really is, not the way they wish it would be. Market forces work in this sphere (as opposed to, for example, health care) and will bring down costs and expose charlatans. My guess is the state won’t let it get to that point because it wants all the profits.

  13. John Petersen

    Daily Fantasy Sports can only be called gambling as much as blackjack and poker can be called gambling. If you have an advantaged blackjack player or a shark at the table, they are going to win much more than they are going to lose. The average player might as well buy a lottery ticket.DFS are no different.

  14. Chimpwithcans

    For those who do their homework and engage fully, no – it is skill to make the right picks. For the majority, yes it is a gamble. I am guessing Fred falls in the first camp – and he probably measures his performance in the leagues to make progress!

    1. Kevin Hill

      So Poker isn’t gambling? Blackjack? Horse Racing?

      1. Chimpwithcans

        Of course for most of us those activities are a gamble. For some they are a way to make a living and there is undeniable skill involved. It is not black and white which is why this blog post was posted no?

        1. Kevin Hill

          Ok sure, but what is your definition of gambling?

        2. Kevin Hill

          Ok, but I’m still not clear on what your definition of gambling is.

          1. Chimpwithcans

            OK I agree all those mentioned (including fantasy sports) are forms of gambling. They involve games of chance for money. I do not think they should be illegal.

  15. Marissa_NYx

    NY state might like to check out how much $$ in gambling taxes are collected by those states like my home town of Victoria, Australia , where gambling of all forms including fantasy sports is not only legal , but one of the biggest sources of revenue to the state. the state permits networked access to gambling in hotels, pubs & restaurants on every street corner, and TV programs covering sport display the gambling odds on the screen. The networks are privately run and licensed by the state , hence their concern is “Unauthorised ” online gambling services promoted to locals who they can’t tax. Australians spend more per capita on gambling than any other nation in the world. Economically it’s a boon to the state but socially it is a disaster particularly to the average family when a member of the family becomes addicted to gambling.

  16. pointsnfigures

    It’s taking risk for sure. Not sure if it’s pure gambling or not. I sort of hope they go out of business because I am sick of seeing their ads everywhere.

    1. PhilipSugar

      See why Fox invested $300mm in Draft Kings, just recycling that money.

  17. Michael Elling

    A third option should be “Don’t know”. Just to see how many really don’t or don’t have an opinion.

  18. Ana Milicevic

    Does it matter? Whatever it is tax it — people spend money on such stupid crap; why is this any different?

    1. Kirsten Lambertsen

      I absolutely love this comment 🙂

  19. Mike

    No. They need regulation for insider advantages. States want tax dollars. Too many people playing.

  20. Tommy E

    Are there elements of chance? Of course! But I believe there are also elements of skill for those that actually study fantasy football.I think it should be legal.BUT I also believe online poker should be legal as well.I would even say that online poker is more based on skill (at least in my experience).It is sad that they allow online horse betting and lottery (though not online, at the moment). I know one of the major concerns for online poker was age verification. Here is a solution: the way you deposit on these sites is through a prepaid card specific to that site. Which can be bought at the local convenience store. 1. Customers can be carded with the purchase. 2. The state can collect taxes. 3. The convenience store lobby would be happy (they can get some of the juice as well).So not just fantasy football, but a slew of games that have an element of skill should be legal to take part in in the convenience of one’s home. But the way the setup is right now, I don’t know if you can get everyone on board- unless plenty of money is thrown to the politicians. One thing fantasy football has going for it, is there is plenty of money available from organizations that support fantasy football – like the NFL.

  21. Tarun U

    One can argue if gambling should be legal. But, its hard to argue that fantasy sports sites are not gambling.

  22. Kirsten Lambertsen

    “…it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country…”These are pretty strong words. Maybe it’s important that it’s being called “illegal” gambling. Not just “gambling.”While I could care less what stupid crap people spend their money on (as Ana put it so perfectly!), and I agree with comments here about Wall St., I can’t help but wonder if maybe there’s more to this story than just whether or not it’s technically gambling.

    1. andyswan

      Yes… the State wants its cut. That’s the whole story. They always want their cut, they want to be the only ones with the “muscle” to enforce it.This is what government is at its core…. a small group of people who use force to keep people from doing the things that they do.

      1. Kirsten Lambertsen

        Maybe. Not ruling that out. I’m not in a hurry to rush to judgement either way.Government is a small group of people who use force to make sure *their friends* get to do whatever *they* want to do.

