The Measure

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DraftKings and FanDuel – Is it Gambling?

We've all heard the ads, here's what you need to know about DFS

November 9th, 2015

Undoubtedly, you’ve been struck by the media blitz blasted out over the last few months by daily fantasy sports sites like DraftKings and FanDuel. It’s not an illusion – these two companies have spent over $200 million on television ads alone, and that figure doesn’t include their ads plastered over subway walls or your favorite websites.  

This marketing thunderstorm has probably caused you to wonder if its true – with a few smart player picks, could you top off your Sunday with a $5 million check? How is that legal? Is some shark just going to take all your money?

Whether you’re a minnow, fish, whale or shark (gamblers love the sea) – we’ve got you covered.

 

Is It Gambling?

Not according to the websites, but probably according to your mother. With promises of daily prizes including boats of money, these Daily Fantasy Sports (DFS) services seem like a mix between Vegas and Wall Street day-trading. Online poker and other web gambling games were outlawed by the federal government in 2006, but the bill carved out a loophole specifically for fantasy sports claiming that these were (hypothetically) games of skill.

FanDuel and DraftKings choose not to operate in several states like Washington and Iowa because they would likely run afoul of state laws. Surprisingly, they both also left Nevada, which just ruled that DFS was gambling and the companies needed to obtain a license.

 

Is It A Scam?

That depends on your definition of scam. Are gas-station scratch-offs a scam? That being said, neither FanDuel nor DraftKings is an IRA.  

“Both sites like to refer to daily fantasy as a game of skill,” says DraftKing player Jim Adams, who handles the capital & expense budget for the transportation department of a Fortune 300 company. “However, when you’re putting up money in the chance of winning more money, it’s pretty much gambling.”

While he doesn’t call himself a shark, Adams is no fish. Although he’s played seasonal fantasy football for nine years, he’s only played DraftKings for two. He plays with 10 percent of his bankroll each week and currently has an 88 percent rate of return for this season.

“The possibility exists that – no matter what algorithm some pro ran; or no matter how much homework and preparation I did – a key player may get injured and wreck your lineup,” he explains. “In Week 8, 16 key players went down injured in-game. There were some real studs in that count of 16.”

Before you remortgage your house, know that Adams is in very select company. In its analysis of the “DFS economy,” Sports Business Journal found that only 1.3 percent of players made any money (findings the sites contest because they’re drawn from baseball season).

 

Is It Fun?

Look – even if you lose money on DFS, you also blow money on beers and chicken wings.

“I find daily fantasy fascinating because each week is like putting a puzzle together,” Adams says. “I enjoy the challenge.”

In fact, the people who win the most sound like they aren’t having much fun at all. In provocatively titled article “You Aren’t Good Enough to Win Money Playing Daily Fantasy Football,” Bloomberg talked to one of the top sharks in the game. He’s made about $2 million so far this year, but he spends 15 hours per day watching games, scraping data off the web, building algorithms and inputting hundreds of entries.  

Sounds far more like MIT than NFL. Even Adams keeps a personal log of his daily wins, losses, lessons and rates of return.

“If one expects to actually make money, then work will be required,” Adams sagely concludes.  

Some folks, of course, are turned on by analyzing data over the weekend. If you’re one, you might just be the next DFS shark.

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