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Tuesday, February 19, 2013

Forbes: Will New Lawsuit Help to Clarify the Legal Status of Daily Fantasy Sports?

Yet another foray into the world of law and fantasy sports - this one about whether or not fantasy sports = gambling:

Most sports fans are probably unfamiliar with the pending lawsuit Langone v. Kaiser & Fan Duel.  However, this case is likely to shape the future of the daily fantasy sports industry.

The case’s plaintiff, Chris Langone, is an Illinois lawyer who is seeking to recover third-party gambling losses from the winners of daily fantasy sports contests run on the website Fan Duel — a website that has recently secured millions of dollars in funding from Comcast Ventures.

The defendants, meanwhile, argue that they are not gambling “winners” but rather operators of the game itself.  Thus, they argue that Langone has sued the wrong party.

In addition, Fan Duel claims that its games are exempt from Illinois gambling law because it purports the games are based on skill, not chance – an argument that no court has directly addressed in the context of daily fantasy sports.

Mike Emeigh Posted: February 19, 2013 at 10:18 AM | 51 comment(s) Login to Bookmark
  Tags: business, fantasy baseball

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   1. Devin has a deep burning passion for fuzzy socks Posted: February 19, 2013 at 11:12 AM (#4371835)
Displaying my ignorance here (since I'm not a fantasy guy anyway), what exactly is "daily fantasy sports"?
   2. Nasty Nate Posted: February 19, 2013 at 11:26 AM (#4371841)
What is a third-party gambling loss?

eh, I guess I should read the article.
   3. Lujack Posted: February 19, 2013 at 11:40 AM (#4371852)
Daily fantasy is where you pit one player or group of players and play a fantasy matchup against somebody else. The winner is the team with the most points, for example HR=4 pts, SB= 2 pts, etc. The site takes a cut of the amount wagered.

There is skill in picking the right players and matchups which is what Fan Duel is arguing.
   4. Nasty Nate Posted: February 19, 2013 at 11:52 AM (#4371861)
Daily fantasy is where you pit one player or group of players and play a fantasy matchup against somebody else. The winner is the team with the most points, for example HR=4 pts, SB= 2 pts, etc. The site takes a cut of the amount wagered.


Thanks.


There is skill in picking the right players and matchups which is what Fan Duel is arguing.


There's skill in picking against NFL lines too....

I don't understand who is suing who in this case. Did someone willingly play and lose, and is suing for their money back?
   5. Sean Forman Posted: February 19, 2013 at 12:18 PM (#4371882)
There's skill in picking against NFL lines too....


I think the argument is that the setting of the lines is tantamount to making it a lottery. There are also some aspects to the effect that you can't wager on the outcome of the game, but underlying aspects are ok.

I find it strange as well that one is legal and one isn't.
   6. Jim Wisinski Posted: February 19, 2013 at 12:35 PM (#4371898)

There's skill in picking against NFL lines too....


I think the argument they're making for daily fantasy is that you're directly competing against someone else, using sports statistics as the medium for doing so. I think that's the justification for regular fantasy sports being legal and not gambling though the article does make the relevant point that daily games have far, far more luck involved than ones lasting an entire season.

I realized that the linked website really isn't aimed at my demographic when I saw the ad on the bottom for a safe company that makes a product for "Ultimate security, convenience, and organization for your watches".
   7. Poster Nutbag Posted: February 19, 2013 at 12:37 PM (#4371900)
I admit, I make quite a bit of spending cash on these sites....hope nothing comes of this
   8. smileyy Posted: February 19, 2013 at 12:45 PM (#4371910)
I realized that the linked website really isn't aimed at my demographic when I saw the ad on the bottom for a safe company that makes a product for "Ultimate security, convenience, and organization for your watches".


Whereas on this site, I get an ad for some sort of magic electricity bill reducing snake oil.
   9. Nasty Nate Posted: February 19, 2013 at 12:53 PM (#4371915)
I think the argument they're making for daily fantasy is that you're directly competing against someone else, using sports statistics as the medium for doing so. I think that's the justification for regular fantasy sports being legal and not gambling though the article does make the relevant point that daily games have far, far more luck involved than ones lasting an entire season.


