Fantasy Sports Gambling 101

Legal Online Gambling

Fantasy Sports Gambling 101
July 27, 2015

If you listen to sports radio for any length of time, you will be inundated with ads for the major fantasy sports online-betting services, FanDuel and DraftKings. Both are wildly popular and offer a legalized form of sports betting with daily or weekly payouts. According to the Fantasy Sports Trade Association, nearly 57 million people are expected to play fantasy sports in 2015.

Not only are they popular, they are also lucrative. The estimated total betting ... sorry, "entry fees" (wink, wink) is $2.6 billion for 2015, expected to rise to $14.4 billion in 2020 according to Eilers Research. FanDuel's valuation as reported by the Wall Street Journal is nearing $1.3 billion, and DraftKings is expected to crack the $1 billion mark as well with its newest rounds of funding.

Smelling revenue, Yahoo is jumping into the mix with Yahoo Sports Daily Fantasy. This makes perfect sense for Yahoo as they already have millions of subscribers to their fantasy sports service; adding gambling is a relative no-brainer.

These are not the baseball rotisserie leagues of old. Compared to the classic fantasy sports leagues that compete as a group over the course of a season, FanDuel and DraftKings offer the same principle compressed into a daily or weekly contest.

Each site has multiple contests going on at any time in multiple sports. They may be head-to-head competitions, leagues, tournaments, 50/50s (cash prizes for finishing in the top half of a field) or other variations. All four major sports (NFL, NBA, MLB and NHL) are represented, as well as the PGA and college football and basketball – even mixed martial arts (MMA) contests are available.

After setting up an account and payment method, choose the contest you want to join, pay the appropriate entry fee and select your team. Compared to year-round leagues where only one person can have a player, any player can be on any team or all teams. Your team just has to stay under the league's "salary cap" (salaries are assigned according to the athlete's skill level and past performance).

Winners are determined by the total points a team's players earn compared to others. Points are earned by various accomplishments, such as runs or strikeouts in baseball or touchdowns scored in football. Entry fees and winnings are transferred through PayPal or credit-card accounts.

How is this legal when sports betting is illegal in 46 states? Fantasy sports betting is not legal everywhere – five states have state laws against the practice (Arizona, Louisiana, Washington, Montana and Iowa) – but the difference elsewhere is a distinction between games of chance (such as the lottery) and games of skill. For some reason, betting on the winner of a game between the Dallas Cowboys and the New York Giants is considered luck, while compiling a fantasy roster is considered skill.

The more likely underlying reason is to avoid the temptation to fix games. By the very spread-out nature of fantasy leagues, there is little impetus for any player to "throw" a statistic like dropping a pass or striking out at just the right time. Betting on the outcome of real contests does introduce that concern, and has ever since professional sports came into existence.

Whatever the distinction, fantasy leagues are likely here to stay. If you are interested, check out the websites and try one of the leagues. Just remember that you are gambling, so do not bet more than you can afford to lose. People on the sites have likely been playing a lot longer than you.

Remember the old poker game analogy: one out of every five poker players is a sucker. If you look at the other four players and can’t identify the sucker, guess what?

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