NHL Legend Bernie Nicholls Says DraftKings and FanDuel “Blew It” and Remain Illegal in New York

The Sports Vote Publishes Commentary on Missed June 30, 2016 Deadline

The daily fantasy sports (DFS) industry seems to be in celebratory mode. Is it justified?

June 30 has come and passed and Governor Cuomo still has not signed the DFS bill. In fact, it appears he has not even called it in yet.

Illegal Daily Fantasy Gambling

Illegal Daily Fantasy Gambling

Why does that matter? It matters a great deal because of this thing called theSettlement Agreement. (FanDuel has a replica agreement).

When DFS was in deep trouble back in March, they cut a deal with New York Attorney General Eric Schneiderman. The heart of the agreement was that if DFS is legalized in New York by June 30, 2016, Schneiderman was going to drop all claims other than those that related to advertising. Otherwise, the parties were going back to court. Here is the key excerpt:

“In the event that New York State does not expressly legalize DFS Paid Contests on or before June 30, 2016, the Parties will continue the Actions…”

The Actions are the courts cases per the definitions in the Settlement Agreement. Translated to plain English, the agreement was that the parties are going back to court, if legalization does not happen by June 30.

Elsewhere in the agreement, DraftKings and FanDuel are given the green light to resume offering Paid Contests, if

“New York State expressly legalizes and establishes a statutory framework to protect consumers and regulate DFS Paid Contests on or before June 30, 2016.” (emphasis added)

Does passing a bill mean a statutory framework is established? Arguably so. But the agreement is very clear that that legalization has to happen (it says “and”, not “or”), and the framework alone is not enough. Even more importantly, it says legalization needs to happen before June 30, for DFS to resume operating in New York.

Did legalization happen? It did not. Passing a bill alone does not make anything legal unless it becomes law. A bill becomes a law when the governor signs it, ordoesn’t do anything assuming the legislature is in session. If a bill is sent to the Governor, when the Legislature is out of session, then a failure to act has the same effect as a veto. In any event, the legalization certainly did not happen on or before June 30, 2016.

Can DFS try to be clever and argue that the June 30 date above only refers to establishing a statutory framework and not legalization? By their track record, that wouldn’t be surprising. It also would be a hopeless Hail Mary. Reading the entire agreement in context, legalization by June 30 is clearly the intended deadline – see the first excerpt above. Also, if establishing a framework alone is the only thing that the parties have intended to happen before June 30, the agreement produces the impossible conclusions that daily fantasy cannot operate and can operate in New York at the same time, and the parties are going back to court yet DFS can operate in the state. That does not make sense at all. Therefore, there is no room for being clever here.

DraftKings and FanDuel Daily Fantasy Gambling

DraftKings and FanDuel Daily Fantasy Gambling

Fireworks? It’s more like firestorms. You may recall that Assemblyman Pretlow called the New York bill a touchdown and you may also recall that DraftKings is known for premature celebrations before touchdowns, DeSean Jackson style. DraftKings uncorked the champagne right after the bill has passed,boasting they are back in New York, only to retract that statement, along with the inaccurate language that there were more people in New York participating in fantasy sports than the state’s entire population.

Will Schneiderman enforce? Arguably this puts him in a difficult position politically. He cut a deal, and was reported to be ok with the DFS bill in New York. Yet, a deal is a deal. The agreement came with a deadline, and the deadline has passed. DFS, for once, should face the consequences of its actions. The boat has sailed, and the matter should go back to court.

Doesn’t sound like celebrations to us. Bernie Nicholls agrees.

“Having played in the NHL, July 1st is always on my mind as free agency is a very important time for most teams and their fans.  I always watch closely regardless of whether or not I was playing. The day or two leading up to and after are always filled with anticipation. This year was a little different for me as I was anticipating what ‘was’ to be a very important decision coming out of New York on daily fantasy gambling. Now, I know that DraftKings and FanDuel have attempted a victory lap but that’s jumping the gun. New York Governor Cuomo hasn’t signed the bill nor has he even hinted he would. That means that daily fantasy gambling missed the June 30, 2016 deadline and therefore STILL illegal in New York. If we still have laws, Attorney General Schneiderman should soon be taking this up in the courts where it belongs. A deal is a deal and daily fantasy blew it.”

