As New York moves to ban daily fantasy sports, the fate of the online practice in California – which ranks second behind the Empire State in the number of players – is still very much in the air.
Two of the industry’s leaders, FanDuel and DraftKings, on Friday sent emails to its players in California urging them to speak out against a push from state lawmakers to outlaw the game.
Assemblyman Marc Levine, D-Marin County, sent a letter to Attorney General Kamala Harris this week to request that the Attorney General’s office take action to order DraftKings and FanDuel to discontinue their business practices in the state. Assemblyman Adam Gray, D-Merced, proposed legislation in September that seeks to regulate and legitimize daily fantasy sports.
Harris has remained silent on the matter, though Gray is confident Harris’ office will conduct an investigation into the legitimacy of the game. Gray said he didn’t think New York’s move to ban daily fantasy sports would affect California because of the difference in the way gambling is viewed in each state.
“Regardless of whether it’s a game of skill or a game of chance, the need for regulatory oversight is the same, in my opinion, and that’s why we introduced the bill,” Gray said on “ Which Way, L.A.? ”
The assemblyman said the bill, titled “ The Internet Fantasy Sports Games Consumer Protection Act ,” was meant to give credibility to daily fantasy sports companies and instill confidence with consumers.
“Californians seem to enjoy it, people across the country seem to enjoy it, but we need to make sure that games are fair, that everyone has an equal opportunity to win and that we have appropriate safeguards in place for prohibiting underage usage, certainly looking for problem gambling and gaming addictions,” Gray said.
There will be an informational hearing Dec. 16 at the state Capitol to go over what regulating daily fantasy sports would look like.
Gray met with DraftKings’s Jason Robins while the CEO was in California on Monday promoting his company as a “new, disruptive technology.”
California represents 10 percent of the game’s 57 million players. Daily fantasy sports are legal in 45 states. The game is much like traditional fantasy sports – which has increased in popularity since its beginnings in the 1980s – where a player will select pro athletes for their lineup and the real-life performance of that athlete during a season will play into a number of other statistical factors.
“But the difference here is it’s on a weekly basis and you have a certain amount of ‘money’ to allocate toward your team,” Adam Brunious, associate director of the Sports Business Institute at the University of Southern California, told “Which Way, L.A.?” host Warren Olney.
Players pay an entry fee before being able to select professional players for their roster. At the end of a given week, the pot of entry fees is paid out to a winner with the greatest statistical outcome.
While the fate of daily fantasy sports hangs on whether it is seen as a game of chance or a game of skill, Brunious believes the latter holds true for the game.
“If you look at the winners … they’ve built out very extensive, expansive Excel spreadsheets to do really deep-level statistical analysis, statistical modeling to help them get an edge over other players, so I think there is some skill that’s involved in doing that,” Brunious said.
Skill or not, New York officials have said that in addition to being a form of illegal gambling, the practice is deceptive and misleads players on the prospect of success, with only 1 percent of players having the skills necessary to win.
Though cease-and-desist letters were only issued to DraftKings and FanDuel on Tuesday, four smaller daily fantasy sports sites – DailyMVP, DraftDay, DraftOps and MondoGoal Trading – have decided to shut down New York operations and not fight Attorney General Eric Schneiderman.
FanDuel and DraftKings filed suits in New York asking the court to overturn the attorney general’s determination.
Schneiderman’s intimidation tactics seem to be working. Large financial institutions involved in processing the gaming transactions could pull the plug and deal another blow to the online practice.
At least one payments processor, Vantiv, will reportedly no longer accept credit card transactions from New York residents.