As far as I know, real money does not go thru the big mainstream fantasy sports sites (Yahoo, ESPN, CBSsportsline etc). It may be legal to involve money, but I guess they are letting the small guys take the risk to figure it out.
   10. Poster Nutbag Posted: February 19, 2013 at 01:06 PM (#4371928)
#9 - Yahoo has been doing money leagues (They call them "Pro" leagues) for a couple of seasons on their yearly format, they just don't do dailies like DraftStreet, FanDuel, etc.
   11. Jim Wisinski Posted: February 19, 2013 at 01:07 PM (#4371931)
ESPN has prize leagues available that require an entry fee; I don't know if it's a monetary prize or not but they don't allow residents of a few states to be eligible for the prize due to state laws. CBS Sports has paid leagues that can cost up to $1000 to play and the winner receives $5000.
   12. Nasty Nate Posted: February 19, 2013 at 01:09 PM (#4371934)
#9 - Yahoo has been doing money leagues (They call them "Pro" leagues) for a couple of seasons on their yearly format, they just don't do dailies like DraftStreet, FanDuel, etc.


Thanks, I didn't know that. Does anyone have experience with them? Are there safeguards against collusion?

I might have to check them out.
   13. Poster Nutbag Posted: February 19, 2013 at 01:20 PM (#4371939)
Nate - I played one last season before #### hit the fan and I had to "abandon" it due to Real Life stuff. $20 to enter. They are monitored by Yahoo Staff (or so we're told) and have a long list of rules for participation, including that your team CAN be taken over in cases of collusion, abandonment, etc. Yahoo has a "Can't Cut"-list, veto process for trades, etc. It's actually fairly safe, or so it seems. Might do another this season since I should have the time to see it through.
   14. Poster Nutbag Posted: February 19, 2013 at 01:26 PM (#4371943)
Deleted double
   15. Poster Nutbag Posted: February 19, 2013 at 01:28 PM (#4371946)
You know what, Nate....I cannot find them for this season now....I wonder if they axed them, or if I just haven't had enough coffee yet this AM.....


Can only find this from last season...

Couldn't we just get enough people to do our own via Yahoo (like everyone else!)? I mean, really, I'm sure there are 12 guys here who would play for a little prize (AND the bragging rights), no? I'd be in....
   16. Jim Wisinski Posted: February 19, 2013 at 01:32 PM (#4371947)
When I was checking the three sites to answer Nate's comment I only saw things about free stuff on Yahoo's page. I also only spent 30 seconds looking.
   17. Nasty Nate Posted: February 19, 2013 at 01:36 PM (#4371950)
You know what, Nate....I cannot find them for this season now....I wonder if they axed them, or if I just haven't had enough coffee yet this AM.....


I looked too and couldn't find them. But poking around, supposedly there just was some glitch and the info will be back up soon. But I wonder if it actually has to do with the legality question.
   18. Poster Nutbag Posted: February 19, 2013 at 01:36 PM (#4371952)
#17 - Thanks...thought I was losing my mind for a minute....
   19. Sean Forman Posted: February 19, 2013 at 01:47 PM (#4371958)
Does anyone have any negative views of Draftstreet, FanDuel or others. we are looking at selling some advertising to them and I want to make sure they are on the up and up and won't make us look bad.
   20. Poster Nutbag Posted: February 19, 2013 at 01:50 PM (#4371959)
Sean: I am a BIG fan of Draft Street. Not so much Fan Duel. Draft Kings is meh. I honestly think you would do quite well to advertise on Draft Street/Fan Duel, FWIW. TONS of traffic on those sites. Bored guys with NOTHING better to do! Draft Street is my favorite and I have been VERY happy with them. Very transparent, upfront and helpful. I had just a single deposit issue last season (and it was a deposit issue, not a withdrawal issue...never had a problem getting money OFF the site) and they handled it IMMEDIATELY. Hope that helps.
   21. You Know Nothing JT Snow (YR) Posted: February 19, 2013 at 02:04 PM (#4371972)
When I was checking the three sites to answer Nate's comment I only saw things about free stuff on Yahoo's page.


Thanks President Obama.
   22. Bob Tufts Posted: February 19, 2013 at 02:42 PM (#4372001)
And when will the owners and management demand a cut of these revenues - or be forced to try to shut them down?