Daily “Fantasy Lawmaking” in New York – Gambling on Chickens and Horses?

Pop quiz of the day. Which one below is correct?

  1. Chickens are not animals
  2. Betting on horses is not gambling
  3. Daily Fantasy Sports (DFS) is not gambling

The answer? NONE OF THE ABOVE, of course.

Lawmakers would beg to differ. Louisiana apparently once excluded chickens from the definition of “animal” to allow cockfighting. Betting on horses is exempt from the gambling definition in the state of New York. At the very least, however, appropriate procedures were followed when betting on horses was allowed in New York in 1939.

Lawmakers bested those efforts on June 18, 2016 when they passed the daily fantasy sports law in the state of New York sending the bill Governor Cuomo’s way for signature.

New York Governor Andrew Cuomo (AP Photo/Mike Groll)

New York Governor Andrew Cuomo (AP Photo/Mike Groll)

It is amazing how bribing politicians… uh… I mean “lobbying” can turn the world upside down. When illegal corrupt well-funded organizations want something to happen in the political realm, common sense apparently cannot stand in the way. Just bring the buckets of loot and bingo!

What’s next? Passing a law that says women are not individuals so raping them is not a crime?  Or how about “murder” only applies to ending someone’s life with a fork? This is a slippery slope, folks. Lose the rule of law and back to the stone age we go.

Clubbers in Bed and New York Legislation at Work

The New York legislature was scheduled to adjourn on June 16. Instead, they went overtime and passed the daily fantasy sports bill on June 18. It happened after 2 am. Couldn’t this bill wait a bit longer? Why the middle-of-the-night rush? I didn’t see throngs of angry crowds asking for immediate action on this matter. Senseless gun violence and sensible laws to help prevent it, yes. Daily fantasy sports gambling, nope.

It is hard to believe but football is just two months away. DFS needs revenues fast. They lobbied harder than the clubbers partied. Governor Cuomo still needs to sign it so it’s not a victory yet, but it is a shame that it even came down to this.

Quick… Spread Some More Lies

The fact that the Governor hasn’t yet signed the bill, of course, is just a tiny little non-important detail for DraftKings. They can’t be bothered by such things. Their immediate press release touted that Daily Fantasy Sports is Back in New York. Of course, that press release is nowgone. The newer version retracted the ‘Back in New York’ statement along with the claim that tens of millions of users will continue to ‘play the game’. Silly us – we didn’t realize there are more people in the state of New York playing daily fantasy sports than the entire state population.

What happened boys? Did you get really excited in the middle of the night after the bill passed and decide to see what you can get away with before your lawyers pulled the plug? Well, guess what, the Internet never forgets…

Alas…  you don’t care about facts, do you? You also claimed that you were 100% legal. ‘Barely legal’ would have been better. Hey, it’s catchy advertising that reels in the suckers. Of course, technically that statement was never accurate in the first place so enjoy the loot until the Feds come…again.

Violating the New York Constitution

The New York Constitution is very clear – offering any kind of gambling (unless exempted already) is against the constitution. Dan Wallach, an expert in sports and gaming law concurs that DFS will potentially trip up.

What about the horses you might say? Good question. Betting on horses is exempt from gambling in the state of New York. Of course, the exemption only got on the books once the procedures were followed in a process that would take at least two years today. DFS does not have that kind of time or patience so they bribed (“lobbied”) and rammed the DFS bill through the legislature in the middle of the night knowing full well it won’t stand the daylight.

