Rise in daily fantasy sports raises gambling concerns

AUSTIN (KXAN) –  It’s no secret Americans love sports. Nearly 52 million people are now part of various games through daily fantasy sports, where people can put big money down on an individual player’s performance.

Popular websites FanDuel and DraftKings dominate an industry projected to rake in $14 billion by 2020. But with some payouts over the $1 million mark, lawmakers are taking notice.

State Rep. Myra Crownover, R – Denton, sent a letter to Attorney General Ken Paxton,asking him to decide if daily fantasy sports is already against Texas law.

Radio station 104.9 the Horn broadcasts the latest from the sports world. Recently, it’s been daily fantasy sports. More and more fans don’t just want to watch, they want a stake in the game. Erin Hogan and Bucky Godbolt even host a two-hour show Sunday morning dedicated to daily fantasy sports.

“You’re going to watch the game anyhow. How about put a dollar, get into one of the dollar, two dollar leagues, pick a team under the salary cap, couldn’t be easier,” said Hogan on the radio program that it sponsored by FanDuel.

“It gives you the opportunity to be an owner and a coach, and a player, you get to do all of it, all in one,” said Godbolt.

And their listeners are getting in on the action.

“Guys are competitive, fans are competitive. Most guys I know don’t go to the golf course without having something on each hole,” said Hogan.

“I don’t play golf for free. I’m playing with my buddies, we play for something every time we go out there,” said Godbolt.

Andrew Busa runs FantasyHub, which is based in Austin—where all you need for a new company is a group of 20-somethings and a room of computers. 17,000 users logon for free but put real money on players.

“How can we change sports 3, 5, 10 years down the road cause that’s radically changing,” said Busa.

But with popularity comes scrutiny. Nevada is forcing companies such as FantasyHub to get gambling licenses. Just last week, New York ordered FanDuel and DraftKings to cease and desist, saying it’s illegal gambling. Last session, lawmakers in Texas discussed banning the operation of daily fantasy sports websites altogether.

Busa says they combat that scrutiny by contributing back. Every time a player plays with FantasyHub, they have the option to donate to their favorite charities. In total, players donate $5,000 a week. Players can also win meet-and-greets and receive autographed gifts – hoping to encourage donations.

“Not only is it incredibly lucrative in the present but it’s also a strategy for the future in the expansion of gambling,” said Brian Russel from the conservative advocacy group Texas Eagle Forum. He sees fantasy sports as a way to bring the casino into every home via TV, phone, computer—all of which consumes time and money. He says the “get rich quick” mentality advertised on TV preys on the poor and the less fortunate. “In principle there is no difference between you gambling on the Cowboys or the Texas Longhorns today, or on your Fantasy team tomorrow.”

“There was a law in 2006 that carved out Fantasy Sports from illegal gambling, saying it was a game of skill opposed to a game of chance,” said Busa. He says the scrutiny over DraftKings and FanDuel, makes it harder for him to run his own business. Any new regulations could come at a price he can’t afford. “That comes down to our lawmakers and congressmen. At the end of the day, people love fantasy sports because it improves their lives and it makes them happier, just the way going to a sports game makes people happier.”

Back at the Horn, they think their fans play more for competition and camaraderie, but a few dollars down makes it exciting.

“People write that off as maybe I can get lucky. Maybe it’s like the lottery, you don’t win unless you play,” said Godbolt.

The Texas constitution bans placing bets on the outcome of a game or a player’s performance. County attorneys handle all gambling cases. The Travis County Attorney tells KXAN because people are betting on fictional teams and combinations of players, and not an actual game, it’s not against the law.

Things can get pretty dicey when law enforcement gets involved.The Federal Bureau of Investigations is investigating some of the largest fantasy sports companies for possible insider trading. Earlier this year, a DraftKings employee won $350,000 on FanDuel. Investigators say he used inside knowledge from his company to get an unfair advantage.

DraftKings and Fanduel have not yet responded to Rep. Crownover’s letter.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s