Fantasy Football and Gambling

For anyone who has played fantasy football for money, the idea that it is essentially the same as gambling has probably come up a few times.  And for anyone who has been following the NFL this season, you've likely seen no less than eleventy-billion advertisements for "Daily Fantasy Sports (DFS for short)" from the likes of Draftkings, Fanduel and others.  But should playing fantasy football for money be considered gambling, and should it ultimately be outlawed?

Daily Fantasy has been in the news recently, and not for necessarily positive reasons.  Full disclosure: I have been playing fantasy football in some form since 2007, and have been playing daily fantasy for the past couple of years, and in both instances I've played for money.  But last week an employee of the mega DFS website Draftkings was alleged to have used the Draftkings statistical information (which is not available to the general public) to gain a competitive edge at rival site Fanduel, and came away winning $350,000 in one of their massive tournaments. This of course raises the question of fair play, and as noted in the deadspin article on the same story, it is rumored that most of the "sharks" at these daily fantasy sites are employees of rival DFS sites.  It's unclear how much of an issue this is, but it does raise the question of fair play in a handful of these tournaments.

While the latest news doesn't make these websites look 100% fair, are they doing anything illegal?  In other words is playing fantasy football for money even legal in the first place?  Well, in 2006 Congress wrote laws outlining what was legal and what wasn't in online gambling.  In that 2006 law, there was an exclusion given to fantasy sports that determined that fantasy football was more a game of skill than it was a game of chance, and therefore shouldn't be considered gambling in the traditional sense.  This article at Forbes from a few years ago spells out very clearly how the law affects fantasy sports.  So while yes, federal law allows people to play fantasy football for money online, many states have adopted their own laws that outlaw playing fantasy football for money and still consider it gambling anyway.  In fact, just last week news came out that a federal grand jury is investigating daily fantasy sports in the state of Florida to determine if online fantasy websites are violating Florida law.  It appears that many people consider playing online fantasy football for money to be a form of gambling.  And since there are many anti-gambling organizations and lobbies in existence, the world of fantasy sports has become a target.

For those unfamiliar with fantasy football, let me attempt to explain what it is as briefly as possible.  There are two basic kinds of fantasy football: season long, and "daily".  In season long fantasy football, a player takes on the role of a general manager and drafts a "team" of players from the overall pool of NFL players prior to the start of the regular season.  So you can build a team of anyone in the NFL by choosing a mixture of players like Tom Brady, Adrian Peterson, Larry Fitzgerald and Jason Witten to have all on the same team.  Then those same players are awarded points each week based on their statistical output: generally yards gained and touchdowns.  So the players that gain more yards and touchdowns are more valuable and earn a team owner more points.  While there is a huge variety of scoring systems in fantasy football, the schedule is basically the same: team owners face off against one other team each week, and whichever team scores the most points (based on statistical output) wins.  In season-long leagues that play for money, there is usually an entry fee to play that is due before the draft.  And then whichever team(s) accumulates the most weekly wins at the end, wins a portion of the pot of money.  It's significant that the outcomes of the actual NFL games are irrelevant to the outcomes of fantasy football.  It's also significant that there is no bet or wagers on specific players, since the entry fees are due before players are even chosen.  The only thing that matters is the statistical production of the individual players on your team.  In daily fantasy, the setup is very similar to season-long, except that instead of "drafting" a team of players for the entire season, you choose your team on a daily basis, based on whoever is playing that day (or week in some cases).  Because there is no draft, each NFL player is assigned a numerical value (in fake US dollars) and every team has the same amount of "salary cap" to spend on their players.  The NFL players that average higher statistical production usually cost more, so the goal is to spend those fake salary cap dollars on the right mix of players that will produce the most fantasy points that week.  The salary cap totals are always changing each week for each player depending on how they are performing, and it is unique to the online website.  Like season-long, there is an entry fee due before you build your team, and the "winners" are those teams that score the most points.  So again, no one is betting on the actual outcomes of the game, or even betting on specific players.

So, should fantasy football be considered gambling?  I suppose it depends on how you define gambling.  Websters defines gambling as:

to play a game in which you can win or lose money or possessions : to bet money or other valuable things

: to risk losing (an amount of money) in a game or bet

: to risk losing (something valuable or important) in order to do or achieve something

The Webster's definition certainly implies that playing the game of fantasy football for money should be considered gambling.  However, Dictionary.com defines gambling as:

1. the activity or practice of playing at a game of chance for money or other stakes.

2. the act or practice of risking the loss of something important by taking a chance or acting recklessly:

In this definition the idea of "chance" seems to be the defining aspect of gambling, rather than the idea of playing a game for money.  In the end, the definition that matters most, is the legal definition in whatever state you live in.  According to uslegal.com, their definition of gambling matches more of the dictionary.com definition that requires there to be "chance" involved, rather than the Webster version of a simple game:

A person engages in gambling if he stakes or risks something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he or someone else will receive something of value in the event of a certain outcome.