  23. TeddyBeingTeddy

    Top 5 industries that take advantage of poor, desperate, and addictive people: 1) drugs, 2) gambling, 3) alternative lending, 4) Russian bride exchanges, 5) MLMs and pyramid schemes

    1. David A. Frankel

      To characterize the entire alternative lending industry (#3 on your list!) as predatory is simply not accurate. There is a legitimate need for access to capital that people and merchants cannot get from traditional banks right now. I can tell you firsthand that there are many companies in this space that have responsible underwriting and lending policies that do help people.

      1. TeddyBeingTeddy

        I disagree. Why do they call it a “cost” instead of an “interest rates”? Why fui they call it a “transaction” instead of a “loan “? Here’s a hint: to avoid being regulated. Because if they were they would be outlawed for being over 36% APR and thus deemed predators. Of course investors love an 80% APR… But let’s call it what it is… Predatory and unethical… Taking advantage of poor and unsophisticated people, and keeping them on that treadmill.

  24. David A. Frankel

    I find it interesting that the state that hosts perhaps the largest daily betting platform in the world, the NYSE, is getting self-righteous about this. Yes it is gambling, and while there is an interest in protecting people, NY really wants to ensure it gets it’s share.

    1. Kevin Hill

      While there are certainly some people the NYSE has not been kind to, I’d say the net externalities are massively positive. Imagine a world where public companies had to get government approval on their valuation, or where it’s valuation was set in some costless manner like reddit up-votes.

    2. LE

      Never going to unring that bell. Feeding to many mouths. [1][1] Similar to why tobacco wasn’t banned in the early days. To many mouths feeding at the trough.

  25. Mark Gannon

    Yes, it is gambling, but I believe it should be legal.In Nate Silver’s book he talked about his evolution as a professional poker player. At first he could make a lot of money because amateurs watched poker on TV and thought they were better poker players than they were. They flooded the on line poker sites and a skilled poker player like Silver could make money. In poker these hapless players are called fish. Eventually they learned they couldn’t make money playing poker and stopped. After a couple of years of this fantasy sports betting, the fish will figure out they aren’t making any money and stop. Another old saying says: If you can’t figure out who the sucker is, you’re the sucker.As someone with 10+ years of NCAA basketball data in a database, I’d welcome a legal way to bet without going to Las Vegas.

  26. Mark Lussier

    I hate the Twitter part of polling. Makes no sense to bring the Twitter shit here in the conversation

  27. Sean Dempsey

    A straightforward test to determine whether DFS is skill-based is to look at the results – are there clear patterns of certain individuals winning consistently or does it trend toward random. The more the latter, the more it looks like gambling.

  28. Stephen Voris

    It is somewhat amusing that the phrase used is “illegal gambling”, as if the state of illegality somehow causes those “social and economic harms” rather than the reverse. Depends on how you read it, though.Specifically, if you read it as “daily fantasy sports companies are engaged in illegal gambling under New York law, and therefore causing the same kinds of social and economic harms as other forms of illegal gambling, and…”, you get the moralizing-busybody interpretation; but if you read it as “daily fantasy sports companies are engaged in illegal gambling under New York law, and also causing the same kinds of social and economic harms as other forms of illegal gambling, and also…”, it sounds much more reasonable (at least to my ears).

    1. Kent Liu

      Latter: reasonable; Former: what he wants you to think. Politics.

      1. Stephen Voris

        Maybe, but if so he’s doing a poor job of it. It just makes it sound like that’s what he thinks, and given that I think the statement interpreted that way is idiotic moderately shortsighted, wellll…

  29. William Mougayar

    Why can’t sports betting be legalized then, as lottery and other gambling are.

    1. LE

      Incumbents (as only one reason) would want to prevent that from cannibalizing their income.

    2. Mark Gannon

      I’d like to see that. The new NBA commissioner is urging sports betting legalization. Not clear to me how they intend to make money from it. I can envisage some nasty NBA relocation fights depending on which states make it legal.

  30. jason wright

    subjective discrimination! i’d sue.

  31. ShanaC

    It is like poker – for most probably, for some, obviously not

  32. kellercl

    How could ESPN (FanDuel) and FOX (DraftKings) be wrong? They said I could have won millions.

  33. ZekeV

    Your poll poses a tough question, is it gambling? Yes. Is it illegal gambling? No, it’s a game of skill, not chance. That’s the question that will be litigated, whether it’s a game of skill. Not whether it’s gambling.

