I have never purchased a lottery ticket, gone to a casino, or joined any online poker site. I can count on my fingers the amount of times I have made serious wagers with friends, and raffle tickets have always revolved around the spirit of charity rather than the thrill of betting. I would not call myself a gambler. I am, however, an avid sports fan. Having experienced the contagious nature of sports and the exhilaration in predicting the seemingly unpredictable, I understand that the world of sports can bring out the best and worst in us. I have seen how fantasy sports can be used as training grounds for fans to gain a better understanding of how the games operate, and I have seen them exploit the addictive behaviours of certain users by luring them into believing that winning is easy.
Sports fans, more than anyone, should understand that winning is never easy. Winning money in daily fantasy sports (DFS) requires an in-depth knowledge of sports and a complex analytical approach; when fans, however, are bombarded with $206 million in television ads from industry giants FanDuel and DraftKings that advertise DFS as a casual and fun alternative to gambling, that point is quickly forgotten. While DFS companies should not be held accountable to teach sabermetrics to their users, they do, however, have a responsibility to accurately represent the complexity of DFS betting.
The premise of DFS is simple: Participants deposit money into an account on a DFS website, pick a roster of players limited by a salary cap, and bet on their daily performance. Users who are knowledgeable about sports or are lucky enough can make a lot of money. So, what’s the catch? A miniscule 1.3 per cent of all DFS players win 91 per cent of total profits. Those equipped with the background and skills to employ advanced statistical models will always do better than casual fans. Despite branding itself as a skill-based game, DFS has a gambling problem. The main issue lies not in the shocking allegations of insider trading, but in the industry’s willful ignorance of the disparity of information between users. If DFS is going to survive, it will have to bridge this gap by building a central hub that offers betting in conjunction with sports analytics tools and social interaction for more casual fans—less money, more Moneyball.
It could all come to an end, however, if FanDuel and DraftKings do not survive their legal battles against state regulators who believe that DFS is gambling. The debate about the gambling status of DFS all began when allegations of ‘insider trading’ broke out in early October. Ethan Haskell, a DraftKings employee, had won $350,000 as runner-up in a $25-entry tournament on rival site FanDuel the same week that there was a data leak. This created fears that employees were capitalizing on non-public information. In response to the news issue, New York Attorney General Eric Scheidermann launched an investigation and issued cease-and-desist orders to FanDuel and DraftKings, calling the DFS industry a “multi-billion dollar scheme to evade the law and fleece sports fans.” Since then, many states have banned daily fantasy sports within their jurisdictions. FanDuel and DraftKings have responded with statements, vowing to protect their growing industry and to fight back against the state’s gambling allegations.
Come what may, DFS companies will have to move swiftly and come up with innovative ideas to secure their future. The lack of data and sports analytics on DFS websites is disappointing. Users can spend five minutes or five hours on platforms, and finish with the same results. The lack of information naturally pushes users to other websites to find the necessary information, creating one more obstacle between casual sports fans and data experts. Granted, sports analytics has never been light work, but a DFS site should not have 44 per cent of its users visit three to four websites to do their research, while another 30 per cent of users visit six or more sites to do theirs. Aside from allowing you to select a roster and a tournament, there is no utility to the online platform provided by either FanDuel or DraftKings. These sites give no statistics on user picks and profiles despite having exclusive access to them. Without the provision of advanced analytics, little separates DFS from the lottery. If the industry is to survive, it will have to learn how to enthuse sports fans to embrace statistics, not gambling. Additionally, the lack of features makes the experience less engaging and counterproductive to the social networks they could capitalize on if they concentrated more on product offerings rather than acquiring new customers.
Centralizing sports data would also increase advertising revenues as user traffic would remain on DFS sites instead of leaking to other analytic resources. Besides, it is no secret that people with more information perform better in the financial markets. An open-data system would decrease the extreme disparity between winners and losers, as the losers would gradually get better, thus increasing the competitive atmosphere of the game. Additionally, decreasing the winner-loser disparity should increase tournament entries, as players would feel more confident about betting if the gambling stigma is removed. As fans await the fate of the DFS industry and the future of sports betting in North America, FanDuel and DraftKings must ask themselves whether they are a gambling website, a sports analytics platform, or sports social media, and whether, when this all blows over, they are willing to make the necessary changes to fix their gambling problem and brand themselves honestly to sports fans.
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