DFS is Over the New York Attorney General’s Head

I played fantasy sports for the first time more than 20 years ago. My high school friend (who is now a rabbi, by the way) invited me to join his rotisserie baseball league with a bunch of his friends who I didn’t know. I still remember going with him to someone’s house, armed with fantasy baseball magazines and pages of notes. We all sat in the living room and I hoped and prayed to get Frank Thomas in the auction-style draft. It was a blast and I still appreciate the effort the commissioner put in, compiling the stats from the newspaper and mailing us all the league standings each week for this five- or ten-dollar league.

I have played fantasy sports in some form or another ever since, mostly for no money at all. This football season, I finally got involved in real-money daily fantasy sports, but still really just for fun. I participate in a $10 guaranteed tourney each week and sometimes one or two other contests for a buck or two. I’ve made about $88 in profit so far, but even if I had lost, I knew what I was getting into and was okay with losing a few dollars here and there, or even my entire deposit over the course of many months, as long as I was having fun.

newyorkpostcardSo while I am no fantasy sports expert, I can safely say that because of my experience playing fantasy sports for more than two decades, my decade in the gaming industry, and my lifelong sports fandom, I know a HELL of a lot more about daily fantasy sports than New York Attorney General Eric Schneiderman.

I write today to explain that when it comes to DFS, he is a complete idiot blowhard.

I am not going to criticize his ruling that DFS is gambling. It very well might be according to New York law. And logically, it is totally gambling. It is just unfortunate that because of antiquated, foolish, and poorly written laws all over this country, that we have to debate whether or not a game is based on “skill” with some “chance” or is mostly “chance” with some “skill” element. It’s all just stupid and makes me feel like an asshole just for considering arguing about it.

Schneiderman Should Study DFS Before Spouting Off

What really grinds my gears, as the esteemed Peter Griffin would say, is how in chastising FanDuel and DraftKings in his cease-and-desist letter, Eric Schneiderman demonstrates that he does not understand how fantasy sports work. He is trying to make legal arguments based on falsehoods. Many of his legal arguments are likely correct, but when some use ignorant bullshit to prove a point, they all look weaker as a result. And the more Schneiderman’s rantings look like bullshit, the more it looks like he is just trying to score political points for going after an industry that not many people actually have a problem with, aside from the tidal wave of commercials.

Here is the passage from his letter with which I take the most umbrage:

We believe there is a critical distinction between DFS and traditional fantasy sports, which, since their rise to popularity in the 1980s, have been enjoyed and legally played by millions of New York residents. Typically, participants in traditional fantasy sports conduct a competitive draft, compete over the course of a long season, and repeatedly adjust their teams.They play for bragging rights or side wagers, and the Internet sites that host traditional fantasy sports receive most of their revenue from administrative fees and advertising, rather than profiting principally from gambling. For those reasons among others, the legality of traditional fantasy sports has never been seriously questioned in New York.

Unlike traditional fantasy sports, the sites hosting DFS are in active and full control of the wagering: FanDuel and similar sites set the prizes, control relevant variables (such as athlete “salaries”), and profit directly from the wagering. FanDuel has clear knowledge and ongoing active supervision of the DFS wagering it offers. Moreover, unlike traditional fantasy sports, DFS is designed for instant gratification, stressing easy game play and no long-term strategy. For these and other reasons, DFS functions in significantly different ways from sites that host traditional fantasy sports.

Schneiderman’s Skill Argument is Reversed

I eye-rolled several times while reading those paragraphs, but what really got me was the Schneiderman’s idea that “traditional” or season-long fantasy leagues rely more on skill than do daily fantasy sports and are thus okay. I like both season-long and daily fantasy. They are both fun. But to say that season-long leagues require more strategy is, well, pure fantasy. There is a lot more luck involved in season-long leagues because in a season-long league, the competitors do not have as much information as those in a daily fantasy contest do.

Take injuries, for example. You can’t predict injuries when drafting a team in August. A team whose athletes suffer season-ending injuries will be sunk in season-long fantasy. It’s all the luck of the draw. In daily fantasy, though, one has up-to-the-minute injury information and can avoid selecting hurt players.

And while we obviously have some sort of idea who the best players and teams will be, there are always surprises. Nobody thought Chris Johnson, Devonta Freeman, and Todd Gurley would be in the top five in the NFL in rushing at this point (maybe Todd Gurley… maybe). Few would have thought the Cleveland Browns would be sixth in passing yards. One might argue that it takes skill to see that coming, but that’s luck. If someone drafted Devonta Freeman before the season started and inserted him in their starting lineup, they got very lucky. Contrast that to daily fantasy where we have more complete information as to matchups, player performance, and player trends week-to-week. There is certainly luck involved – who knew Peyton Manning would have the worst statistical game for a QB in the past decade on Sunday – but because we have more information, we can apply our skill to fitting the best team within salary cap restrictions.

Schneiderman criticizes the DFS sites for controlling “relevant variables” such as athlete salaries, but this has nothing to do with gambling. This has to do with a company hosting a game and setting its parameters. And again, the salary cap feature of the game adds to the skill element.

You Should’ve Stopped While You Thought You Were Ahead

Perhaps my favorite part of Schneiderman’s letter comes in the paragraph that follows the passage I quoted above. “In practice, DFS is far closer to poker in this respect: a small number of professional gamblers profit at the expense of casual players,” Schneiderman writes. “To date, our investigation has shown that the top one percent of FanDuel’s winners receive the vast majority of the winnings.”

Now I know what you’re thinking. “Did the Attorney General just argue that daily fantasy is actually a skill game?”

Why yes, yes he did. If a small subset of “professional” players are winning money at the expense of “casual” players, this naturally means that, based on what Schneiderman has presented, that skill is a significant factor in the success of a DFS player. Were the game mostly luck, winners and losers would be distributed much more randomly.

Finally, I want to add that the vitriol coming from Schneiderman in word vomit like this:

Daily fantasy sports is neither victimless nor harmless, and it is clear that DraftKings and FanDuel are the leaders of a massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country.  Today we have sent a clear message: not in New York, and not on my watch.

Is an indication that all of this is just grandstanding and that the AG really has no clue.

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