Today, the big names in online daily sports fantasy announced that they would be “suspending” action on college sports.
According to a report by ESPN, this action is the result of negotiations between the online sports betting services and the NCAA, which, not shockingly, opposes any kind of betting on college sports. The organization doesn’t like the pressure it could exert on its young, inexperienced, and “amateur” players. And while the “daily fantasy” services continue to insist that they offer games of skill and not chance, their legality is rapidly becoming a national issue. ESPN points out:
College sports, both football and basketball, represent only 3 percent of FanDuel’s revenue. At DraftKings, the NFL daily fantasy market is 10 to 20 times larger than the college football market.
So the loss for these services is minimal, while making a deal with the NCAA, may forestall it from joining those who want to see the services dead.
A majority of states—30 so far—have introduced legislation regulating the action of daily fantasy sports this year. Five of those bills have an explicit ban on amateur sports being included in daily fantasy. Indiana and Massachusetts already have regulations prohibiting it. Plus, FanDuel and DraftKings are in a battle with the New York State Attorney General over whether they can even operate in the state. And then there’s the FBI, which is also poking around to see if this is legal.
Whether or not it makes sense for websites to have to negotiate so many different laws and change how they operate in every state is another question. But daily fantasy is probably betting on the state laws being, on the whole, less restrictive than a federal one would be. Part of the reason they insist on being called a game of skill rather than a game of chance is to avoid existing prohibitions against online gambling in games of luck.
FanDuel’s statement on the matter bills the whole thing as “voluntary” and trumpets the cooperation of the NCAA on “smart regulations for the fantasy sports industry.” The statement says, in part:
As a part of a new agreement with the NCAA, we have decided to voluntarily and indefinitely suspend college sports contests in all states upon the conclusion of this week’s college basketball games. As a leader in calling for smart, common sense regulations for the fantasy sports industry, FanDuel has had months of productive conversations with the NCAA, their member institutions, and various state legislators to better understand their concerns around fantasy sports contests based on amateur athletics. It is clear that this is an issue that matters to a variety of constituencies and we feel that the best path forward is to suspend offering these contests pending resolution on the issue within state legislatures.
The rest of the statement is focused on projecting a rosy outlook for fantasy sports, which is no surprise. The services can’t make this look like a setback while they gear up to argue in state legislatures. Especially since NCAA president Mark Emmert said in his statement, “We will work diligently with our member schools over the coming year to ensure such amateur sports ‘carve outs’ are included in pending states’ legislation.” Having the NCAA lobby to just exclude college sports from online fantasy is much less dangerous to the industry than having them lobby against the sites as a whole.
In the short term, what this means is that any March Madness-based games will end at the end of this week. A spokesperson for FanDuel told me that this means the suspension will begin, “After the games on Saturday. You can’t run fantasy with just one game so we’ll be done by Monday anyways.”
In the long term, states might pass enough laws deciding what FanDuel and DraftKings can do in each state that they might be up and running, at least in some places, by the time college football starts back up again.