Lawmaker Wants Rules for Fantasy Sports Sites

I can remember gathering in a friend’s kitchen about 10 years ago for a fantasy league sports draft. Little did those involved realize we were on the ground floor of what would become a multibillion-dollar business.

If you’ve watched any NFL football this season, you’ve likely seen TV commercials for the websites DraftKings and FanDuel, the two largest Internet fantasy league companies, that offer to make players wealthy overnight if they’re smart enough to outwit competitors.

On Tuesday, state Rep. Michael Zalewski, D-Riverside, joined a growing list of government officials expressing public concern about a lack of regulation for these sites and others. Zalewski is sponsoring a bill aimed at preventing players from draining their bank accounts and making sure that the Internet companies running the sites can pay off when players win.

Although Zalewski touts the bill as the first of its kind in the nation, it’s so tame that both DraftKings and FanDuel issued statements supporting the legislation.

DraftKings statement reads, “We believe Representative Zalewski’s legislation represents a reasonable and measured step toward oversight of fantasy sports. We recognize our responsibility to the millions of fans who are captivated by the excitement and interactive nature of daily fantasy sports. We are committed to ensuring they can continue to play the game they love and will work with all relevant authorities to ensure that our industry operates in a manner that is completely transparent and fair for all consumers.”

For his part, Zalewski said he’s more concerned about newcomers in the booming fantasy sports business than he is about DraftKings and FanDuel. He told me he wants to make sure that money spent in these fantasy leagues is kept in an escrow account to pay off the winners and that limits are put in place to prevent players from losing their entire bank balance in one day.

“I want the kind of regulations we’ve put in place at riverboat casinos in Illinois to make sure that people who are addicted don’t lose their life savings,” Zalewski said. “I don’t want to do anything that would prevent people from enjoying this sort of thing, I know millions of people do. I just want to make sure they are run legitimately.”

You ought to know, if you don’t already, that FanDuel, Draft Kings and most other fantasy sports Internet companies claim that their players are not gambling. What they are doing is engaging in a game of skill, where the players can win by accumulating more knowledge than other competitors, according to the companies.

There have been stories about fantasy league players who put in 12 hours a day studying the statistics of professional football players, team tendencies, injury reports and other data.

Poker players have made the same claim about a “game of skill” for decades in trying to get Internet poker sites legalized without success.

The Internet fantasy sites remind me a lot of the old poker sites that existed before the government shut them down, in part, for allegedly laundering money. Competitors can initially play without putting up any money, but the matches are addictive.

Before long players come to believe they’re wasting their time playing for free when they could be earning money and start playing in games that can result in giant cash jackpots, as much as $1 million if the commercials are to be believed.

It should surprise no one that gambling officials in Nevada ordered FanDuel and DraftKings to cease operations in the state because legal sports books operate out of casinos there. At least five states have banned daily Internet fantasy gaming.

A widely reported story recently revealed that an employee of DraftKings won $350,000 in a contest on FanDuel. Zalewski’s bill would prohibit employees of sports fantasy web sites from competing on other Internet sites.

He also wants to ban players under 18 and set policies for audits. Under the legislation, the sites would be required to check players to make sure they don’t owe child support payments or have tax liens on property.

He would assigned the regulatory authority over these websites to Illinois Attorney General Lisa Madigan, who would likely consult with the Illinois Gaming Board, the state’s gambling authority, if the bill were to become law. Attorneys general in other states have launched inquiries into how the fantasy gambling sites conduct their business.

What’s surprising to me is that governments have been so reluctant to get in on sports gambling, which is really what these daily fantasy leagues are about.

For decades, people have spent billions of dollars each year gambling on sports events, particularly NFL football. Most of that money is wagered illegally, and everyone knows it.

That’s why newspapers print point spreads, usually set by Las Vegas sports books, and over-under lines. That’s why the NFL lists injury reports on players. There was a time that only gamblers, who paid for such injury information, could obtain it — giving them a big edge when it came to betting on games and setting the lines.

And now some NFL owners are allegedly invested in these fantasy sports sites, which not only make big money but have increased interest in the football games. Fans don’t merely root for their home teams any more but rather “their” fantasy players, who can star for teams playing against their hometown heroes.

Hey, you may live in Chicago, but if you play fantasy football, Aaron Rodgers is going to be your guy if you’re lucky enough to draft him or pay for his rights. That’s right. On many of these fantasy sites you, the owner, are given a certain amount of cash to “buy” players.

If you pay big bucks for Aaron Rodgers, chances are you’re not going to have enough money left to buy a quality wide receiver or running back. The idea is to level the playing field, and that’s where the ability to pick up unheralded players who perform well on Sunday can give the skilled player a huge advantage.

Someone might ask, as I have repeatedly over the years, how people are coming up with all this expendable income to wager on sports?

If you’ve been listening to any of the presidential candidates for 2016, you know the salaries of middle- and low-income wage earners has remained relatively stagnant since the Great Recession. In addition, they and the upper middle class are being taxed to death. Many people can no longer afford to send their children to college or retire.

But people have billions of dollars to spend on fantasy sports competitions. They spend hundreds of millions more on sports apparel and other merchandise.

Would all of that money, used wisely, save Social Security for future generations and assure the elderly that Medicare would be adequately funded? Might our nation find a cure for cancer with all those resources devoted to medical research instead of NFL fanaticism?

Possibly. But none of that would be any fun. And when it comes down to having fun, being entertained, we’re No. 1!

Don’t get me wrong. I appreciate the entrepreneurial genius behind the marketing of the NFL and these fantasy football sites. My friends and I who gathered around that kitchen table years ago never considered the possibilities.

We knew people in every workplace were putting together leagues. We knew fans young and old were enjoying the idea of playing fantasy football team owner or general manager. But we didn’t see the potential to make our fortunes.

Good for the people who did. Good for the people who enjoy spending their time and money on the fantasy sites. And kudos to the NFL.

But Zalewski’s legislation doesn’t seek to tax these businesses, and that’s what I would do, as a citizen of a state and nation that needs money to fund all sorts of things.

Would the government waste that money? Probably. But are you going to make the argument to me that it’s not being wasted already?

Source: Chicago Tribune