NV Fantasy Sport Sites Shut Down

If you watch pro football, and I’m sure most of you do, you probably also belong to a fantasy league or two which you play with your friends. Most sports sites such as ESPN and Yahoo provide you with everything you need — player rankings, team stats, injury reports — and if that's not enough, there are plenty of sites on the internet that specialize in fantasy stats, projections and advice. Every week you can trade players and most leagues let you pick up free agents once they've cleared waivers. There are games that set salary caps and allow competitors to draw from the same talent pool, just as long as you keep your total team cost under that cap. Sites such as ESPN and Yahoo don’t charge you anything to play, and they don’t pay out prizes to the winners. Some sties like NFL.com and ESPN have free games that also feature prizes. 

Because it’s more fun to play if you can win a little money when it’s all done, most leagues play their games like office pools where everybody chips in at the the start of the season and the pool is split among the winners according to agreed on percentages at Super Bowl time. Illegal? Yes, probably, but who cares. Like the NCAA Final Four basketball pools, it’s mostly for fun and the prizes aren’t big enough to waste the taxman’s time enforcing gambling laws. If you win and it bothers your conscience, report your prize on line 21 as other income - along with your slot wins.  :)

But there are also many sites that have many different styles of games with entry fees and prizes that can be won. 

You probably read in your local newspaper or saw on your electronic news device this morning that yesterday, Oct 15, Nevada declared fantasy sports to be gambling, taking the first steps to shut down the sites such as DraftKings and FanDuel where people now pay to play. I'm sure you've seen their ads on the internet if you visit any sports-related sites. These businesses have been operating in the state of Nevada until now without a gambling license. The NV ruling means that daily or weekly fantasy sports must cease immediately according to the Nevada Gaming Control Board.

Does this have any effect on you and your friends’ football pools? Probably not. Nevada’s decision doesn’t affect season-long fantasy sports, and most of these pools pay out at the end of the season, not every week.

Draft King and FanDuel argue that their sites provide games of skill and not chance, and that they are therefore protected by the 2006 Unlawful Internet Gambling Enforcement Act which carved out a specific exemption allowing fantasy sports.  The distinction has allowed the industry to dodge the type of regulation that governs traditional casinos and sports books. Avoiding being labeled gambling has made the games palatable to professional sports leagues that have partnered with and even invested in the sites. Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots have stakes in DraftKing. Until now the sites have been available in all but five states: Iowa, Wisconsin, Arizona, Louisiana, and Montana. It was allowed everywhere else, including California. Now, unless they are granted a NV license, these companies could face felony fines and 10 years in prison for running an illegal gambling site.

This comes on the heels of the questioning of integrity of DraftKings games after a data breach involving a DraftKings employee. On Sept 27, an employee of DraftKings, Ethan Haskell, posted information about how often fantasy players had chosen different National Football League players in a million dollar tournament. The information was accidentally released before some of the NFL games had started on Sunday. That same weekend, Haskell, a mid-level content manager, won $350,000 at rival FanDuel, leading to questions about whether he had used insider information to game the system. Employees at daily fantasy sites are not allowed to play in games run by their employers. Until now, however, they had been free to play at other sites. The companies both say there was no wrongdoing, but the New York Attorney General is asking for more information, including a list of employees with access to insider data and details on how they control for potential fraud. 

I’m sure we haven’t heard the last of this.

Getting Ready for Online Poker

     How would you feel if it suddenly became legal to play poker online? Would you still make the trip to your favorite casino or card club for the fun and fellowship, or would you place your bets on your home computer? If two Los Angeles assemblymen have their way, you may soon be faced with that choice.

     Gambling has been an on again - off again activity in the USA almost as long as there has been a USA.  It was completely banned in the 1890’s, and then, in the roaring 20’s it began making a comeback. It was finally fully legalized in Nevada in 1931. Over time riverboat gambling and then state lotteries and then Native American casinos became legal throughout the nation as states sought to tap into this profitable source of revenue. There are only two states currently that forbid all forms of gambling: Hawaii and Utah.  The others all allow some forms of wagering and forbid others. You might be interested in a site called gambling-law-us.com where you can find out the laws of any particular state you want to know about.

     The first online casino began operation in 1995, offering 18 online games.  It quickly caught on. Conservative estimates have the profit from cyber-gaming growing from $1 billion in 1997 to $10.9 billion in 2006. In 2006, Congress banned online gambling by passing UIGEA (Unlawful Internet Gambling Enforcement Act of 2006) which prohibited wire transfers for betting. Together with the Wire Act which banned sports betting, these two laws were interpreted as prohibiting most online gambling. In 2011 the US Department of Justice reversed the Federal Ban on Internet Gambling, allowing states to decide whether to legalize the practice within their borders. Since then Nevada, New Jersey, and Delaware have all approved rules allowing online state-regulated poker sites. Eight other states, according to Fox News, have bills in the works.  California is one of them.

     California Democrat assemblymen, Mike Gatto and Reginald Jones-Sawyer, have each introduced bills, AB 9 and AB 167, each called the Internet Poker Consumer Protection Act of 2015, hoping to expand online gaming to tribal gaming facilities and licensed card rooms, but not to racetracks. Both bills ban games banked by the house, including slots, video poker, and table games. Poker is viewed differently because it involves some measure of skill where players can earn winnings in the long term.  If adopted, an action which would require a two thirds majority to pass, a deposit of $5 million dollars would be required to apply toward future taxes.  Licensees would have to have had 3 years of gaming experience, reduced from 5 years in earlier drafts, a requirement which would exclude some newer casinos from participating. The bills also ban internet cafes. All operations and all gamblers would have to be located in California. Another problem to be resolved is the “bad actors” clause in Gatto’s bill, which could potentially ban the Morongo Band of Mission Indians from operating a site because of association with companies who had ignored the federal ban from 2006 through 2011.

     If you are interested in learning more about the progress of California Internet gambling, you can read the full text of both bills and statements by the sponsors at www.californiaonlinepoker.com.