Are team names being used? If so, the leagues are not protecting their copyrights and could theoretically lose them.

   23. Moeball Posted: February 19, 2013 at 03:27 PM (#4372048)
Oh, boy. First of all I RTFA and it's basically useless - doesn't really tell you anything or why Langone is suing in the first place. My guess is he played fantasy sports and lost his $. Waa, Waa (insert baby crying app from your favorite smart phone of choice).

Worse yet, however - this is our great legal system at play here.

What an incredible waste of time spanning several months and this bozo hadn't even stated a claim.

Edit: my apologies to any Bozo the Clown fans out there. I did not mean to take the clown's name in vain.
   24. snapper (history's 42nd greatest monster) Posted: February 19, 2013 at 03:40 PM (#4372075)
I think the argument they're making for daily fantasy is that you're directly competing against someone else, using sports statistics as the medium for doing so. I think that's the justification for regular fantasy sports being legal and not gambling though the article does make the relevant point that daily games have far, far more luck involved than ones lasting an entire season.

Usually the distinction for illegal gambling is whether the "house" is taking a cut from the game.

A home poker game is perfectly legal, if the host tries to take 10% of every pot, it's illegal. Likewise, bars running Superbowl boxes are fine, unless they take a cut.
   25. Nasty Nate Posted: February 19, 2013 at 04:04 PM (#4372103)
Usually the distinction for illegal gambling is whether the "house" is taking a cut from the game.


Is that the actual distinction, or just the guideline for what might get you in trouble? I assume it wouldn't be legal to open up a website or physical sportsbook that took NFL bets, but took no vig or fee for the house.

edit: I guess a better analogy would be a bar opening a poker room that took no rake for the house.
   26. zenbitz Posted: February 19, 2013 at 04:16 PM (#4372124)

Isn't sports book betting illegal in 49 states (not Nevada) -- obviously discounting Native American reservations.

Betting on fantasy sports is clearly gambling, although some states (California) have legalized (non-home) poker games on a local basis.

I took about 2 minutes to scan the 480 page PDF on California Gambling Law but that was not sufficient to see how "Games of Skill" were distinguished.
   27. Nasty Nate Posted: February 19, 2013 at 04:21 PM (#4372131)
Isn't sports book betting illegal in 49 states (not Nevada) -- obviously discounting Native American reservations.


I don't think sports-betting is legal even on Indian casinos.
   28. snapper (history's 42nd greatest monster) Posted: February 19, 2013 at 04:25 PM (#4372138)
Is that the actual distinction, or just the guideline for what might get you in trouble? I assume it wouldn't be legal to open up a website or physical sportsbook that took NFL bets, but took no vig or fee for the house.

edit: I guess a better analogy would be a bar opening a poker room that took no rake for the house.


I think sports betting (betting on game outcomes) is addressed by specific laws.

I think the poker room would violate their liquor license, but not gambling laws.
   29. The Yankee Clapper Posted: February 19, 2013 at 06:56 PM (#4372234)
. . . we are looking at selling some advertising to them and I want to make sure they are on the up and up and won't make us look bad.

The "Asian Brides" aren't renewing for another season?
   30. Sean Forman Posted: February 21, 2013 at 10:45 AM (#4373306)
The "Asian Brides" aren't renewing for another season?


Touche'

I haven't seen that one.
   31. Howie Menckel Posted: February 21, 2013 at 11:31 AM (#4373343)
"Isn't sports book betting illegal in 49 states (not Nevada)"

Since 1992, it has been legal to offer whatever states offered before that.

So Nevada gets to offer widespread sports betting, while Delaware, Oregon and Montana can offer limited betting - like multi-game parlays or betting tickets. Oregon is dormant, Delaware offers the parlays at their racinos, and no one lives in Montana. The other 46 states can't do it (well, New Jersey could have done it Vegas-style, too, if they passed a law to allow it within a year after the law was enacted. But they didn't act back then. No other state even had that option).

New Jersey's challenge to this federal law will be ruled upon in a federal court in Trenton by late next week. The loser will then appeal.