Can’t Claim Ignorance

Seal of the State of New York

Seal of the State of New York

It would be one thing if the unconstitutionality was a subtle issue that wasn’t raised. It was openly debated for everyone to see at the New York Assembly. The irony was rich as the person who argued the unconstitutionality of the DFS bill, Assemblyman Andy Goodell, is none other than the cousin of one of the most powerful men in sports, Roger Goodell, NFL Commissioner. Amazingly, there were still 91 people who were clearly not bothered by a very serious issue before sending the bill to the Senate. This is “fantasy lawmaking” at its best.

Enough with This Skill Argument

“DFS involves skill, so it’s not gambling”. This argument is the only thing that stands between DFS and unconstitutionality. Why? The moment we realize that skill and gambling are not mutually exclusive, DFS becomes gambling and the New York legislature cannot do anything without a voter referendum.

The absurdity of the logic can be readily followed by an 8th grader:

  1. Sports betting involves skill. (If you don’t believe us, ask NFL or the Department of Justice.)
  2. Skill and gambling are mutually exclusive.
  3. Therefore, sports betting is not gambling.

So, all the geniuses out there who think skill and gambling are two entirely separate things, why don’t you go ahead and start a betting operation in New York after Governor Cuomo signs the bill? DFS already gave you the recipe: Ignore the law, make money, use the money for bribery (uh… lobbying) and use skill as a cover. Presto.

There is a website called Legal Sports Report. These guys follow the daily fantasy sports industry for a living and here is what Dustin Gouker had to say “I am tired of extreme opinions that it can’t be both skill and gambling.”

And please don’t tell us the issue is the federal law. DFS has the exact same problem sports betting has with federal law. UIGEA, of course, never made daily fantasy legal. That was yet another lie disseminated by DFS.

Oh… and then there’s the fact you put this “non-gambling” enterprise under the gambling regulators. Good luck explaining that. Ah yes… the new world of “fantasy” lawmaking.

Hold Your Horses

Again – don’t claim ignorance. Assemblyman Andy Goodell made the argument, ever so eloquently, on the Assembly floor. He observed, rightly, that betting on horses is gambling despite the existence of skill and noted that the legislature had to go through a proper process to exempt it.

Yet again, DFS doesn’t have that type of time. The DFS sponsor had a response: “Betting on horses wouldn’t be gambling under New York law today.” WTF?!?

That’s very interesting, Mr. Pretlow. That completely defies common sense and the companies that hired the carpetbaggers (I mean… lobbyists) who convinced you to push this bill through have admitted that betting on horses is gambling in their New York court filings! Maybe they forgot to cover that part during the lobbying discussions? Oops.

Never mind… your impeccable logic elsewhere also leads to the conclusion that roulette is not gambling, among other things.

How do you sleep at night? Don’t get too comfortable on that pile of cash because you’ll need it soon…

The DFS Bill That is DOA

We are hopeful that Governor Cuomo will come to his senses and not sign this illegal bill. Even if he does, this bill is dead. DFS has simply kicked the can down the road by trading an almost-zero likelihood event (winning in New York courts) with another (prevailing on constitutionality). It’s a timing play they will come to regret. They may get a few dollars from New York this fall but the moment the constitutionality is challenged and standing is granted, not only will this bill be dead, but the whole industry will go down with it. A negative court ruling in NY would have been pretty bad. This will be even worse.

DFS is “The Walking Dead”. Time will prove that out.

Miss California, Inequality and Transforming Society through Sports

She is Miss California. We will not opine on whether or not she’s the hottest thing in West LA, but instead will discuss her answer at the Miss USA Pageant. The media certainly ganged up on her. But you know what? Her answer wasn’t bad at all.

Let’s see. She said

“the rich need to be able to be giving”

Well, yes. The rich should give. We’ve read some “Monday morning quarterback” commentators saying that she should have brought up taxes. Of course, taxes are essentially “giving” through fiscal policy. Giving can, and should, occur regardless of what the tax code says. Her answer is much broader and much more appropriate for a situation where one has only 30 seconds and a pretty deep question.

