Is Daily Fantasy Sports a game of chance or skill? It’s both

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The debate on whether daily fantastic sports in fact constitutes gambling heated.

After Yahoo recent entry in the DFS market, Dustin Gouker of Legal Sports Report noted that the Wall Street Journal and New York Times had little trouble labeling DFS as “Gambling” or as legitimizing “a pastime which is very similar to gambling”.

Gouker too interrogates 152 articles covering the launch, concluding that (only) around a third of the articles include either explicit or “soft” references linking DFS to the game, while the others avoided the terms “bet”, “game” or “bet”, choosing instead to characterize DFS as a means of “making money” or “competing for cash prizes”.

And Howard stutz of the Las Vegas Review-Journal took stock of the “debate”, developer that gaming operators and regulators in Nevada widely believe that DFS “constitutes unregulated gambling.”

On the other hand, both FanDuel and DraftKings insist that their DFS products are games of skill and therefore are not gambling. As Stutz noted, the DraftKings website states, “We are a US-based skill games company and all of our contests are run 100% legally under US and Canadian law. Stutz also quoted an email from a FanDuel spokesperson saying his product “is a fantastic everyday sporting experience classified as a game of skill and NOT a game.”

The problem is – at least in practical terms – the argument that DFS is a skill set and so do not play is completely non sequitur because both things are not mutually exclusive.

What is the game?

The game requires three things:

  1. Consideration. There has to be a bet of some value in order to win anything of value.
  1. Price. What you get when you win, whether it’s monetary value or something else.
  1. Luck. There must be at least enough variance for an unqualified or less qualified bettor to win said prize, at least in the short term.

Other definitions are sometimes too narrow to be fundamentally correct. This is especially true of legal definitions which may vary in definitions of the term “luck” when attempting to insert the presence (or “preponderance”) of competence into the equation.

You see, poker is a game of skill, but it is also clearly a game of chance. Even if you were to say that a skilled poker player “invests” and does not play, it would also be unequivocally true that a less skilled or unqualified player should play, even if he thinks he is playing with an advantage but that it really isn’t t. What the player think it does not matter.

In essence, the very existence of skilled poker players – playing for an advantage and for a profit – depends on the presence of less qualified players willing to bet with a disadvantage against them. You cannot have a skilled poker player without a paying player. Therefore, although poker is a game of skill, it is also most certainly a game of chance, regardless of the preponderance of skill.

Thus, in my opinion, legal interpretations which attempt to qualify poker as either a game of skill Where a game of chance by virtue of predominance are insufficient in practice, as such interpretations identify only what the winners (the “skillers”) do and not what the losers (the “players”) do.

Likewise, the existence of qualified DFS players – playing with an advantage and for a profit – depends on the presence of less qualified players willing to bet at a disadvantage against them, whether they know they are playing at a disadvantage or not.

DFS meets all the requirements of the Fundamental Definition of Gaming. DFS has consideration (the player bets money), price (the player wins cash prizes), and luck (enough variance for any schmuck to win – and no DFS operator will tell you otherwise). Therefore, like poker, DFS is a game of chance.

The presence of competence does not matter.

By the way, especially in a game like poker where the competition has stiffened over time, a player who once could have play professionally but can’t beat the rake anymore can now play even if he still thinks he is playing with an advantage. And as I wrote last month, the same is likely to happen in DFS (see DFS and poker lessons: what’s the future? And for whom?).

The argument of preponderance by population: Gamblers vs. Skillers

Here is what we know about poker: simply thanks to the rake, we lose more money than we earn. We also know or can deduce that there is (and has been) far more losers than winners.

The same can be inferred about DFS. Because of the rake, there is more money lost than earned in DFS. And there are probably a lot more losers than winners, although it is possible two-thirds of DFS think they will win or the breakeven point.

Now we have already established that in order for there to be skillers (winners) there must be players (losers) willing to play at a disadvantage against them. We can also assume that in DFS there is probably many more players (losers) per population than qualified players (winners).

And if there are more players than skills, isn’t it reasonable to say that DFS has a preponderance of play by population?

So why the “debate”?

By any practical definition, DFS is clearly a gaming product. So why are we having this “debate”?

It’s no mystery why FanDuel and DraftKings would argue that DFS is a game of skill and therefore no game, even if the argument is non sequitur: It is in their best interests to do so.

The point is that in the United States, generally recognized forms of commercial play are usually either regulated or prohibited. Currently, DFS is considered illegal in at least five states, but unregulated and (apparently) not illegal anywhere else – at least for now. As such, FanDuel and DraftKings have a vested interest in encouraging the idea that DFS is not a form of gambling in order to maintain the status quo.

Their argument is very not probably based on a moral belief that their product is not a game, where the entire premise of DFS is to offer a sports betting product – and which has a very particular bonus of being able to be offered in States where traditional sports betting is currently banned.

As an occasional observer, I accept that DFS operators have all the incitement to Argue that DFS is a game of skill, and therefore does not play. And I accept that they continue to do so, even if – at least in practice – it is a ridiculous argument.

Whether legislators will see it that way on a state by state basis is a different question. That said, I suspect it’s inevitable that anything that looks so much like the game is likely to attract the growing attention of state legislators. And while interpretations may vary from state to state, I also suspect that there is a reasonable chance that a form of gambling that has such a striking similarities to poker can be treated the same as poker on a state-by-state basis.

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