  34. SaberCruncher

    The reality of DFS is guys like me make tons of cash from the rubes. Maybe 0.1% of DFS players actually bank long term. I put in 2-3k lineups in big contests and use math to basically eliminate casual players from cashing along with others who do the same. You may fluke out and win but over the long term you have no chance. Zero. DFS is an agreement between FD/DK and folks like myself who are the few who actually understand the logistics of cashing out. Its surprising how mathematically illiterate the average player is.

  35. Rob Larson

    The poll should have 2 questions: is it gambling, and should it be legal.

  36. sigmaalgebra

    That tomato sauce I described is surprisingly good for being so simple. Italian foods, and music, tend to do that — be surprisingly good for being so simple!At times I did try to make some reduction sauces. So, right, I read from Escoffier, Julia Child, Jacques Pepin, Louis Diat, etc. Most of my efforts were starting with beef, but I started with chicken other times and even some seafood.Some of the results were okay, and some were finger lick’n good!During the work, I got torqued: I know that at AVC I write long, complicated posts, but my experience with documentation of cooking is that they write far too little. E.g., one of the best reasons for a good beef reduction sauce is a good Beef Burgundy, right, Boeuf Bourguignon. The omitted details were on temperature. To simmer is an open invitation to disaster.Finally, with some good American emphasis on real know how, from of all places, American BBQ fora, I learned some of the basic food chemistry: Don’t get meat over about 180 F, and mostly keep it not much over 160 F. Why? Because a little too hot, say, close to 200 F or very long over 180 F, somehow the proteins change, expel their H2O, and become hard, dry, tough, and even brittle — ruined. I ruined a LOT of beautiful beef that way, cursed the books, for years gave up, and eventually on the Internet found the key data on temperature.I concluded that nearly all the cookbooks were edited and published by English majors who deeply, profoundly, bitterly hated and despised anything about measurements, especially of temperature, from a thermometer, in degrees F or C, and, instead, wanted a version of literary art with vicarious, escapist, fantasy, emotional experience entertainment. Throwing away some dozens of trials of beautiful ingredients, wasting time, money, and effort, was for me not at all entertaining.No one, no one at all, not Escoffier, Child, Pepin, Diat, not some cooking school book,stated what temperature in degrees F. The answer: 155-165F. That’s the secret. I have shelves of cookbooks without the secret, but that’s the secret.Then, if I try again, I will have a good use for a good reduction sauce.From a recent note, I learned that a famous chef in CA starts with a bottle of wine and reduces that to nearly a syrup. There’s no joke — commonly reductions concentrate flavors.But now there is more progress with the sou vide efforts where, for one, they make careful handling of temperature a really big deal. Good.I know; I know; Escoffier could get it right by his little pieces of evidence and experience. But he was not able to communicate those keys. Instead, he needed to pull out a thermometer and report THAT. Same for Child, Pepin, Diat, NYT, etc.Or, apparently do not have to start with chuck roast and, instead, can start with bottom round roast. Now, it’s tough, right. But the toughness is from the collagen, not the proteins. From all I read, the proteins are always tender unless ruin them from getting the temperature too high. So, at 160 F, slowly the collagen melts out, becomes gelatin in the braising liquid, and the meat is left tender, moist, succulent like the English majors dream, maybe eat at some bistro, but don’t have even a weak little hollow hint of a tiny clue how the heck to DO it.Sure, now can get temperature controllers. So, if I try some beef stew again, then I’ll get a temperature controller. Then I will have a good reason for a good beef reduction sauce, maybe one of Escoffier’s sauces, a demi glace for general purpose, etc.Sure, in the meanwhile we have the really big book of Myhrvold who really can understand temperature, the heat equation, the physics and chemistry, etc.The one sauce I did that was finger lick’n good was just from the poaching liquid from poaching scallops. So, that liquid had some bottled clam juice, shallots, bay leaf, maybe thyme, and some dry white wine, really, usually from Macon (not Montrachet!). When the scallops are done, reduce the poaching liquid, combine with a blond roux, add milk, cream, and egg yolks, add salt, pepper, and lemon juice, thus get a hot custard sauce, combine with the scallops, and serve. Good stuff — butter, cream, egg yolks, white wine, shallots, etc. — shouldn’t miss!Escoffier claimed that get a better beef stock from older cattle. Okay here in NYS, start with, say, retired dairy cattle? Yup, I found a slaughter house in PA that gets those. They sell pieces in 50 pound boxes. They also mentioned that much of their beef goes into fast food! And maybe some ground beef ground at the slaughter house has such beef — thus would be better for stock making than, say, shin bones which are absurdly too expensive in stores.