Daily fantasy sports (DFS) barely existed two years ago. Today, whether DFS is considered a game of skill or a form of gambling, the service is having a significant influence on the debate over sports betting in the United States. By federal legislation, fantasy sports are legal and sports betting is illegal, and DFS has blurred the line between the two. We anticipate that 2016 will see continued regulation of this burgeoning industry on a state-by-state basis. However, as the popularity of DFS grows and the prize pools get bigger, it may only be a matter of time until Congress is forced to address the overarching gambling question, especially with NBA Commissioner Adam Silver’s outspoken support of legalized sports betting.
If sports betting is legalized, it would create opportunities for a variety of stakeholders. Teams could profit by setting up betting kiosks in stadiums and arenas, similar to existing gambling options at horse tracks and European soccer stadiums. Leagues could sign lucrative sponsorship deals, license trademarks and proprietary data, and even consider operating their own gaming platforms as a way to collect a percentage of the billions of dollars bet on sports each year. More importantly, for both teams and leagues, legalization could result in increased interest and engagement by fans, driving higher TV ratings and ticket and merchandise sales. At the same time, legalization would not come without challenges. Federal and state governments, leagues, and governing bodies across both the professional and collegiate levels must introduce appropriate governance for heavily regulating sports betting in order to prevent the point shaving and match fixing scandals that have plagued the sports industry in the past.
Though states can—and will—continue to move faster than Congress in regulating DFS, the prospect of legalized, nationwide sports betting is more possible now than at any time since it was outlawed in 1992. Whether or not DFS even is gambling, it is the catalyst for this movement.