   32. Ron J2 Posted: February 21, 2013 at 11:54 AM (#4373363)
#26 It's tricky. I do know that quite some time ago they tried to prosecute the operator of a rubber bridge club on the grounds that it wasn't a game of skill. Eli Culbertson was a defense expert and the prosecutor tried to argue that even a novice would know what to do with a 13 card suit. Culbertson said that this is actually a tricky problem for an expert. How do you buy the hand (they likely have a decent sacrifice) and keep partner from doing something clever (he is after all void)

Now rubber bridge specifically is a game of luck provided the players are all reasonably close in ability. But as soon as there is any meaningful difference in skill ... well Bob Hamman had some losing sessions back when he played rubber bridge for his living, but over time he made a comfortable living (playing in the strongest game on the west coast)

   33. Lassus Posted: February 21, 2013 at 12:12 PM (#4373371)
I don't think sports-betting is legal even on Indian casinos.

There is definitely no sports book at the Turning Stone that the Oneida nation owns up here.
   34. Tripon Posted: February 21, 2013 at 12:47 PM (#4373391)

The "Asian Brides" aren't renewing for another season?


Touche'

I haven't seen that one.


You haven't seen the Asian Brides? Sometimes I feel that they're the only ads I see on a given day.
   35. snapper (history's 42nd greatest monster) Posted: February 21, 2013 at 02:21 PM (#4373443)
You haven't seen the Asian Brides? Sometimes I feel that they're the only ads I see on a given day.

Never seen 'em. I get lots of weight-loss and dynasty baseball ads. Right now I've got some "work from home and make $7,397 a month" nonsense and Verizon.
   36. flournoy Posted: February 21, 2013 at 02:38 PM (#4373454)
Yahoo has a "Can't Cut"-list


I may be mis-remembering some details, but I think my last year of playing fantasy baseball was Yahoo's first year of implementing this. I had Chris Carpenter, who hurt himself on opening day, and was out for the season. But I couldn't cut him, and was stuck with him clogging up a spot on my roster all season. That was stupid.
   37. The Good Face Posted: February 21, 2013 at 02:54 PM (#4373474)
Never seen 'em. I get lots of weight-loss and dynasty baseball ads. Right now I've got some "work from home and make $7,397 a month" nonsense and Verizon.


Lots of "work from home" and "incredible device brings huge electricity savings!" ads lately. Considering that recent thread here about how half of BBTF is unable to make eye contact with others or engage in casual conversation without great difficulty, the Asian Brides ads might be aptly placed for this demographic.
   38. snapper (history's 42nd greatest monster) Posted: February 21, 2013 at 02:58 PM (#4373481)
Considering that recent thread here about how half of BBTF is unable to make eye contact with others or engage in casual conversation without great difficulty, the Asian Brides ads might be aptly placed for this demographic.

What thread was that?

I thought it was the intense desire of 50% of the site not to support their offspring that was driving the need for mail-order brides ;-)

   39. The Good Face Posted: February 21, 2013 at 03:04 PM (#4373488)
What thread was that?


Something about Zach Greinke and how he doesn't do small talk; from earlier this week IIRC.

I thought it was the intense desire of 50% of the site not to support their offspring that was driving the need for mail-order brides ;-)


Hoho! Well, if we're going to engage in Posts-on-Internet communication, you've gotta accept that kind of thing can happen.
   40. snapper (history's 42nd greatest monster) Posted: February 21, 2013 at 03:10 PM (#4373498)
Something about Zach Greinke and how he doesn't do small talk; from earlier this week IIRC.

OK, missed that one.

Hoho! Well, if we're going to engage in Posts-on-Internet communication, you've gotta accept that kind of thing can happen.

Just breaking balls.
   41. The Chronicles of Reddick Posted: February 21, 2013 at 03:10 PM (#4373499)
I don't think sports-betting is legal even on Indian casinos.



I live in the Sacramento area and I know that there is no sports betting at any of the Indian Casinos in and around Sacramento.
   42. The Good Face Posted: February 21, 2013 at 03:22 PM (#4373515)
Just breaking balls.


It's cool, was doing the same.

