Why Daily Fantasy Sports Are Here to Stay (Despite Gambling Laws)

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While many sports fans are already familiar with weekly fantasy sports formats, the daily fantasy niche is coming up strong. Daily fantasy sports (DFS) represents a rapidly growing industry that is generating millions and benefiting from official league visibility, thanks in part to a noteworthy partnership between top daily fantasy site Fanduel and the NBA. This partnership, along with NBA commissioner Adam Silver’s public support of sports gambling, is a strong indication that daily fantasy sports are here to stay. Still, there are many questions the everyday sports fan has regarding its legality and strategy.

The Legality of Daily Fantasy Sports

With sports gambling still illegal in the USA (for the most part), it’s only natural to wonder why fantasy sports are considered legal, while action on sportsbooks is not. Fantasy players in the US can withdraw and deposit with their PayPal, credit card, and banking institution without any hassle. The primary reason for DFS’ legality is that the government classifies it as a skill-based game, rather than a game of luck. A fine line, to be sure.

Fantasy sports—both the weekly games that have been popular for some, as well as the increasingly popular daily format—are legal due to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which exempts games or contests that “have an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participant’s individual performances in such sporting events…” This describes fantasy sports to a tee.

The DFS Community: Skill Over Luck

While some will argue that fantasy sports constitute gambling, just like normal sports betting, the consistent success of top players suggests it’s a game of skill. It’s the same logic that explains why poker is a game of skill; the top poker players clearly win on a consistent basis. It’s similar in daily fantasy sports. Full-time fantasy expert Drew Dinkmeyer has won over one million dollars to date and several tournaments, including this big one. Dinkmeyer and other consistent pros—like those listed on Rotogrinders’ daily fantasy player rankings—prove that a skillful daily fantasy player can win on a consistent basis due to their ability, rather than luck.

The Big-Time Cash Potential

Whereas some players opt for safe but low-paying games like 50/50, where you nearly double your entry fee if your lineup finishes in the top half of the contest, the appeal of DFS for many is GPPs, which stands for “guaranteed prize pools.” These are contests which sometimes have tens of thousands of entries, with the top lineups pulling in winnings in the thousands of dollars.

In Dinkmeyer’s case, he turned $1,323 (49 $27 entries) into one million dollars on Draftkings, which turned in $304 million in 2014 entry fees and is Fanduel’s main competitor. When asked by the Wall Street Journal what he would do with his winnings, he mentioned a vacation, but also acknowledged a more long-term perspective. “I’m an investor at heart,” he said, “so most of it will go back into the business.” For Dinkmeyer and others like him, this is a full-time job—and they’re making hundreds of thousands per year off it, if not more.

Arguably the most persistent myth about fantasy sports is the notion that it appeals first and foremost to sports fans who have so-called “addictive personalities” – that is, people who habitually seek new sensations, or thrills or who regularly engage in impulsive behavior. The truth is, true fantasy sports players are drawn to something else entirely: namely, their love of risk management, their affinity for statistics, and yes, the desire to turn a profit. These aren’t desperate people waiting for their next “fix”; oftentimes these players are professionals in their own right.

The General Strategy

The premise of daily fantasy sports is simple; you’re allotted a specific salary to spend on players, with the player’s values being determined by their likelihood of scoring points in that given game. The primary DFS sites, Fanduel and Draftkings, differ in salaries and roster size, but the strategy is the same: pick the players you think will result in the highest-scoring lineup possible.

Pros like Dinkmeyer excel at areas like spotting value plays, players who may be very cheaply priced due to a late scratch or injury replacements. They often combine these players with higher-ceiling expensive players, in addition to entering several entries with various player differences to account for volatility in GPPs. Perhaps most importantly, as is the case with any money-risking game, they preach astute bankroll management.

While the daily fantasy sports industry may be relatively new, its impressive profits, increasing popularity and recent partnership with the NBA all suggest it will continue to gain popularity—not to mention legitimacy—among sports fans of all varieties.