Daily Fantasy Sports: Games of Luck or Skill?

Bloomberg News

There’s not a whole lot that New York Attorney General Eric Schneiderman and daily fantasy sports companies see eye to eye on.

But as they prepare to face-off in court, the state’s top law enforcement officer and the industry’s two biggest players agree on this: the legal battle comes down to a question of whether the online contests are gambling.

FanDuel Inc. and DraftKings Inc., the targets of the attorney general’s clamp-down, let their customers compete for cash prizes by drafting virtual lineups of professional athletes and scoring the real-word performance of the rosters in rapid contests as short as a day. Entry fees range from as little as a quarter to more than $10,000, and cash prizes can reach $1 million.

Mr. Schneiderman is suing to stop the companies from accepting wagers in New York, one of their largest markets. He claims the online sites are

unregulated, illegal gambling operations like an underground poker room. The companies say the charge is false and that Mr. Schneiderman has no business telling them what to do.

Next week, the two sides are facing off in court before a New York judge who is considering whether to grant an injunction sought by Mr. Schneiderman that could force the companies to suspend their New York operations.

This is just the first stage of litigation, which could take months or years to play out, if the parties don’t settle. But the big question before the judge — is it gambling or not — is the central one in the whole case.

In some ways, gambling isn’t a “I-know-it-when-I-see-it” kind of activity. It’s actually defined in New York penal law, which says:

A person engages in gambling when he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.

The words “control or influence” could be key here. Some games easily fall into one category. Chess players, at least skilled ones, can control or influence the outcome of a match. Lotto players pretty much depend on the mercy of Lady Luck.

But what about daily fantasy sports? Mr. Boies calls it a game of skill.

“Anyone who believes that DFS players don’t control how they do in the contests has never played those contests,” litigator David Boies, counsel to DraftKings, told reporters Friday. He said the best players in the industry don’t just win once but keep winning because they have more knowledge about the sport and the players.

Mr. Schneiderman’s says it’s a game of luck that most contestants lose. His office told the court in a brief filed this week:

Like any sports wager, a DFS wager depends on a “future contingent event” wholly outside the control or influence of any bettor: the real-game performance of athletes…The moment a DFS player submits a wager, he becomes a spectator whose fate is sealed by the real-game performance of athletes. The rules of DFS make this relationship crystal clear.

Don’t bet on that, Mr. Boies said. “It’s very important for us to focus on what the law says.”


New York Attorney Eric Schneiderman
Associated Press