If you watch sports, own a TV, or stream just about anything on a laptop or mobile device, you’ve seen the ads: champagne-soaked millennial dudes in baseball hats holding aloft giant, million-dollar checks — real money they’ve won playing fantasy sports at one of the two biggest sites in the game, Boston-based DraftKings, or New York-based FanDuel. The ads are ubiquitous — the result of what some experts deem to be a combined $200 million-plus marketing campaign by the rival companies. And with football season in high gear, it’s a safe bet that the champagne is going to keep on splashing, the big checks waving. Without realizing it, we’ve all been watching the birth of a multibillion-dollar industry — one that even a few bumps in the road can’t derail.
Just as you’ve seen the ubiquitous ads, you’ve probably also seen the recent headlines of the “scandal’’ involving a DraftKings employee who posted internal data about users’ player rosters on the same day he himself won $350,000 on the rival FanDuel site. Whether this constituted evidence of some sort of insider trading scheme or was just a harmless mistake, the effect was instantaneous — the entire industry suddenly found itself under intense scrutiny. Salivating journalists, armchair pundits, and voter-conscious attorneys general are banding together like crazed villagers, sharpening their pitchforks; Frankenstein’s coming, they seem to be screaming, and he’s wearing a baseball hat and a Free Tom Brady T-shirt.
Full disclosure: I wish I had come up with the idea of daily fantasy sports. I’ve watched the rise of DraftKings and FanDuel with awe and a little jealousy. I’ve gotten to know Jason Robins, the CEO of DraftKings — and I think he’s a brilliant local entrepreneur who is essentially creating a multibillion-dollar industry out of thin air. I both love him and hate him for it. I was writing about Mark Zuckerberg and the Winklevii twins when Facebook was still brand new — and now those guys I wrote about are all billionaires, while I’m sitting at a crappy table at Au Bon Pain mourning the loss of the Prudential Center Food Court. But online fantasy sports — that’s something that I should have seen coming.
While working on a book about the online poker industry a few years back, I spent a lot of time researching Internet gambling law. I was disturbed by the somewhat arbitrary bill that snuck through Congress in 2006 — the Unlawful Internet Gambling Enforcement Act, which made most forms of online gaming actionable, including traditional sports betting. The drafters carved out an exemption for fantasy sports, which was granted — in part due to the intense lobbying of the professional sports leagues, who saw fantasy sports as one of the main drivers of viewership. Why else would anyone watch the last few innings of a meaningless baseball game between two last-place teams near the end of the season — if they weren’t invested, in some way, in stats that had little to do with the game itself?
In the pre-Internet days, fantasy sports was something you did socially with your friends. You put together a fantasy roster of baseball or football players, and then, based on what those players did in actual games, you won money, beer, or bragging rights. And unlike, say, blackjack, bingo, or the lottery, it was predominantly a game of skill. The better you knew the stats, the more info you had on the players, and the more likely you were to win.
Moving the party online, DraftKings and FanDuel have magnified the game and accelerated the process; now you can play monthly, weekly, even daily — against thousands of strangers. But at its essence, the core of the game hasn’t changed; it’s still about skill and data, and the better players win more consistently than anyone else. Along with the size and speed of the game, the money has become phenomenal. Between DraftKings and FanDuel, close to $3 billion in prize money will reportedly be paid to players by the end of 2015. Meanwhile, fees collected from players have already been estimated to be above $3.5 billion, with a projected $20 billion to be collected over the next five years. This is crazy money, Zuckerberg money — and when you start talking about numbers like these, there’s no more hiding in the shadows of the poorly constructed Internet gambling law.
Which brings us to the present conflagration. According to DraftKings, its own internal investigation has shown that the employee at the center of the “leak’’ did not use any “inside” information at the time he set up his roster at the rival FanDuel. As Robins told me over the phone Wednesday, “We have proof that nothing happened here, and I feel bad for the kid whose name is being dragged through the mud.
“I’m glad it’s being discussed,” he continued, “but taking an innocent kid in his early 20s who keeps his head down and works and has been playing in the industry for years — hearing him telling me that the media is out stalking his home — the thing is, we have definitive evidence that he didn’t do anything wrong. We have good monitoring in place. We have records, and he received this info after the lineups were locked at FanDuel. He couldn’t have used the information.”
The sad thing is, the pitchfork-wielding mob doesn’t really care about the details of the incident — it’s the perception that really matters. Robins is well aware that the key to his industry’s continued growth is the trust players have that the game isn’t rigged.
Which means transparent self-regulation — or regulation coming from somewhere outside. Robins isn’t against the idea of outside help — in fact, he said, DraftKings approached Massachusetts Attorney General Maura Healey to get her to look into the industry.
“If the government determines that oversight is needed,” he said, “we will be open to it and go along with it. If they don’t, we will be able to build the same procedures ourselves. Our goal is to do the right thing.”
As for the concern that employees could possibly use information to play on rival sites, Robins said, “We’ve discontinued employees being able to play on rival sites.” Perhaps it was a bump in the road he could have foreseen. “In the industry, there were lots of former players who were hired into the company — they knew the product. As we’ve gotten bigger and the optics became more important, it’s not practical anymore. No matter what policies and procedures are in place, it can never be perfect. There will always be people uncomfortable with that — always the opportunity that something is going to happen.”
As Robins has learned, the pitchforks will always be out there. The ads are everywhere, the industry is now impossible to ignore — and there will always be plenty of people who will bundle fantasy sports in with gambling, and hope to extend the Internet gambling law beyond its already arbitrary boundaries.
But that’s a wrong-headed and hypocritical point of view. I can take my entire retirement account and bet it on random penny stocks that I’ve never heard of, and that’s perfectly fine. I can buy a scratch ticket out of a vending machine at Star Market, and nobody cares. I can fill in my brackets during March Madness or bet $50 on my Super Bowl square.
Without realizing it, we’ve all been watching the birth of a multibillion-dollar industry — one that even a few bumps in the road can’t derail.
I should be allowed to go on the Internet with a bunch of my friends, put together a fantasy football team, and dream about seeing myself in one of those commercials, holding a big check. Or better yet, launch my own fantasy sports site, out-Zuckerberg Zuckerberg, and hire the Winklevii to pick up my sandwiches from Au Bon Pain.Ben Mezrich is the author of “Bringing Down the House,’’ “The Accidental Billionaires,” and “Once Upon a Time in Russia.”