Weekend Update: State of DFS
Recently, the state of Nevada banned DFS. The Nevada Gaming Commission has banned the playing of DFS games in the state because it claims that the sites are operating without a gambling license. The gaming board acted unilaterally in defining playing in daily fantasy sports contests (yes, even free ones!) as gambling rather than skill based gaming. After defining the activity as gambling, it quickly imposed the ban on DFS because the sites do not have gambling licenses in the state. But how did we come to this point?
As you can imagine, a great deal of revenue for the state of Nevada comes from one of it’s most lucrative draws – Las Vegas, or ‘sin city’ – which is filled with casino gambling at every turn.
It’s no coincidence that a powerful gaming board filled with ex-casino executives, in a state which survives in the desert largely based off of large inflows of tax revenue from casinos and gambling licensing, has acted so decisively to deter what it perceives to be one of its biggest competitors.
I would argue that consenting adults who are playing DFS from the privacy of their own homes are not so easily converted into casino patrons. People who throw in an entry into a $1 DFS tournament, like myself, from my cell phone, on the trip between work and home, are not necessarily willing to drive or fly for several hours to enter a dark, often creepy and smoke filled brick and mortar casino. I won’t suddenly take that $1 I was willing to risk on DFS in a large contest or even a head to head (1v1) game against my little brother and put it into a slot machine instead. Capturing the entire DFS market by banning the activity is a pipe dream, and shows that brick and mortar casino operators, state lotteries and their lobbyists do not fully understand the product that companies like DraftKings or FanDuel offer.
Adam Smith once wrote:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
This self-interest – specifically, that of an entire industry which is already hurting in the US, is causing much of the pressure for individual states to crack down on DFS gaming. Brick and mortar casinos have suffered for awhile now, as the population of dronelike slot machine playing patrons has given way to an equally dronelike ‘electronic music’ patron more interested in clubbing and the VIP experience than in actual gambling vs. the house, at games designed to make them lose as long as they play for long enough. The data bears this out:
So, what can you do when a large industry acts to eliminate another it perceives as competing with it? There is a grassroots campaign developing in many states to prevent what has happened in Nevada from happening across the nation. However, others fear that the state of Nevada is just the first domino to fall in a nationwide push by those who feel they ‘aren’t getting their cut’ of the massive amounts of money moving around in the DFS economy each and every day.
What we have here is a action clearly compelled by greed, self-interest, and desire for self-preservation. This is a cash grab by certain states which operate their own lotteries and games, as well as a powerful casino lobby which holds great influence over statewide gaming commissions and has conspired to railroad any and all competition.