While there is no denying that there is at least some level of chance associated with the statistical output of an NFL player, playing fantasy football is less about chance and more about choosing favorable conditions for statistical output.  Things like weather and injuries are random events that can effect statistical production, and even the best projection models are never 100% accurate.  So yes there is at least some level of chance associated with fantasy football.  But there is also something to be said for studying data and creating statistical models that make fantasy football more of a skills-based endeavor.

For example, let's say you have to choose which of two players will have a better statistical day for fantasy football.  Player A is a famous, 6-year veteran of the NFL who has won the MVP, been a three-time All-Pro at his position and in previous years was ranked at the top of his position in statistical output.  Player B is a rookie who has been playing pretty well.  In a vacuum, unskilled fantasy football players would just automatically choose Player A regardless of what might be happening with those two players this season.  Let's say that this season the team surrounding Player A is in disarray, and they have opened the season 0-6.  Player A hasn't scored more than 5 fantasy points in a single game, and is touching the ball less than 10 times per contest.  On the flipside, Player B is in the conversation for rookie of the year, has averaged 20 fantasy points per game, and is touching the ball 15-20 times per game while playing for last year's Super Bowl winner and a favorite to repeat this year.  An unskilled player might still pick Player A due to what he has done in the past making the claim, "He's due to have a breakout game!", and may even dismiss the rookie's production as luck.  But this week Player A faces the strongest defense in the league that has held all players at his position to under 10 fantasy points per week.  Meanwhile, Player B faces a cakewalk matchup that is allowing 15+ fantasy points per week to his position.  A skilled player pays attention to these trends, and would pick the rookie 10 times out of 10.  In this case the matchups and statistical trends matter, and a skilled fantasy football player will make educated decisions based on the context of each situation.

So, is playing fantasy football for money gambling?  Well, it depends on the definition of gambling, but in most cases I believe the answer to that is no, because the effect of random chance in fantasy football can be minimized by studying statistics.  However, in those states where they define gambling as involving *any* level of chance, playing fantasy football for money typically has been outlawed.  If you go with a much looser definition of gambling, in which playing any game for money (even a game like Chess where there is no random chance at all), then yes playing fantasy football for money is gambling.  It ultimately depends on where you live and how your lawmakers in your state choose to define it.

The dangers as I see it are that people generally think they know more about the NFL and fantasy football than they actually do.  The average person who plays fantasy football with their friends and family, and who keeps tabs on the NFL regularly and follows columnists advice tend to do better than those people that follow the NFL casually and just choose the most famous players (or the players they are fans of) to have on their teams.  And let's face it, in friends and family leagues the vast majority of those participating are doing it just for fun.  So a lot of people have a warped view of themselves when it comes to their "skill" at playing fantasy football.  Just because you've won your family league 5 times in the last 5 years doesn't make you an expert in fantasy football.  But many of those people will put up money at DFS websites and enter season-long leagues with the expectation that their winning ways will continue.  If you want to win at fantasy football, you need to play against people who are less skilled than you.

And this is where skill and knowledge of fantasy sports really comes into play.  The most skilled fantasy football players will avoid the big "millionaire maker" tournaments, because there are hundreds of thousands of participants and often times less than 15% of the entries earn money.  And yet, these massive tournaments are the ones that DFS websites promote and advertise the most, because they will rake the most money from all those entry fees.  If any element of DFS was like gambling, it is these massive tournaments with low odds of winning: they are almost like buying a lottery ticket, even for the most skilled veterans.

But not every league you can join in DFS is structured that way.  In fact, some of them are called "Head-to-head" leagues where you face off against only one other person in a winner take all.  Others are called "50-50s" where half of the entries earn money.  When your odds of winning money back are that high (a coin flip at worst) then knowledge of players and statistical modeling (aka skill) becomes completely relevant.  And if your skill allows you to win, say even 55-60% of the time, then playing fantasy football isn't exactly a gamble, mathematically speaking.  In just about any casino if you were to win one of their games 55-60% of the time you'd come out way ahead of the house and they'd probably ban you for life.  So the way most of these DFS sites make money on these 50-50 or Head-to-head leagues is to take a "rake" of the entry fees.  In a head to head for example, if you both put up a dollar on the on the outcome, Fanduel or Draftkings or whoever, will take 10% of your entry fees, so the winner only earns $1.80, and the loser gets nothing.  It's become a very lucrative business that is projected to earn roughly $2.6 Billion in entry fees this year.

In my belief, while there are certainly some elements of chance in fantasy football, it is ultimately a skills-based endeavor where the most knowledgeable folks tend to perform the best in the game.  Therefore, calling fantasy football "gambling" is only true for those people of low skill, or those games where the odds of winning are very low, or in those places in the country that choose to define gambling in the more general way possible.  So if you do decide to spend your money on the game of fantasy football, be sure to educate yourself and gain some skill first (and make sure your state hasn't outlawed it).