“The poor need to work hard”

True again. It is hard for the poor to get out of where they are, but they should not sit idle or feel entitled and instead keep working hard. One commentator noted that Trump essentially said the same thing, but we don’t recall him getting this type of treatment.

“the middle class needs to come together and find an in between.”

This one could have been articulated a little bit better, but again, yes, the middle class needs to come together. Even the answer she started to formulate initially, “I think there is a middle class”, is quite decent, once interpreted charitably as “I think there should be a middle class”.

All the haters out there don’t realize that nobody could provide a really good answer to this question in the last 50 years. If they did, we wouldn’t be in this situation.

Now…As we said before, whatever is left of the middle class will be destroyed if sports gambling is legalized. If we only realize that sports and money can mix in socially beneficial ways and deliver purpose – we call that SportsFolio – we can make the middle class stronger instead of destroying it – that’s SportsVote.

Oh – and our answer to the inequality question is SportsCore – delivering education reform through sports. Focusing particularly on improving financial literacy through sports, we envision that we’ll make a dent in the inequality problem.

And that would make Miss California proud.

Wrecks, Lies and Rape – A Daily Fantasy Love Story

Have you ever reluctantly agreed to entertain the obnoxious friend of the person you have your eyes on? That person would not be anywhere near you if it wasn’t a necessary price to pay for greater good. Sometimes, the exact same thing happens in government. A bill has no chance to pass on its own. Recognizing this, it gets attached to another bill, one that is typically much larger and less controversial.

Daily Fantasy Sports (“DFS”) is a big smelly mess that threatens the middle class and their desperately needed financial security.  The funny thing is… it all began with another measure that was intended to keep our people safe: port security. The Unlawful Internet Gambling Enforcement Act (“UIGEA”) was attached to a port security measure in 2006. Who would dare say ‘nay’ to port security, right? It would have not made it otherwise, but the UIGEA sailed through Congress under the wings of port security.

UIGEA itself was not the problem as much as its execution.  Every new law had good intentions, but creates unintended consequences, especially when it is not properly vetted.  When it came to UIGEA, there were no deliberations, no discussions. Its author said “No one ever conceived of it becoming a large scale activity or that it could transition into one-day contests.”

Some would say the rest is history. I guess that would be Nigel Eccles and Jason Robbins, CEOs of FanDuel and DraftKings, respectively. For the rest of us, and especially for the middle class, it’s the beginning of the end.

What Did UIGEA Do for Daily Fantasy Gambling?

NOTHING. It did not make daily fantasy legal. That was a lie that daily fantasy disseminated. Investors bought into it without much questioning. The troublemakers, FanDuel and DraftKings, boasted that they are 100% legal on the heels of UIGEA. Even liars get to a point where they totally collapse under the heavy weight of their deception. Recently, both operators retracted that statement, realizing such a blatant falsehood won’t fly anymore, but the damage was done.

Of course, even before they changed course to save face, the daily fantasy sports betting industry was speaking out of both sides of its mouth. Privately they acknowledged that state law would supersede UIGEA, hoping the states would give them an easy pass.

The States Did Not Play Along

That did not happen. States started declaring daily fantasy illegal under state law one after another. That created a real problem for DFS. Not only did they start missing out on significant revenue, but they also started feeling the exposure to criminal liability. The UIGEA was never a lifeline for DFS but that’s the blatant fraud they spread. Over time, it started to look like a death penalty. The UIGEA is not even the only federal law that can put DFS executives in jail. The Illegal Gambling Business Act of 1970 (“IGBA”) is another one. The key similarity is this: Once you violate the state laws, which DFS has and amazingly continues to do, federal laws can piggyback on those violations and create real trouble.

We the Further North

Quebec should be proud of itself. The second largest province in Canada by population is reportedly on the verge of blacklisting daily fantasy sports as an illegal gambling activity. Look at Canada as an outsider all you want. Sometimes it takes an “outsider” to see things more clearly.

