OPINION:
Here’s a sad and textbook case of how companies all too often use the strong arm of government to destroy their competition.
The online gambling industry in this country spent years and years fighting the powerful Las Vegas casinos to make online sports betting legal in the states. They won a historic Supreme Court case in 2018, which struck down the Professional and Amateur Sports Protection Act, a federal ban on sports betting across the United States.
The court recognized this law as a protection racket — and, for better or worse, almost overnight, the floodgates were opened in most states for legalized online sports betting.
But now the kings of the hill in the online sports betting world — led by FanDuel and DraftKings, the same companies that profited so much from that court decision to deregulate — are using the same flawed logic to argue that popular sports fantasy league wagering should be illegal.
Just like the brick-and-mortar casinos that they fought for years, the online betting association is flexing its political muscle to try to extinguish this new competition.
They have good reason to be worried. The fastest-growing sport in the country — in terms of participation and revenue — is fantasy league sports. You can play them on your cellphone while planted on the couch.
Some 65 million Americans draft players (that’s half the fun) and compete for money by scoring points based on how well their draft picks perform statistically (for example, by scoring a touchdown) in the actual game played on the field or on the court. The fantasy leagues are so popular that they dramatically increase TV nationwide audiences for regional games — not just when the hometown team is playing. Fantasy has spread to baseball, soccer, basketball (pro and college), and even the TV show “The Bachelor.”
Fantasy leagues have evolved from a weekend hobby in fraternities 20 years ago to giant payoffs and big business. The estimates vary widely about how much money is bet every year, because much of the revenue is never reported to the government. But the Sports Management Degree Hub estimates about $18 billion changed hands in 2022, up from less than $5 billion per year a decade ago. Drafting players can go for as little as $2 to as much as $5,000 in high-stakes games.
At issue is whether fantasy sports leagues are like roulette, i.e., pure games of chance, or whether they are games of skill that require players to make smart draft decisions like a general manager to build a winning team. The Sports Betting Alliance, a lobbying arm of traditional online gaming firms, recently brought a complaint in Wyoming that the fantasy leagues are “sports betting sites … operating under the guise of fantasy sports.” They claim these are illegal, unlicensed and unregulated gambling establishments that must be shut down. The Wyoming Gaming Commission bought the argument, and under lobbying pressure, other states are looking to do the same.
The Wyoming decision overturns nearly a century of precedent that games of skill are treated differently from games of chance under federal and state law. If the gaming commissions — which naturally want to regulate as much of the industry as possible to expand their powers — don’t back down and the Betting Alliance wins the day here, either the online fantasy leagues go out of business or a thicket of complicated and costly government regulations will hobble them. Either of these options are just what the fantasy league competitors are seeking.
But what the state gambling regulators can’t identify is why there is any problem here that needs fixing. The public is not being harmed. The leagues are wildly popular with 65 million Americans. Can they all be wrong — or wronged here?
No. Clearly, the only so-called victim here is the gambling industry itself, which is acting like a mob boss who objects to a competitor invading his monopoly. Instead of taking a tire iron to the perpetrators, they rush to the courts for protection.
Here’s something you can bet on: If FanDuel and its ilk prevail by siccing government regulators on their competition, the biggest losers will be the tens of millions of Americans who have fallen in love with fantasy sports.
To borrow a sports metaphor, the courts should say no harm, no foul.
• Stephen Moore is a co-founder of the Committee to Unleash Prosperity. He is an economist with FreedomWorks and is serving as an economic adviser to the Trump campaign.
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