Betting on sports is illegal in most states, California included. Nevertheless, betting on a hand-picked group of star athletes — also known as playing “daily fantasy sports” — has become a multibillion-dollar enterprise seemingly overnight, spurred by a barrage of advertising and investments from major sports leagues. Lawmakers and attorneys general across the country are trying to decide whether to regulate fantasy sports betting or simply ban it. As usual, though, they’re way behind the curve.
In a fantasy sports league, participants “draft” teams composed of athletes from a variety of professional teams, then compete against each other based on how their players perform in real life. People have been forming leagues — and betting informally on them — for decades. What’s different now is the emergence of fast-growing businesses such as FanDuel and DraftKings that charge players fees to play online, then award a portion of the fees to those whose teams prevail in daily or weekly contests.
That smacks of asking for forgiveness instead of permission, which seems to be the modus operandi for online businesses. Nevertheless, it may be too late to ban fantasy sports, which have already become a large part of the online gaming phenomenon. The leagues have drawn millions of players, just as online poker sites have developed huge followings regardless of their legality. The fact that fantasy sports leagues and other online games are legal in some jurisdictions means that it will be difficult, if not impossible, to stop people from playing them even where they are illegal.
The smart approach is to regulate the leagues, ideally within the context of a comprehensive approach to online gaming. That way the state can protect consumers against fly-by-night sites while requiring companies to use sophisticated technology to block minors and problem gamblers, pay fees that can be used for oversight and enforcement, and guard consumers against insiders competing unfairly for jackpots, as both FanDuel and DraftKings were accused of allowing last year. None of those protections is assured online today.