14 DAY TRIAL // DraftKings, FanDuel, and Yahoo! are in danger of being outlawed as the New York Attorney General seeks to place them under a temporary injunction until the courts decide if to categorize their services as online gambling sites or leave them in the unregulated fantasy sports section.
Fantasy sports appeared in the early ‘80s in the US and consisted of regular people choosing a lineup of their favorite players and creating an imaginary sports team that racks up points every week. Players face each other in leagues, and at the end of the season, one person wins money if players decide so, or just gains a moral advantage and bragging rights over their friends.
It's been like this for the past three decades, until a few years back, when a few sites that revolved around fantasy (American) football decided that, instead of having the same team an entire sports season, you could change it every week.
Things quickly evolved when a few of these sites decided to allow players to put money together in a pool, and give it to the player that racks up the most points.
The DraftKings-FanDuel scandal that sparked all the recent hoopla
It turned ugly this summer, when one DraftKings engineer decided to play on FanDuel, a rival site. The DraftKings employee used insider information and won $350,000 / €310,000.
Quickly after, a public debate started about the unregulated status of the daily fantasy sports industry, which has all the traits of the gambling sector, but none of the laws and restrictions.
There are currently two camps in this debate. The first says it takes skill and knowledge to pick the right players each week, requiring a lot of work and study. The other camp says that weekly fantasy sports are just a random gamble, since long-term player evolution is practically ignored, and human users have the same odds of hitting the right team just like when playing dice or Black Jack.
States likeArizona, Iowa, Louisiana, Montana, and Washington had gone and already made it illegal in 2014. Nevada followed suit in 2015. Despite legal decisions, the states did not take any other actions like blacklisting the sites on local ISPs or going after their users.
If it walks and talks like a duck...
Even worse, the two leading companies, FanDuel and DraftKings, have many executives in their ranks that previously worked for online gambling websites, and have partnerships with companies like World Series of Poker and the Belmont Stakes.
Gambling is regulated mainly because it's a game of chance, which most people fail and lose money at. According to stats provided by DraftKings and FanDuel, 90% of their users lost money in 2013 and 2014. Users have acknowledged having gambling addictions because of the sites.
SEO-wise, both sites use common betting-related keywords to drive traffic to their sites from search engines.
On TV, the two have assaulted users with a barrage of commercials on every channel that's interested in playing them. This aggressive marketing campaign reminds us of those pushy casino and betting ads on the Internet that seem to pop up everywhere.
The two sites are constantly shouting out loud that they're not gambling sites, but they do like to behave like one.
Yahoo! jumps in, right before everything else may be crashing down
Yahoo! entered the market only this year, offering a daily fantasy sports service, but the company may have just stumbled over a bees' nest by accident. Or maybe not.
While most of Yahoo's other fantasy sports services don't support paid contests, its daily fantasy football service does. The service is available only in the US, except Arizona, Florida, Iowa, Louisiana, Montana, Nevada, and Washington.
Right now, the company has refused to comment on the DraftKings and FanDuel's legal inquiries, but it will have to, especially after the New York General Attorney expanded his investigation to include Yahoo's service as well.