criminal law reform

Dethroning Draft Kings and Fan Duel

This week, we have a guest blog post on sports betting law by law student Gabriel Arevalo. His article follows.

In the last few years, fantasy sports have become an American pastime. For each professional sport in this country, millions of Americans gather in living rooms and sports bars to set line ups and draft players for their fantasy teams. At first, this new sensation was just for fun – that is, until people began to figure out how to make money on it. Beginning with simple money pools in bars among friends, small time betting quickly begat multi-million dollar companies.

Draft Kings and Fan Duel have built empires based on online fantasy sports betting. In many states, internet gambling is illegal, unless the type of gambling falls into a few categories that receive an exception. In New York, Internet gambling is illegal when it is based solely on chance. Games of skill like poker fall outside of this category.

Many states find that season-long fantasy league betting is a game of chance, not skill. Their reasoning is that, throughout a season, many unknowns such as injuries, lock-outs or unprecedented trades make the season unpredictable. In these states, the element of chance trumps any skill it may take to analyze players and statistics in order to develop a once in a lifetime fantasy team.

Fan Duel and Draft Kings argued that their fantasy betting was not chance-based because they provided daily league updates. Fan Duel and Draft Kings claim that, by publishing a different league every day, they reduced randomness and made their betting a game more of skill than of chance. Performance and winnings are based on picking players and teams, based on statistics and predictions. Fan Duel and Draft Kings’ argument is now insufficient, according to the New York Attorney’s office.

Draft Kings and Fan Duel were recently handed a cease and desist letter demanding that they stop all operations within New York. Draft Kings and Fan Duel were denied an appeal that would temporarily allow them to continue operations while the case is being decided. This denial is a huge indicator of where the courts are leaning. If the courts decide that the Draft King model of betting is illegal and does not fall into the “game of skill” exception, this multi-million dollar industry will be shut down in New York. Unless the government steps in with some legislative solution, thousands of people will be out of luck when it comes to playing weekly in the hopes of picking up a few extra dollars.

Fan Duel and Draft Kings have become a major part of sports today. You cannot turn on a major league sports game without seeing ads for these two betting behemoths; they even appear in popular video games like Madden. What will happen to the Sunday warriors who find some pleasure in managing a team and gaining an actual reward from their efforts?

Perhaps New Yorkers who disagree with the state government’s latest crusade should start to show their disdain to the governor in the next electoral cycle. More likely than not this will come down to a battle of politics and lobbying. Hearings are set to continue as Draft Kings and Fan duel make their argument that they should continue to operate in New York. The result of this hearing not only affects a booming industry, but also millions of Monday night quarterbacks across the state.

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