Blurring the Line Between Fantasy Sports and Prediction Markets

March 13th, 2013

One of the items I am currently working on is defining a line between prediction markets on topics of political speech, and prediction markets for sports. The latter runs awfully close to sport gambling. It would serve the former greatly to separate the two for purposes of the First Amendment. The Times has an article exploring how regulators may soon crack down on sports fantasy leagues that are in truth betting rings.

But people who know the industry also acknowledge some troubling aspects of daily fantasy. Many sites are run by people with backgrounds in online poker or sports betting, activities that have run afoul of government regulators. For the top players, mostly young men, daily online fantasy sports are a full-time job in which they can win six figures annually.

Paul Charchian, the president of the trade association, said at a conference in January that the industry’s resemblance to illegal gambling was a concern.

“The caution that I’m recommending to the daily game providers is that they do more than highlight the monetary element of fantasy sports,” he said in a recent interview.

Some experts in sports law say that a shakeout is inevitable because daily fantasy games have a fundamentally different relationship to chance than season-long fantasy games. On a given day an injury, a hailstorm or a ball bouncing strangely could affect a result. In this regard, playing daily fantasy seems very similar to placing a bet with a bookmaker, said Ryan Rodenberg, an assistant professor of sports law at Florida State University.

“On the spectrum of legality to illegality, they’re getting pretty close to the line,” he said. “It’s tough to make an intellectually honest distinction between the two.”

I want prediction markets for political events to be clearly on the constitutional, and legal side of that line.

The article also quotes Professor Marc Edelman, who has an interesting article on FantasySports and the law.