The daily fantasy sports industry has been growing rapidly over the past few years, and according to some forecasts in 2020 it will reach revenues worth 2.5 billion dollars in the United States alone.

That is not guaranteed though as legislators are debating whether this industry should be regulated pretty much the same as online casinos are in many countries. Let’s see how it all started.

A Little Bit of History

Fantasy sports games have captured the imagination of sports fans all over the world for quite a few decades. The earliest appearance of fantasy sports was all the way back in the 1950’s when American businessman Bill Winkenbach set up a fantasy golf game. The rules were quite simple: each player picked a team of professional golfers and the person with the lowest total of strokes among his selected players at the end of the tournament would win the game.

In 1962, the same Bill Winkenbach set up the first fantasy football league with a rather long and complicated name: the Greater Oakland Professional Pigskin Prognosticators League. The idea spread to baseball and grew over time, it is reported that around 3 million Americans were involved in fantasy sports games in 1994.

Then the internet appeared in our lives and it changed everything. A survey conducted in 2003 revealed that 15 million people were playing fantasy football on a regular basis, each spending around 150 dollars a year on average. The concept of daily fantasy sports gained popularity in 2014 as people were seduced by the idea of playing for daily or weekly prizes instead of waiting and fighting for a whole season to win something.

Legal Challenges

The rapid growth attracted legal challenges as well since some legislators argued that daily fantasy sports are quite similar to games of chance, so they might be the same as gambling in the eyes of the law. Others argued that daily fantasy sports represent a game of skill, as successful players are required to have extensive knowledge of the players and teams.

In the United States of America, there is no federal law to regulate daily fantasy, each state is free to set up its own rules. The federal Unlawful Internet Gambling Enforcement Act (UIEGA) of 2016 clearly states that fantasy sports are not considered an unlawful wager. But the same act prohibits the electronic transfer of funds from unlawful gambling as defined under state laws. So if a state law says that daily fantasy is gambling, then a DFS website will have to get a gambling license in order to operate.

In the state of Nevada, DFS games must be licensed as a sports pool. The states of New York, Massachusetts and Virginia decided to regulate DFS games instead of banning them altogether. But most DFS services continue to block users from Arizona, Iowa, Louisiana, Montana and Washington from taking part in paid games as the gambling laws are quite strict in those states.

Skill, Chance or a Bit of Both

The main issue is defining DFS as a game of skill or a game of chance, or maybe something in between, but then the question is how much skill and how much chance is required. Some people have also raised concerns regarding the addictiveness of daily fantasy sports games, claiming that such an addiction would be similar to an addiction to gambling.

One thing is clear: skill and knowledge are surely required if you want to be successful in daily fantasy sports games. If you play on basketball for instance and you don’t know anything about the teams, the players and their performances, you have absolutely no chance of winning against a more experienced DFS player. But if you go into an online casino and play a game of slots, you don’t need to know anything in order to bag a lucky win.

Is it addictive? Well, sports are addictive. A sports fan will check results, line-ups, even watch dozens of hours worth of matches and sports news every week. One chooses to use that knowledge in a fantasy game which combines the passion for sports with the pleasure of competition against other fellow sports fans, but if that person becomes obsessed with the money involved then it might be an addiction similar to gambling.

New York Times writer Jay Caspian Kang is a regular daily fantasy sports player and he described his experience like this: “I play pretty much every night. This requires me to pick a team of players — whether baseball, basketball, football, hockey or soccer — each of whom have been assigned a dollar amount, and fit them all under a salary cap. I base these lineups on reasonably educated hunches: I’ll play the Indiana Pacers point guard George Hill tonight, because he’s going up against the New Orleans Pelicans, who have been a defensive train wreck this season, especially on the perimeter. My bets range anywhere from $3 to $100. My losses in D.F.S. are not financially crippling, nor are they happening at a rate that should be cause for concern.”

In some ways, playing daily fantasy sports games is quite similar to playing poker, give or take a few percents of chance involved. If a poker rookie sits down for a game against Daniel Negreanu, the rookie has a pretty good chance of leaving the table with no money in his pocket. It’s the same in daily fantasy sports, if an avid sports fan plays against his sports-ignorant wife, then he has a solid chance of winning that confrontation. But chance is involved as well, you might pick a player that has excellent stats during the season, but on that particular match he might just have a bad day, ruining your whole set-up.

Pro poker player Andy Frankenberger says daily fantasy resembles gambling much more than online poker. "A daily fantasy pro's competitive edge over a beginner is nothing compared to the edge of a poker pro versus a first-time poker player. Your decisions in daily fantasy can't be that bad when players' prices are efficiently set by the sites," Frankenberger said. "It's similar to how there's no bad pick in sports betting if the lines are set efficiently. But in poker, players assign their own values to each hand, and as such, the skilled player stands to gain from making better decisions. Anyone who thinks poker is not a game of skill probably hasn't played much poker."