The unlikely helping hands for Legal Sports Betting

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At the start of the NFL season, it was impossible to watch twenty minutes of football without hearing how easy it is to turn a few dollars into millions playing in fantasy football contests.

DraftKings and FanDuel blanketed NFL broadcasts regardless of the station, with an extra procession of ads hiding behind every commercial break for nationally televised fixtures.

The onslaught of advertisements became so impossible to ignore that complaints were filed to local congressmen, and statements were made by politicians across both party lines questioning the legality of fantasy sports betting.

The main question raised by SBR Forum posters was why the NFL, who has long been opposed to all things gambling, seemingly had no issue with fantasy sports betting operators. In fact, the NFL Players Association struck a licensing deal with DraftKings for usage of players' names.

As bettors know — whether sports bettors, casino players, or even poker players — gamblers have been ostracized and had their liberties taken away for the better part of the last ten years. Why was fantasy sports gambling any different?

Enter the UIGEA
The Unlawful Internet Gambling Enforcement Act ("UIGEA") of 2006 was mostly responsible, because fantasy sports betting had a specific  exemption inside of this federal legislation which classified fantasy contests as games of skill and not chance.

"It's a distinction without a difference," quipped New Jersey State Senator Raymond Lesniak during an interview with Sportsbook Review this past fall concerning the double standard of fantasy wagering being seen as perfectly OK, and straight-up betting demonized by the federal statute, as well as by the major US sports leagues and the NCAA.

All it took was a little insider trading scandal involving a DraftKings employee for the heat to be cranked up and the NY State Attorney General to subsequently declare fantasy sports gambling as illegal.

New York continues to pursue DraftKings and FanDuel in federal court, though a temporary injunction has been granted in the case in favor of the fantasy sites, as SBR noted in a recent news report.

US Justice Department's pursuit of sports bookies
On the other side of the counter, online sports bookies are continually targeted by the US Justice Department, despite offering a service that arguably makes it easier for an average Joe to turn a profit. With an online sportsbook wagers are made against the house, there is no competition with hundreds of other entries who might possibly be armed with insider trading knowledge such as was alleged to be the case in the previously mentioned fantasy sports insider trading scandal.

Industry pioneer Spiros "The Greek" Athanas is closing in on a possible sentence of one year's probation following a plea agreement with prosecutors for his association with the defunct Legends Sports website.

The owner of the one-time popular Panama based sportsbook, Bartice "Luke" King, was tried and convicted of two counts for money laundering and running a gambling enterprise, though King was rather sensationally acquitted on the most serious charge of racketeering.

Sports Leagues & the Elephant in the Room
It is no secret that sports such as the NFL and college football receive epic ratings year in and year out due to the massive money wagered on the sport, both in Las Vegas and internationally at online betting sites.

The outdated perception of sports betting, however, has kept the NFL and other sports leagues from embracing the industry, unlike in the United Kingdom for example where betting site logos cover sports stadiums and team uniforms with the same frequency as fantasy sports ads ran in the US to start the NFL season.

For example, the sports leagues have spent considerable time and effort fighting New Jersey in their attempt to let their residents and tourists wager on sports inside of Atlantic City casinos. But at the same time, the MLB and NBA hold equity stakes in DraftKings and FanDuel. Betting on the performance of athletes in sporting contests is OK, but benefiting from a team's performance in a singular sports wager is not. The logic fails to track, hence the conversation of legal sports betting in the United States becoming too loud to ignore for much longer.

US states like New Jersey and Pennsylvania want sports betting to help boost their economies, encourage tourism, and to create jobs. Many industry and legal pundits agree that the federal government will eventually repeal or amend legislation like the Professional and Amateur Sports Protection Act of 1992 ("PASPA"), which outlaws sports betting across the United States with the exceptions of Nevada, Delaware, Oregon, and Montana, but that it may take a New Jersey victory in the US Supreme Court before it happens.

In the meantime, the sports leagues are continuing to find clever ways to skirt around the depth of their own hypocrisy by inking highly lucrative deals with sports data providers, whose business models categorically aid sports wagering, as a report by ESPN detailed at length.

  • The NFL struck a deal in mid April to be part owner of Sportradar US, a subsidiary of a Swiss company that offers real-time stats and odds to sportsbooks. SBR previously reported that Michael Jordan and Mark Cuban are among two of Sportradar's high profile investors.
  • Major League Baseball signed a contract with Sport Integrity Monitor in November, a London company that monitors betting activity and identifies suspicious wagers on markets that might be fixed.
  • The NBA, whose commissioner has been outspoken on the inevitability of legal sports betting [despite the previously mentioned conflicts], became part owner of NY tech company numberFire. The company offers analysis for fantasy sports wagering.

The Future of Betting
It is clear no matter how you slice it that Americans want to bet on sports whether straight-up with a traditional bookmaker or with a fantasy operator. What's also clear is that the major sports leagues and their hypocritical stances on when betting threatens the sanctity of their games, and when the industry lines its pockets, will only help the betting industry become more mainstream and eventually legal everywhere.

Until the time when bettors can walk a few blocks in any state to enter a brick & mortar establishment as they can in Nevada or across the pond, online sportsbooks will continue to be the driver of taking in billions in sports wagering volume and revenue.

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