Should DFS Sites Like FanDuel And DraftKings Be Considered 'Gambling'?

I’ve always subconsciously spat at the “FanDuel fanatics” I’d see on Sundays, who were feverishly stalking the play-by-play performance of their lineups and possessed by the prospect of making some sort of return on their two-dollar buy-in.

A two-dollar buy-in isn’t gambling, I would think to myself. Two dollars is a coffee -- and a hot one, at that. If you want an iced coffee in the year 2015, you’re dropping at least three bucks and change. If you’re only risking two-to-five dollars on a wager, I viewed it as petty -- not gambling.

And this was before the actual legal debate hinging on whether or not companies like FanDuel and DraftKings are gambling services.

Mind you, these were just my thoughts as a person not unfamiliar with the concept of gambling. Then again, I’m more accustomed to the old school form of traditional gambling, in which there are point spreads, money lines and typically something at stake (more than two bucks, anyway).

For those of you who are unfamiliar with FanDuel and DraftKings, these services allow users to create daily fantasy lineups that can result in real cash prizes, distributed by the companies themselves. Players usually enter large-scale “tournaments,” in which entry begins at two dollars, and payouts vary depending on what percentile you finish in.

To me, because of the small amount of apparent risk -- and the fact that these services are laid out in the format of fantasy sports -- daily fantasy sports (DFS) seem a whole lot more benign than traditional gambling, which is more dangerous.

When I think of gambling, I think of degenerates. When I think of fantasy sports, I think of guys like Ruxin from “The League.” The two, in my mind, weren’t the same.

However, according to The New York Times, the NY Attorney General, who recently filed a major lawsuit against the two biggest markets for daily fantasy sports -- FanDuel and DraftKings -- considers DFS a form of gambling in the legal sense.

Over the past few weeks, the legal sanctions imposed by the state of New York on daily fantasy have affected the lives of many “players” and the business of DFS’ two biggest operators, FanDuel and DraftKings.

To get a better idea of what’s to come, I spoke with legal expert Kevin Sali, who has contributed for Huffington Post and has appeared on CBS and MSNBC.

According to Sali, the current battle between DFS companies and the Attorney General is a tricky one to understand. The two parties are battling over how much of DFS is skill and how much is up to chance.

If the Attorney General can conclude that there is a “material degree” of chance involved with DFS, or that chance plays a significant role in the outcome of the game, courts can rule it illegal by section 225.00 of New York Law.

And this is where DFS gets tricky.

As Sali explained to me, all games require some mixture of chance and skill. Even in real-life football, some of the game will be determined by the talent of the players on the field, and some will simply be left up to how the ball bounces.

However, the legality of certain types of gambling is contingent upon whether or not chance is the predominant factor.

But it’s hard to say that DFS doesn’t require skill. If you were to look at the leaderboards over the past few weeks or months, you’ll probably see a lot of the same usernames. It’s indisputable, similar to professional poker, that there are certainly players who maintain consistent success.

If DFS were truly a game of chance, this success would be distributed much more randomly. But it’s not.

Some players are, in fact, more skilled than others at forecasting how players will fare on the field (or court). That said, how these players ultimately fare on the field is completely left up to chance. So it’s a difficult relationship to tango with conceptually.

Still, gaining sustainable success in FanDuel requires knowledge. It’s not pure luck like a lottery ticket or scratch-off.

Having said that, there are consistently good handicappers, too. Tons of people make a living betting spreads, which are supposed to provide bettors with 50/50 odds (making this gambling in the purest sense).

Regardless of the pure chance involved in this type of gambling, though, some bettors are simply better at playing and using the odds than others -- and are, in effect, skilled at manipulating chance.

Sali used an interesting analogy to describe the difference between “regular gambling” and DFS.

“It’s like blackjack vs roulette,” he told me.

Think of a casino, where they have a bunch of different types of gambling games. If two people, one person a “skilled” gambler and another with no gambling experience, walked into a casino and sat down at a roulette wheel, there’s a decent chance that the person with no gambling experience can get lucky and win more.

However, in blackjack, there’s certainly a degree of skill warranted in addition to pure chance. If these two were to sit down at the blackjack table for an hour or so, the player’s experience -- or lack thereof -- will likely be apparent in their winnings (or losings).

In this way, traditional sports gambling is like roulette, and DFS like FanDuel and DraftKings are a lot like blackjack; while one is certainly a more blatant form of gambling, both are illegal outside of the casino.

Although we might want to say that DFS aren’t gambling in a traditional sense, they’re still gambling in a legal sense.

And while this ruling has certainly set the DFS playing world into a tailspin, the rampant reaction may provide all the more reason to believe that daily fantasy is, in fact, gambling.