Anyway, the Greinke thread was interesting if you want a glimpse into the Aspergery soul of Zach Greinke and/or BBTF.
   43. zenbitz Posted: February 21, 2013 at 10:04 PM (#4373711)
I can't imagine the internet without adBlock. Except on a phone, where I Am zoomed in anyway
   44. akrasian Posted: February 21, 2013 at 10:40 PM (#4373723)
I can't imagine the internet without adBlock. Except on a phone, where I Am zoomed in anyway

That's evil. Do you think bandwidth is free?

(I suppose I should let you know that I make my living creating web advertising, primarily SEM but definitely some website advertising too)
   45. Jack Carter, calling Beleaguered Castle Posted: February 22, 2013 at 04:27 AM (#4373766)
I think the argument they're making for daily fantasy is that you're directly competing against someone else, using sports statistics as the medium for doing so. I think that's the justification for regular fantasy sports being legal and not gambling though the article does make the relevant point that daily games have far, far more luck involved than ones lasting an entire season.

Usually the distinction for illegal gambling is whether the "house" is taking a cut from the game.

A home poker game is perfectly legal, if the host tries to take 10% of every pot, it's illegal. Likewise, bars running Superbowl boxes are fine, unless they take a cut.


Incredible, that we need to be protected from ourselves by politicians. When Congress decided to take the payoff from casinos and shut down internet poker they cost me a small frakking fortune.

Now rubber bridge specifically is a game of luck provided the players are all reasonably close in ability. But as soon as there is any meaningful difference in skill ... well Bob Hamman had some losing sessions back when he played rubber bridge for his living, but over time he made a comfortable living (playing in the strongest game on the west coast)


Quite a few years back I played some of the rubber bridge games housed in clubs in NYC and while I didn't give it much thought at the time, looking back I'll guess they got around the issue of taking a cut or rake from the game by instead charging an hourly "card fee", presumably (at least nominally) for resolving disputes, providing the roof and lights, and so on.

If that made it all legal, though, why don't we see poker games all over the place doing the same thing? It might have been that no one was going to get too riled up over a half dozen clubs hosting money rubber bridge, whereas a poker game on every block would get attention.

Card fees instead of a rake definitely favored playing in the higher stakes games. I suppose with high stakes poker you'd also have more of a risk of robbery and violence.

Now rubber bridge specifically is a game of luck provided the players are all reasonably close in ability.
More a game of skill than hold 'em, for what it's worth. Also a lot more room to cheat than poker. Bridge is up there with chess wrt skill.
   46. Jack Carter, calling Beleaguered Castle Posted: February 22, 2013 at 04:29 AM (#4373767)
Considering that recent thread here about how half of BBTF is unable to make eye contact with others or engage in casual conversation without great difficulty, the Asian Brides ads might be aptly placed for this demographic.

What thread was that?


I thought it was the intense desire of 50% of the site not to support their offspring that was driving the need for mail-order brides ;-)


Actually, it was our desire not to support your offspring :)

Jesus. We work our electrons to the bone trying to educate you, and 2000 posts later you still don't know what the thread was about.

   47. Rafael Bellylard: Built like a Panda. Posted: February 22, 2013 at 05:21 AM (#4373768)
I, too, play in these daily leagues. Mostly at Daily Joust, which has been reputable in all our dealings. I play for small amounts and am about a couple hundred ahead.

They do take their cut off the top, though. If 10 people join a winner-takes-all league at $2 each, first prize gets $18. Since they regularly run contests with entry fees upwards of $50, it's easy to see why they are lucrative.
   48. zenbitz Posted: February 22, 2013 at 11:47 AM (#4374002)
Bandwidth? Isn't that what I pay Comcast for?
   49. Nasty Nate Posted: March 08, 2013 at 03:53 PM (#4384333)
You know what, Nate....I cannot find them for this season now....I wonder if they axed them, or if I just haven't had enough coffee yet this AM.....


The Yahoo PRO LEAGUES are again listed on their site.
   50. Poster Nutbag Posted: March 08, 2013 at 04:08 PM (#4384350)
The Yahoo PRO LEAGUES are again listed on their site.


I had just come to post this. Beat me to it!

   51. Poster Nutbag Posted: March 08, 2013 at 04:28 PM (#4384372)

(I will also use this opportunity to ask if anyone wants to join my league over at CBSSportsline....it's Premium, comes with free MLB Gameday Audio, has kitschy prizes, and is FREE...drop a post if interested)

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