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A game of skill – or just luck?

By Staff | Nov 16, 2015

In Casino Royale, James Bond says that "in poker you don’t play the hand, you play the man across from you." This comment is in response to Bond girl Vesper Lynd, who questioned the wisdom of giving Bond millions of pounds for a game of poker. Bond is confident that he can figure out the other player’s flaws to gain the upper hand. With this, Mr. Bond believes the game is one of skill. This is the same argument that Daily Fantasy Sports websites like FanDuel and DraftKings make when defending their industry.

In recent weeks, the two giants of the Daily Fantasy Leagues have come under scrutiny. The biggest news splash came when a DraftKings employee used company information to enter into a Fanduel tournament and won $35,000. The New York Attorney General responded by announcing an investigation into the two sites. A second blow came when the Department of Justice and the FBI decided to investigate the CEOs to see whether the companies fall within a 2006 law banning online gambling like the poker games that were very popular at the end of the 2000s. Perhaps the biggest shock to the fantasy industry came a few weeks ago when Nevada declared that daily fantasy is a game of chance, thus requiring a license to operate within the state of Nevada and the recent declaration by the New York Attorney General that DFS is gambling.

The question for many is: What’s the problem? Fantasy sports as we know them today started in the 1980s. DraftKings, a current example of the sport, offers participants the chance to enter into a league for dollar amounts ranging from 25 cents to $5,300, with a prize well in excess. There are different types of games as well. These games include the highest score wins the largest amount of money and a 50/50 game. A 50/50 is when the top 50 percent of people win some payout, while folks in the lower 50 percent receive nothing. In a FanDuel commercial, the company specifically targets people inclined to play a 50/50 by saying "You’re better than average, aren’t you!"

The problem is that a person playing daily fantasy sports is entirely reliant on the playing abilities of actual professional athletes. This possibility is illustrated by Andrew Luck of the Indianapolis Colts this year. In the 2014-15 season, Luck was the highest scoring quarterback in the NFL. This year, Luck has had horrible offensive line play, a shoulder injury and more than one off day. However, week after week, Luck is continuously trotted out on fantasy teams because of fans who think: "He’ll turn it around today. I can feel it." That’s not the thinking involved in a game of skill; its more akin to a losing poker player saying: "One more hand. The next one will be different." Certainly, Andrew has been of little luck to most fantasy players this season.

There is one more issue that needs to be addressed: The odds of the not-so-serious player winning. To turn a popular phrase on its head, the odds may never be in your favor. This is because, as one study done by Rotogrinders for Bloomberg showed, the top 10 ranked players combined to win an average of 873 times daily, and the remaining players – roughly 20,000 of them – won an average of just 13 times a day. This comes as no surprise since these top-tier players make up 70 percent of the money lost to the websites, and 90 percent of the money won. These top-tier players are also not your everyday person – their full time job is fantasy sports and they play until they win.

The two giants of daily fantasy sports have barnstormed their way from obscurity to national prominence in less than five years. They are now billion-dollar businesses, but only pay out a fraction of that amount a year, much like a casino. Fanduel and DraftKings almost always win.

It’s time we stop turning a blind eye to what daily fantasy sports really is. Let’s call a spade a spade: daily fantasy sports is a bad bet.

Sean Leonard is an attorney working on Capitol Hill. He grew up in Concord.


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