2024 Business Of Fantasy Sports Series: Education & Politics | How It Started | Mainstream Explosion | CBC v MLBAM | UIGEA | The Rise of DFS | The Fall of DFS | The Repeal of PASPA | Sports Betting Crossover | Fantasy Sports Feeds Sports Betting

 

In 2022, the US emerged from the pandemic with a renewed excitement around making the games more fun to watch. Like in the early 2000s, fantasy sports was the main feeder for sports betting with sites like Bodog and MVP Sportsbook funding the FSTA and many fantasy sports companies with huge sponsorships and ad buys. It is still the same, only the sportsbooks are regulated and in the US.

 

 

 

 

Why This Series & Why Now?

The reason to tell the story the way I did was to show that fantasy sports companies were feeding sportsbooks in the late 90s and 2000s. Player-oriented action at sportsbooks has always been focused on supporting the fantasy player. The same is true now.

To quote from last week’s article:

“We understand now that PASPA was an attempt to stop organized crime syndicates and offshore sportsbooks from compromising players. With the repeal of PASPA and more player bets at all sports betting outlets to support fantasy players, there is a greater risk of compromise. 

We can argue that the main reason fantasy sports got the UIGEA safe harbor is because requiring multiple athletes from multiple real-world games minimizes the chance that someone could corrupt the sport. You can imagine that fixing a fantasy contest is practically impossible.

Compromising a single player as was the case with the Jontay Porter scandal and subsequent lifetime ban, is way different from the Henry Hill gang compromising nine players from Boston College.

Player performance contests MUST be left to fantasy companies, where the entry fees are fixed. No one would consider compromising multiple players from different teams in any sport to protect their small contest entry. It is the size of the wagers coupled with single-player bets that creates the risk. 

Leave player-oriented contests to fantasy companies where they belong. Eliminate single-player bets at sportsbooks. Allow fantasy sports and sports betting to both be safe and fun.”

 

 

 

Hindsight Is 20-20

There are still bad actors in fantasy sports trying to make a quick buck. That is why we pushed for one “Control Agency” to work with the federal government. Let me be clear, the FSCA would have insured the integrity of the industry while continuing to spur competition from all size companies.

This week, we saw another fantasy sports company go under and thankfully all of the companies that struggled paid the accounts of the customers. These are not the first issues or the last with a state-by-state approach with less resources than necessary to handle a high growth industry.

In sports betting, we see scandals and issues with players being compromised, gaming the systems or regulations in certain states not being strong enough. That is why I would like to see Congress act to pass one universal set of laws nationwide that regulates and taxes gambling properly. I am sure that I am the only one. Unfortunately, we are too far down the state-by-state road for that, but confusion between regulations in each state and educating each state government on the nuances that make understanding the differences between fantasy sports and sports betting is very difficult.

Here is a recap of the battles that people asked me for:

  • NBA vs Motorola - NBA sued STATS and Motorola for distributing broadcasts of the games via statistics. The NBA originally won the case. In January 1997, Motorola & STATS appealed and won. The broadcasts are protected under copyright law, but STATS & Motorola reproduced only facts and not the expressions or descriptions of the games.

 

  • Federal Fines for Abetting - In the early 2000s, the federal government levied heavy fines for media and technology companies sending US residents to offshore sportsbooks. Largely these fines were levied using the Wire Act which said: “Whoever being engaged in the business of betting or wagering knowingly uses a wire communications facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.” This is from 1961. It is archaic, but it does force the geo-location services we need to stay in the US and segregate by state borders.

 

  • CBC v MLBAM - Leagues and players associations affirmed that the players owned the rights to their own statistics. In the landmark case, based largely on an Amicus Brief from the FSTA, statistics were deemed news and therefore public domain. In Oct 2007, a three-judge panel upheld that for the fantasy sports industry.

 

  • UIGEA - In October 2006, the federal government passed the Security and Accountability for Every Port Act which contained Title VIII, UIGEA. This section of the law attempted to stop illegal gambling by defining what a “bet or wager” was. The federal law limited financial institutions from processing transactions related to online gambling activities. Legislators decided that UIGEA did not have “supremacy” over the states so if the states had their own laws governing fantasy games, sweepstakes, games of skill, etc., those would take supremacy over UIGEA. 

 

  • PASPA - PASPA did not make gambling illegal, it only told states that they could not make it legal. It ran into constitutional issues under the principles of federalism when four states were exempted. The repeal of PASPA in 2018, allowed for all states to legalize gambling. For the last six years, we saw systematic legalization and regulation state-by-state. Of course, Congress can and, in my opinion, should act to pass one universal set of laws nationwide that regulates and taxes gambling properly. 

Phew! That was a lot.

Wanted to say a sincere thanks for indulging me with this trip down memory lane. Fantasy sports is my life. The turmoil we saw over the years only slows continued growth and innovation. 

Let’s stay together in ONE voice and work with the state governments and sports betting operators to make the games more fun to watch for all fans.