Daily Fantasy Sports Study by Nevada Officials

AG Burnett of the Nevada Gaming Control Board

A.G. Burnett Has Been a Member of the Gaming Control Board Since 2011

Nevada’s Gaming Control Board Chairman, A.G. Burnett, announced this week he has ordered a “legal analysis” of daily fantasy sports. While no time table for the report has been announced, Legal Sports Report published that those results should be released soon.

It is possible that the Control Board’s findings could have a negative impact on daily fantasy sports, at least in Nevada. If research by Nevada’s gaming regulators showed that the DFS industry was sports gambling, it could spur the legislature to pass an anti-DFS law. If that happened, it might start a trend of such legislation, given Nevada’s pivotal status in the gambling industry.

Daily Fantasy Sports in Nevada

At the moment, daily fantasy sports operates as an unregulated industry in Nevada, because it is viewed by the government as a game of skill. Team owners in one-day contests select a starting lineup of players. To succeed regularly, competitors need to analyze injuries, match-up information, player news, team news, statistical trends, and weather reports. Each contest has a salary cap, so competitors also must engage in resource allocation. With so many factors involved, DFS is seen as a skill game by 45 US states.

AG Burnett’s Menacing Words

AG Burnett’s announcement should be seen as menacing by fans of daily fantasy sports, though. The Gaming Control Board likely would not announce an upcoming review, if that review did not have groundbreaking findings. If the DFS industry was going to get a clean bill of health, then Burnett likely would not have said anything.

At least some aspect of the industry is likely to come under censure. Perhaps the big brand name DFS services which provide player-versus-player contests only are given an endorsement. Lesser known player-versus-house DFS sites exist. Those services have come under criticism, because they set up a game similar to casino games table games, in which the odds are stacked heavily against the player.

DFS Sites Have a Lot to Lose

If so, then the brands like FanDuel and DraftKings might be happy enough with the Control Board’s findings. They are likely to see the player-versus-house brands as greedy troublemakers likely to bring unwanted state and federal attention on their industry.

Many gaming writers blur the lines between daily fantasy sports and traditional sports betting, though. If people who cover the gaming industry every day blur the lines, then the gaming regulators might do the same thing.

Joe Asher’s Opinion

The attitude was summed up by Joe Asher, the CEO of William Hill US. In a recent interview with Reuters, Asher was quote as saying, “I make my living in the gambling industry, so I’m hardly opposed to gambling. I think daily fantasy sports betting should be legal, just like I think traditional sports betting should be legal. But let’s not pretend one is OK and the other is not. Drawing some artificial line between the two makes no sense as a matter of law or policy.

That is a bit of a poisoned pill from Joe Asher. While he endorsed daily fantasy sports, he also equates DFS with a banned practice. Online sports betting is banned in all 50 states. He is saying they are virtually the same.

Why DFS Is Different Than Sports Betting

I’m not so sure. Betting on the Yankees versus the Red Sox is betting on one simple proposition: which team wins? Betting on a fantasy sports contest is betting on a complicated interplay of stats involving multiple games and at least 8 or 9 different key factors (players).

Once again, besides factoring in the various players to the equation, resource allocation is needed to find the best lineup. Certainly, a measure of luck goes into who wins or loses, but professional DFS players have been shown to win 90% of the time they play. That is not luck. Sports bettors might go on a lucky streak and win at a 60% clip, but most of the time, even the best can barely break 55%. With the vig, a player must win 52% to 53% of the time to be profitable. The vast bulk of players aren’t profitable.

If sports betting is akin to betting on blackjack (without card counting), then daily fantasy sports is akin to playing poker. Poker players can make a career based on their skill; blackjack players who don’t count card cannot.

American Legal Precedence Works Against Us

Even that might be giving too much, comparing DFS to poker. Recently, a Wisconsin judge ruled that poker was a game of chance and not a game of skill. Of course, even that judge said he thought card playing was a skill game–the previous legal cases binded his hands in saying otherwise.

Whatever the case, the UIGEA legalized fantasy sports. The reasons were it was popular with the mainstream of America, and because it was considered a skill game.

Nevada Gaming Executives

It is not out of the question that AG Burnett, who works closely with Nevada’s gaming executives, was prodded into the study by land-based gaming executives. Most of Nevada’s top casino operators have a dim view of online gambling in the first place. Sheldon Adelson of Las Vegas Sands has made it a crusade to get rid of all forms of online gambling, so it would surprise no one if he was against online daily fantasy sports. Steve Wynn of Wynn Resorts flirted with the idea of launching an online gaming portal, but decided the profits were too small to waste his time on a launch.

Jim Murren of MGM Resorts would be expected to embrace online gambling, because his Atlantic City properties owned licensed online casino and poker room, but even Murren has waffled on the iGaming niche. Only Caesars Entertainment is squarely on the side of the online gaming industry, but Caesars is embroiled in bankruptcy and several lawsuits stemming from their bankruptcy process. Caesars also just got a new CEO in Mark Frizzori, replacing Gary Loveman.

The fact is, the American gaming industry is a fractured, messed-up bunch. It was only a matter of time before they began to view daily fantasy sports as a rival for gaming dollars. These guys want a monopoly on sports enthusiasts’ cash. The Nevada Gaming Control Board is a government agency, but it is also beholden to one industry in the state of Nevada.

DFS is a game of skill, but that only increases the danger. When people who want to match wits over football and baseball and basketball decide to put a little money on the line, it’s better to put that money on contests at FanDuel or DraftKings. That makes one-day fantasy sports very dangerous to the Las Vegas Strip.