Daily fantasy sports games drive more people to watch sports on TV, which helps the NFL, NBA, MLB, NHL, MLS and NASCAR. But is it gambling?
Daily fantasy sports operators have plenty of high-powered friends in the real lsports world.
Industry leaders FanDuel and DraftKings have investment deals or partnerships with the NBA, MLB, NHL, MLS and NASCAR and promotional agreements with 15 NFL teams on in-stadium signage and radio and digital advertising. NFL owners Jerry Jones and Robert Kraft have also bought DraftKings equity stakes
The major sports leagues wouldn’t touch Daily fantasy sports (DFS) a few years ago, fearing harm to their integrity. But that changed once they realized how they could leverage the popularity of DFS into increased television and digital viewership numbers.
“Our research shows that those are popular among young people and it’s important for us to be active in that space,’’ MLB commissioner Rob Manfred told several media outlets, including The Seattle Times, during the Associated Press Sports Editors (APSE) commissioners meetings in New York last April. “So, I think there are tremendous benefits to us in terms of growing the game.’’
Eilers Research says DFS is hugely popular among Millennials (born between the early 1980s to the early 2000s) because it provides them “instant gratification” and an “engaging second-screen experience” over multiple platforms. It says there’s been an increased overall consumption of U.S. sports in a “virtuous circle” on TV, Internet, print and social media and that DFS has successfully managed to thrust itself into that dynamic.
The leagues hope the daily fantasy partnerships drive more eyeballs toward their games. The Fantasy Sports Trade Association, an industry lobby group, says 61 percent of players admit watching more live sports because of fantasy play.
MLB has had an exclusive partnership with DraftKings the past two years and made a small equity investment in 2013. Before buying the stake, MLB hired a consultant that helped convince the league DFS wasn’t gambling.
“We spent a lot of time and a lot of money making sure that we understood exactly what the law is and where the line between fantasy and illegal gambling falls,’’ Manfred said. “We analyzed the games that DraftKings offered. We got comfortable with the idea that those games were on the right side of the line of what the federal law is now.’’
Federal law exempts fantasy sports from online gambling statutes, classifying it as a game of skill. But recent scandals and government investigations into possible “insider trading” and whether daily fantasy play is driven by “luck” has leagues in an uncomfortable position — given dark gambling chapters in their histories.
Manfred told reporters covering the World Series he has no regrets about the deal and still considers daily fantasy to be skill-based.
NBA commissioner Adam Silver has also stood by DFS, but wants enhanced regulation and transparency. Silver’s league signed a four-year partnership with FanDuel in November 2014 that included an equity stake.
New England Patriots owner Kraft also called for more industry regulation while defending his equity purchase in DraftKings.
The NFL is the only major sport not to have partnered with a DFS company at the league level, leaving that up to individual teams. NFL commissioner Roger Goodell told The Times and others at the APSE meeting in April that the league wanted to limit daily fantasy involvement for now despite ample internal discussions about it.
“We are taking a cautious approach to it and making sure that we observe how it evolves,’’ Goodell said.