 

“DFS is Gambling” Says a CURRENT Daily Fantasy Sports Operator

For a long time, we’ve been saying that daily fantasy sports is illegal gambling and that federal laws can put the daily fantasy sports executives in jail, but don’t take our word for it. Believe it or not, a current daily fantasy sports operator now agrees with us.

You heard that right. A current daily fantasy sports operator is saying that they are at risk of being charged for the same crime under the laws aimed at syndicated gambling and organized crime. If this was a proposed Hollywood script, it would have been tossed out… but not with DFS. The game goes on.

OF COURSE DFS Knew It Was Gambling All Along

The most amazing thing is that this is not even the first time a daily fantasy operator acknowledged it is gambling. Every step of the way daily fantasy operators tripped up and showed their true nature.

A CEO of a DFS site said DFS is like “a sports betting parlay on steroids”. Sports betting on steroids. Think about that.

Then Jason Robins (CEO of DraftKings) attached the words “betting” to the images all over the place on the DraftKings website.  Elsewhere, he said the DFS concept is “just like a casino” and even pitched his company to investors as gambling.

Then, the Executive Director of Small Business of Fantasy Sports Trade Association declared that DFS is a bet, in front of the entire United States Congress, no less… just weeks ago.

Let’s see, by our count, the argument that daily fantasy sports is gambling is made by three daily fantasy sports operators and an entire association. This is just what surfaced… so far.

The chances are there is not a single person in the industry who thinks daily fantasy is not gambling.

Go Ahead and Put Your Entire Life Savings into Daily Fantasy

That’s what daily fantasy is effectively telling you. They argue “customers are not risking anything”. Bernie Madoff is probably having a good laugh at this.

Adam Silver, NBA Commissioner and one of the main proponents of DFS disagreed publicly, noting that “you are putting money at risk.” So did Jay Correia, another strong proponent of DFS, who authored a book titled Daily Fantasy Sports.

The only thing that stands between the ridiculous argument of customers not risking anything and that argument being publicly destroyed by the New York Supreme Court is the New York legislature.

Daily Fantasy Does Whatever It Takes to “Win”

It would be one thing if DFS showed some class and bowed out gracefully. Ah, sorry, you can’t expect class from criminals, can you? Instead, they kept spreading more lies and changing the narrative.  Regulation, which was a no-no, all of a sudden became a desirable end game. But, nothing could be left to chance, so some questionable actions were undertaken:

* Contacting a college student so he doesn’t utter the “G” word to the media? Check.

* Snubbing the United States Congress when they were invited to testify? Check.

* Allegations of bribing the Illinois legislature which derailed the bill there? Check.

Russian dopers are angels compared to these guys.

Daily Fantasy Sports Abuses Traditional Fantasy Sports (TFS)

DFS treats TFS like an abusive son treats his mom, alternating between the need for protection when vulnerable and abusive behavior when not. In courts, daily fantasy is happy to align itself as closely as possible to traditional fantasy. Similarly, when they need the power of many or “strength in numbers” as the Warriors fans would say, traditional fantasy becomes a powerful ally. There are 56 million traditional fantasy sports participants in North America and a very small percentage of that is daily fantasy. “Fantasy Sports for All” sounds great when it’s time to send e-mails to the legislature.

When it’s time for legislative action, they don’t give a damn. One of the NY bills on the table (Pretlow’s) may kill traditional fantasy sports as we know it. In a lot of bills across the country, FanDuel and DraftKings are the only guys who can pay the steep fees. Who is paying for all this? I’ll let you answer that one.

Is it fantasy for all? Nah. It’s more like “We are in this together until I don’t need you anymore.”

Traditional fantasy sports – listen up! You thrived way before daily even existed and you will continue to thrive way after daily dies. Don’t get in bed with a deadly snake.

Are We On Our Way to Total Lawlessness?

Every house has rules. If our children violate them, they bear the consequences whatever that may be. As parents, we don’t change the ‘no hitting’ rule after our child beats up another kid, do we?

