Fantasy football puts billions into play

DOVER — Does it take skill or luck to pick which quarterback — Aaron Rodgers or Carson Palmer — will throw for more touchdowns and yards today?

Is there any such thing as a fantasy football expert, or is everyone who plays just hoping for the best?

Throughout the country, states like Delaware are determining whether the booming daily fantasy sports wagering industry is considered legal within their borders, and how it should be regulated, if at all.

In play are billions of dollars spent by DraftKings and FanDuel website customers competing against each other by picking a lineup of NFL players they hope will score the most touchdowns and gain the most yards compared to everyone else playing.

Cash prizes go to group pool participants whose lineups earn the most points in a statistical scoring system.

According to FanDuel, nearly $2 billion in cash prizes will be paid this year, including football, baseball, hockey and basketball competitions, with winnings available immediately after a contest concludes.

So, does betting on the statistical performances of NFL players each week require talent, a system and/or the best information, or is it gambling on chance and fate in a chase for the money?

State Finance Secretary Thomas Cook

State Finance Secretary Thomas Cook

Delaware officials are gathering intelligence on how other states are addressing the fantasy sports dilemma, and State Finance Secretary Thomas Cook plans to have a recommendation for lawmakers when the General Assembly re-convenes in January. The cabinet member said he’s committed to accumulating extensive information before forming an opinion, to avoid recommendations that are potentially overturned, challenged or later revised.

“The analysis is to determine that pursuant to the state constitution does it have to be regulated by the state,” Secretary Cook said.

“It has to be determined if it is really gambling.”

Other state views

In New York, Attorney General Eric Schneiderman attempted to shut down FanDuel and DraftKings by lawsuit, deeming them illegal gambling operations. FanDuel ceased taking deposits from New York patrons, while DraftKings said it would continue on until court order.

According to an Associated Press story, the attorney general argued that, like any sports wager, these depend on a future event outside the control of any bettor, meaning the actual performance of individual athletes in real games.

“As New York law has long recognized, gambling often mixes elements of chance and skill. The key question is whether the outcome depends in any ‘material degree’ on an element of chance, ‘notwithstanding that skill of the contestants may also be a factor.’”

Speaking for the Fantasy Sports Trade Association, DraftKings and FanDuel in South Dakota this week, lobbyist Griffin Finan told the state Commission on Gaming this week that fantasy sports is predominantly based on skill rather than chance, which makes it legal for players in South Dakota, the AP reported.

“Winning or losing doesn’t come down to the spin of a wheel, the roll of the dice or the turn of a card,” Finan said in an AP story. “Despite superficial similarities, fantasy sports differ greatly from sports betting.”

Also this week, the AP reported that daily fantasy sports companies would be allowed to continue operating in Massachusetts, but with age and advertising restrictions, disclosure requirements and other new rules proposed by the state’s attorney general.

Delaware Gov. Jack Markell’s office referred questions on the matter to Mr. Cook, and the Delaware Department of Justice will assist if needed.

“The Department of Finance is looking at the issue and DOJ will provide legal assistance if needed in coming to a determination and in taking legal action if necessary,” DOJ spokesman Carl Kanefsky said.

Legislators watching closely

A DraftKings employee winning $350,000 in a contest on rival FanDuel earlier this year — beating more than 200,000 other players — raised questions about possible insider trading, according to the AP.

U.S. Rep. John Carney, D-Del., said this week, “I believe it’s crucial to ensure everyone is playing by the same rules. I’ll be watching closely to see what recommendations are made at the state and federal levels.”

Said Sean Coit, a spokesman for U.S. Sen. Chris Coons, D-Del., “Millions of Americans, including many Delawareans, play fantasy sports through season-long, weekly, and now even daily competitions, and that’s not going to change any time soon.

“State and federal agencies have a role to play in making sure that these totally unregulated entities are fair for all, so that everyday sports fans are not taken advantage of.”

U.S. Sen. Thomas Carper, D-Del., could not be reached for comment this week.

Personally, Secretary Cook said, he’s a San Diego Chargers fan who doesn’t have the time to participate in fantasy football ventures. He acknowledged that many folks in Delaware do play, however, and it’s a big issue here.

With ongoing state budget hearings while working with Gov. Markell and the Office of Management and Budget, along with preparation for December’s DFAC report, there’s plenty of important work currently ongoing, Secretary Cook said.

Time must be carved out to monitor fantasy sports proceedings as well, he said.

“This certainly is an issue” that warrants attention now, Secretary Cook said. There needs to be an environment within the contests that assures that the customers are involved in a fairly determined outcome that’s on the level, he said.

“There’s a wide variation on this,” nationwide, he said.

According to the State of Delaware, potential paths forward include:

• Letting the industry continue to operate as is.

• If in violation of state law, then sanction a shutdown.

• If legal, then what state regulation should be involved.

“There’s also the question of what role the federal government will play in this,” Secretary Cook said.

Consideration on how Delaware could profit from daily fantasy sports contests must be given, according to Secretary Cook.

“Of course there’s that, too,” he said.

Delaware’s keen interest

There’s clearly keen interest in NFL wagering in the First State, and the Delaware Sports Lottery is heading toward another record year of sales. As of last Sunday, sales were at $23.15 million this season, up 12.2 percent from the same time last year.

In the DSL, wagers are made on game scores and point spreads, and participants play against the house (state of Delaware) in parlays of three games or more at various odds.

While both results rely predominately on chance, Sports Lottery Director Vernon Kirk said, daily fantasy sports betting isn’t taking away from the state’s separate operations.

“No, these are very difference forms of gambling,” he said.

The state’s share in Sports Lottery proceeds have been lucrative and increasing steadily, Director Kirk said. The debut Fiscal Year 2010 brought in $1.6 million, followed by three straight years of $2.3 million, $5.7 million 2014 when retail locations were added, and $7.1 million in 2015. The state’s year-to-date take for FY 2016 is currently $2.7 million.

Daily fantasy football wagering isn’t a threat or competition to the state of Delaware’s realm, Director Kirk said.

“Based on our sales trends, including this year, and based on the fact they are very different types of wagers, I don’t think that would have any impact of note,” he said.

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