Opinion: Regulation key to reining in fantasy sports sites

Running back Le’Veon Bell tore his medial collateral ligament last week.

After reading the tweet, I immediately Googled “Pittsburgh Steelers depth chart,” and put in a waiver wire request for second-string back DeAngelo Williams. When the league’s first overall draft pick goes down, you want his replacement.

That’s the life of a fantasy football owner.

Fantasy sports is a game where participants assemble virtual teams of real players of a professional sport and compete based on the statistical performance of those players in actual games.

According to the Fantasy Sports Trade Association, 56.8 million people played fantasy sports in the United States and Canada this year and 73 percent of those players favor fantasy football. It’s a multibillion-dollar online industry with the average player spending roughly $465 annually.

You’ve got to keep up on not only injuries but also coaching changes, weather patterns, prospects and opponent statistics.

As a proud team owner, it feels like a finely honed skill to choose the magical alignment of players each week. However, it’s always a gamble – just not in the eyes of federal regulators.

According to the FSTA, the Unlawful Internet Gambling Enforcement Act of 2006 included carved-out language to clarify the legality of fantasy sports.

The act makes transactions from banks or similar institutions to online gambling sites illegal, with the notable exceptions of fantasy sports, online lotteries and horse racing.

Since 2009, the industry has more than doubled in size, leading to such household names as FanDuel and DraftKings for daily fantasy sports. But a burgeoning industry without regulations always leads to problems.

The two companies were mired in scandal last month after allegations of what amounts to insider trading.

The New York Times reports both companies released statements after an employee at DraftKings admitted to inadvertently releasing data before the start of the third week of NFL games. The employee, a midlevel content manager, won $350,000 at rival site FanDuel the same week.

A spokesman for DraftKings acknowledged employees of both companies won big jackpots playing at other daily fantasy sites using data obtained through their own sites, and both temporarily barred their employees from playing games or taking part in tournaments at any other site.

Fantasy players didn’t seem to mind. The week following the allegations, the two sites received a combined 7.1 million entries and generated $43.6 million in entry fees.

An informal office poll at Springfield Business Journal revealed just one person who plays daily fantasy sports online for money.

Proponents are quite adamant it’s not gambling.

They maintain daily fantasy sports are games of skill and variance, not chance, similar to the stock market. Smart investors make money over the long haul. My co-worker gave the example of doctors and lawyers who can’t know with 100 percent certainty what will happen when they begin a procedure or enter a courtroom.

These people have a strategy and make an educated guess, often leading to more right than wrong. Proponents argue fantasy sports are the same.

Interesting argument, but it’s wrong. An educated guess is still a guess, no matter how much knowledge is behind it. If a poker player is good, he’s right more than wrong, too.

Legally defined as gambling or not, the need for regulation is there. With the kind of money moved daily in fantasy sports, insider trading is a real possibility. An unfair advantage moves fantasy sports from an enjoyable pastime into the realm of business.

Even stock market investors have rules to follow.

Congress recently requested a hearing to explore the relationship between fantasy sports and gambling.

Lobbyists and industry experts will soon tell their tale.

But keeping an industry unregulated just because it’s fun or it makes a lot of money isn’t acceptable.

It’s often said we live in an overregulated society, but sometimes we need regulations to keep people from taking advantage of others.

That’s a bet I’d take any day.

Features Editor Emily Letterman can be reached at eletterman@sbj.net.