A well-functioning country operates the same way. There are laws. If people break the laws, they face the consequences.

Marc Edelman, Law Professor and a sports & gaming law expert said (from Correia’s book, Daily Fantasy Sports):

“Companies that jumped the gun in entering the ‘daily fantasy sports’ marketplace in violation of the existing state law should not be allowed to reenter – at least not for a period of time – and perhaps some of the worst gun jumpers should be prosecuted.

DFS is illegal in New York, period. They violated the law, and they should bear the consequences. If they want to argue that daily fantasy is not illegal gambling under New York law, by all means. They already have an invitation to the New York Supreme Court in September, and pending legislative action by June 16, that’s where we’ll see them … going down.

New York, New York and “The Big Ugly”

Frank Sinatra sang “If I can make it there, I’ll make it anywhere.” That’s what DFS is hoping for, too, by conniving their way through New York to live another day.

DFS bills face lots of obstacles and now we are hearing that it may get attached to another bill. The ‘obnoxious friend’ situation. It even has an appropriately disgusting name: “The Big Ugly”.

Wake up, people! This is the approach that got us into this mess into the first place. We can’t do this again or the quicksand will suck us down the bottomless pit. It is time to stop this criminal madness and start anew with a sensible policy or daily fantasy will do what Dr. Octavius couldn’t do in Spider-Man 2… annihilate New York and then the rest of our country.

To be clear, DFS bills must be rejected in whatever form they come in front of the legislature. Be even more skeptical when you see it paired up with something good. It’s called putting lipstick on a pig. Would you kiss it?

Wrecks, Lies and Rape

To conclude:

* DFS will wreck our country and our economy

* DFS is raping our sports fans and innocent bystanders

* DFS is spreading lies, lies, and more lies.

Again – don’t take our word for it. Listen to a DFS podcaster and respected industry veteran:

“The idea that these sites exist so that regular guys can make a lot of money playing daily fantasy sports is a lie. FanDuel and DraftKings are optimized for power players to rape and pillage regular players over and over again.”

Reflections on DFS Congressional Hearings

People who were expecting a robust discussion on DFS did not get what they were looking for. The only expert in the room, Ryan Rodenberg, got very little speaking time. Instead we heard from Steve Brubaker who, in a come to Jesus moment, described daily fantasy as a bet. This is the Executive Director, Small Business of Fantasy Sports Trade Association, by the way. Is it fair to say that Congress didn’t call him out on that because everybody already understood that daily fantasy is sports gambling? He also appeared to have been stuck in 2015, arguing that daily fantasy is legal in 45 states, only correcting himself after Rodenberg noted the real number is actually closer to 35. Finally, he admitted he is not an expert in daily, making us wonder what a non-expert on daily is doing on the witness stand in a Congressional hearing about daily fantasy sports.

Locke had the best hair and a lovely accent, but he also openly admitted that he has never worked with daily fantasy. Another one bites the dust. Ultimately it was Locke and a couple others on the panel that mostly just promoted their own businesses. These are people who would see increased revenues if sports gambling were to be legalized in the U.S.

Kurt Eggert provided useful insights around scripting. Peter Schoenke was not helpful when Pallone grilled him on DFS specific questions, like why DraftKings did not release the internal investigations memo around Ethan Haskell. Schoenke also misled the Congress, intentionally or not, arguing that daily fantasy is not different from traditional, season-long fantasy. Really? The substantial differences between the two are well documented in the New York Court proceedings, and we have dedicated a specific section to it in our amicus brief submitted to the Supreme Court of New York. Schonke either doesn’t understand a product he oversees, or he is trying to ride on the friendly image of traditional fantasy sports, intentionally misleading Congress.

Meanwhile, the real expert, Ryan Rodenberg, mostly sat silently, because only a couple of questions were thrown his way. How is it that a self-admitted non-expert in daily fantasy gets 20 mins of speaking time, and the guy who knows the industry backward and forward gets two? Beats us.

