Last week, Nevada’s Gaming Control Board ordered daily fantasy sports websites to stop offering their services to Nevadans, concluding that the sites offered “wagering on the collective performance of individuals participating in sporting events,” which is only legal in Nevada with a license (which those sites did not have). The ruling begs two larger questions: Is daily fantasy sports actually gambling? And does it matter if it is?
By definition, gambling takes place when someone offers up something of value for the chance at winning a prize, based on the outcome of an unknown event. On the surface, it seems obvious that putting money into a slot machine and pressing “bet max” is a gamble, and that putting your card into an ATM and entering your PIN is not. Gambling is gambling.
But things get fuzzier in the margins. Well into the late 19th century, those opposed to gambling believed stock markets to be pernicious gambling dens; at one point even insurance was considered a gamble. In the abstract, it’s hard to see much distinction between buying raffle tickets, anteing up at a blackjack table and guessing which team will prevail on Sunday. In the real world, though, we know—because we’ve been taught, that the first is harmless fundraising, the second is gambling, and the third…well, who knows?
Operators of daily fantasy sports websites had insisted that since what they offered involved skill, it was not really gambling. Until now, few states have sided one way or the other. But recent controversy over the use of “insider” information by employees and, frankly, the explosion in popularity of the sites—as many as 56 million people are projected to play fantasy sports—has forced some states to make a choice.
So either daily fantasy sports isn’t gambling, in which case it is allowed to flourish, taking in millions or billions of dollars with only tenuous player protections or accountability, or it is gambling, and, depending on the state, is either banned or subject to regulation. How to decide?
Taking a step back, the line between gambling and non-gambling is arbitrary. You can place sports bets on your phone in Primm; walk a few yards to get a lottery ticket in California, and you can’t. This isn’t just about the Golden State being too uptight to let its citizens legally bet on sports; after all, the reason why you have to cross the border to buy that lottery ticket is that lotteries are illegal in Nevada.
That’s a quirk of the federal system which, among other things, leaves gambling regulation to the states. Some might find the lack of a uniform national gambling policy frustrating, but liberty is never about lessening frustration; the Constitution that lets California and Nevada adopt contradictory laws about gambling also guarantees elective government, an independent judiciary and individual rights—a fair trade-off.
But even within state borders, the forms of gambling that are legalized and those that are not seem arbitrary. Why are Nevadans entrusted with the responsibility of picking against the spread but not buying lottery tickets, when in California it is the opposite? Because when Nevada re-legalized commercial gaming in 1931, the federal government was sufficiently leery of lotteries (thanks to the Louisiana Lottery’s 1890s shenanigans) that lawmakers didn’t want to antagonize the feds by allowing one. When states started legalizing lotteries 30 years later, Nevada’s gaming industry was already well established and not eager for competition.
Sports betting is mostly illegal because the same states that could profitably run lotteries had no guarantees that they could reliably make money on sports wagering. As has been seen in Nevada sports books, sometimes the house does not win. States opted to go into the more reliable—but worse for customers—lottery business and passed on sports betting. It has only worked in Nevada because the large casinos that offer it do not live and die by its weekly vicissitudes.
That’s why, in 2015, people are arguing over whether daily fantasy sports is gambling or not. It seems a clear-cut question that will either end in business or a ban.
Unless you take another view. Maybe American adults should just have the chance to bet on sports—either by playing in fantasy leagues, daily or otherwise, or just picking someone to beat the spread—and state governments should find a way to let them do so legally, with the protections that sports gamblers in Nevada—and most Western nations—enjoy.