News

U.S. Fantasy Sports At Risk From Federal Online Ban, Attorneys Warn

July 22, 2014

By John Edwards, GamblingCompliance
Attorneys warned members of the Fantasy Sports Trade Association (FSTA) Thursday that a proposed federal ban on Internet gambling could morph into a threat to online fantasy sports contests.
 
The attorneys mentioned Sheldon Adelson, the billionaire casino operator who advocates legislation to prohibit online gambling. Adelson, chairman and CEO of Las Vegas Sands, is a contributor to the newly-formed Coalition to Stop Internet Gambling.
 
An initial bill draft to ban Internet gambling would not hurt online fantasy sports games, attorney Marc Zwillinger of ZwillGen told FSTA members at a conference at the Bellagio in Las Vegas.
 
Nevertheless, Congress easily could amend the bill in ways that affect fantasy sports.
 
“Everything is going be on the table,” Zwillinger said. “Everything is in play.” 
 
Attorney Glenn Colton of Dentons law firm agreed. “Once things start happening in back rooms in Washington, anything could happen,” he said. 
 
“Their concerns are not misplaced,” Dan Mauer of Porter Gordon Silver, a Washington, D.C. law and lobbying firm, later told GamblingCompliance.
 
In fantasy sports competition, players assume the role of sports team owners and use statistics to select real professional athletes for fictional contests conducted on online websites. Some games are for free; others involve fees and cash prizes.
The number of fantasy sports players has almost doubled to 33m in the U.S. over the five years ending in 2012 and annual revenues totalled $3.38bn.
 
The Unlawful Internet Gambling Enforcement Act passed by Congress in 2006 allows fantasy sports online contests because prizes are paid based on the knowledge and skills of players rather than only luck, according to the FSTA.
 
Although most state laws permit fantasy sports, some, including Louisiana and Vermont, have laws that essentially bar fantasy sports or make the legality of fantasy sports questionable, the attorneys said.
 
If the Coalition to Stop Internet Gambling is successful, Congress will ban all online gambling by broadening the scope of the federal Wire Act of 1961.
 
Given this possibility, Colton and Zwillinger urged fantasy games operators to avoid promotions and advertisements that compare their games to gambling.
 
“People are not being careful,” Colton said. 
 
One unidentified company advertised that players could “bet on fantasy sports.” Fantasy sports operators should also avoid using gambling terms, such as “rake,” in promotional material, he said.
 
“The closer you get to the line, the more you attract attention [of potential opponents],” Colton said.
 
The FSTA conference also featured a session on ways that the Las Vegas Strip’s sportsbooks feature propositions similar to fantasy sports and how Strip casinos could use fantasy sports promotions to attract visitors to Las Vegas.
 
Matt Holt, vice president of business development at Cantor Gaming, compared non-gambling fantasy sports to proposition wagers that some casino sportsbooks offer while a game is underway. Gamblers, for example, may bet on which team will score first or last.
 
Las Vegas casinos typically offer proposition bets on big games, such as the Super Bowl. Fewer than 5 percent of U.S. sports wagers are proposition bets, compared with 70 percent in Europe, Holt said. 
 
Casinos contracting with Cantor Gaming in the past have allowed players to bet on fantasy sports events, using computers to pit one pro team against another.
 
“It was extremely popular but extremely difficult to do in Nevada,” Holt said. The difficulty stems from Nevada regulations that require sportsbooks to use one of two licensed sports information providers to set the odds.
Calculations for fantasy sports events were labor intensive at the casinos. Holt suggested casinos automate fantasy games in the future.
 
Meanwhile, players also want to monitor how their fantasy team is faring in competition throughout the day, rather than waiting until the end of the contest for results, Holt said.
 
Casinos could award winners of fantasy games points through loyalty programs that entice sports fans to visit Las Vegas, Rob Phythian, CEO of Sports Data, said. The points then could be used to pay for shows or meals.
 
Fantasy sports games attract the kinds of individuals that casinos covet. “They come in and they play and they play hard,” Holt said.