Legal expert Dan Wallach noted the meetings may have been a colossal waste of time. It mostly was, but the real culprits here are the DFS operators, who snubbed the federal government by not even bothering to show up. In an era where everyone is looking for an opportunity to get their story out, their absence is telling and all you need to know about DFS.

What business spends hundreds of millions of advertising dollars then declines some free advertising on the biggest stage when given the opportunity?  Answer: A business that has something to hide.

Why DFS is a Federal, not State Issue

If you are still curious what DFS is and what role the federal government should play, you have come to the right place.

  • Skill and gambling are NOT mutually exclusive

For DFS or anyone still buying the story of skill implying that DFS is not gambling, we have one question. Does traditional sports betting involve skill? (Hint: Department of Justice, NFL and Mark Cuban all think so). ‘Nuff said.

  • DFS is Not a Game

You may be scratching your head now. We can hear you. “I understand skill and gambling can co-exist. But I also know more skill means less gambling. Like chess. How do these reconcile?”

Excellent question. In fact, that question is the heart of this debate.

Here is the answer. Skill moves you away from gambling if we are talking about games. Chess vs. roulette with poker being in the middle.

Skill doesn’t do jack when we are talking about markets.  If you are skilled you can beat the rest of the market participants. That still doesn’t tell you anything about whether the market is gambling or not.

DFS has a better argument when they say it involves skill. But is it a game?

Think of your favorite game. Chess, football, scrabble, blackjack? If you are hosting a party in your backyard and your cell phone is upstairs, you can play all of these, can’t you? But you can’t bet on sports or play daily fantasy sports because without access to those games, you can’t determine a winner.

We formalized this simple insight after being inspired by Elon Musk. We called it the Mars test. Here is a nice visual, and here is a write-up. We covered it in our amicus well.

DFS and sports betting are markets, not games. A game is local, something you can do with your friends in isolation. Traditional fantasy sports was mostly local, and it tricked us into thinking fantasy sports is a game. It’s not. It’s hard to accept this fact after hearing everybody referring to DFS as a game a zillion times, but can you name another game that you can’t play on Mars? Go ahead, we’ll wait.

  • The Federal laws apply for market activity

As a broad governing principle, states are responsible for regulating local activity, like casino gaming, and the federal government is accountable for the regulation of markets. What about Nevada you might say? There is sports betting there. Well, Nevada is really a special case. Congress passed PASPA precisely to prevent spreading sports betting but grandfathered a few states including Nevada. Also worth noting is the fact that while still a market, sports betting in Nevada is an intrastate activity (although this idea is certainly pushing the boundaries and is likely a violation of federal law). DFS is interstate commerce, crosses state lines and it is well within the federal government’s authority to regulate if it so chooses.

Outlook for Daily Fantasy Sports

We believe that daily fantasy sports is clearly gambling and should be shut down by the federal government. It is not clear whether that will happen.

Gambling proponents hope that the federal government will move in the direction of enabling legislation at the federal level. It is not clear whether that will happen either. Commentators generally agreed that nothing will come out of this first congressional hearing. Dustin Gouker, sports journalist and Legal Sports Report contributor tweeted that he does not expect anything will come out of these meetings.

That is indeed the most likely outcome. The New Jersey case is on deck, however, and depending on the result, it may create some momentum toward legalized gambling. That would be a disaster for America, and turning America into a sports book will end the American Dream forever.

A Better Path

Ultimately, it all comes down to one huge misconception: people like gambling on sports. What people really like is speculating on sports. That is a very subtle difference. Gambling characterizes a market, and speculation describes individual activity. Purposeful markets where speculation, investment and risk management happily coexist are already a big part of the American economy. They are called the stock market and derivatives markets. While they are not perfect, they played a huge role in making America the leading nation it is today.

Can we do the same for sports? Can we mix sports and money in a way that is a win-win for the governments, leagues, sports fans, and America?

The answer is YES.