It’s time to legalize online gambling

Since the days of Pete Rose, getting caught betting on sports is one of athletics’ most egregious sins. I grew up in Cincinnati in the 1990s, when Rose’s very name was synonymous with disgrace. In 1989, an investigation into the former Cincinnati Reds manager—who set the league’s hit record as a player for the team—alleged that he placed $10,000 bets on 52 Reds games during the ’87 season. Although Rose denied the accusations, he accepted a deal with former baseball commissioner Bart Giamatti to be placed on the league’s ineligible list, thus banning him from the Baseball Hall of Fame.

Although professional leagues have taken a strong stance against personnel betting, their stance on another form of gambling remains hypocritical—that’s right, I’m talking about fantasy sports.

The online industry has become a hot topic following the CNBC presidential debate, when GOP candidate Jeb Bush was asked his opinions on whether fantasy football constituted illegal gambling. Bush said there should be some regulation of the industry, then quickly touted his fantasy football team’s 7-0 record.

New York Attorney General Eric Schneiderman certainly believes it’s illegal. According to the Chicago Tribune, Schneiderman likened FanDuel and DraftKings to “digital bookies” in November, when he issued a court order that the popular sites “stop doing business with New York residents.”

The common defense of fantasy football argues that what differentiates it from gambling is that unlike betting on the roll of a dice, it’s not a game of chance.  

The common defense of fantasy football argues that what differentiates it from gambling is that unlike betting on the roll of a dice, it’s not a game of chance. The 2007 New Jersey court case Humphrey v. Viacom ruled that fantasy football requires “skill.” Bloomberg profiled a professional fantasy sports player in Boston, Saahil Sud, who spends up to 15 hours a day watching games and placing bets. While I don’t doubt his efforts, Sud is no different than the shark who meticulously spends his days counting cards, trying to beat the house. Only novices think gambling is all based on luck.

Let’s face it: Fantasy football is gambling, but that’s not a strike against it. Instead that’s precisely why it should controlled through sweeping federal regulation. As it stands, fantasy football is a dangerous industry that requires greater oversight to protect users from egregious abuse by a system that lacks any kind of controls. Many states, like Illinois and Iowa, are weighing legalizing online gambling altogether—and here’s why they should.

The prohibition against online gambling is a product of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which classified “unlawful Internet gambling” as a federal offense. The legal loophole offered through Humphrey v. Viacom allows fantasy football to continue, despite the general probation, but the state of Nevada is a unique case: The state voted to legalize online gambling in 2013, and earlier this year, the Silver State’s Gambling Control Board “ordered the sites out of the state unless they get a gambling license,” according to the Associated Press.

For those with any doubts that fantasy football does, in fact, constitute gambling, the Board’s memo is fairly damning. According to the AP’s Kimberly Pierceall, regulators cited a Reddit AMA interview with Jason Robins, the CEO of DraftKings in which he describes fantasy football like so: “The concept is almost identical to a casino, specifically poker. We make money when people win pots.” In addition, the Board stated: “The DraftKings CEO repeatedly refers to the payments on his sites as ‘wagers’ and ‘bets,’ and the activity as ‘betting.’”

If Nevada has argued that the solution is to bring the practice under the purview of regulators, other states should follow suit. Currently, Nevada is the only state in the U.S. that allows gambling outright. Elsewhere, gambling is decided by local municipalities. Thus, Indiana might not have legalized gambling, but Gary, Indiana permits it within the metro area.

Regulation is something of a double-edged sword when it comes to fantasy football. Although gambling is widely cited as a boon to struggling cities that lack profitable industry—like Baltimore and Cincinnati. In the late 1980s, the mayor of Gary, Indiana, Thomas Barnes, and and other proponents of the city’s casino project cited economic growth as a major incentive for the push. ”An opportunity for jobs and economic revitalization—that’s going to be the pitch,” State Rep. Earline Rogers told the New York Times in 1989.

Gambling didn’t save Gary, and it hasn’t saved any other city. As the New York Post reports, the city’s median household incomes have actually declined since Gary’s casinos were built, and in the 1990s, the city became known as the “murder capital of America.” Nationally, many casinos are actually shutting down—due to continued economic doldrums in many areas of the country, including Mississippi and Atlantic City.

Just as Netflix changed the way we watch television, the Internet has completely transformed the way we gamble—for better or worse. 

While analysts cite an oversaturated market and less disposable income, one of the likely reasons that lawful gambling has fallen on hard times is because of the presence of illegal online betting, which is big money. In New Jersey—which legalized online gambling in 2011—the state’s industry is projected to bring in nearly half a billion by 2017, and fantasy football is no financial slouch itself. According to Forbes, it’s estimated to be an absurdly profitable $70 billion dollar industry.

Just as Netflix changed the way we watch television, the Internet has completely transformed the way we gamble—for better or worse. While the lack of regulation is leaving a huge pile of potential tax revenue on the table, it’s also bad for consumers themselves. One of the things that has made online betting, even fantasy football, so popular is that it takes away from the stigma of gambling, allowing an environment for problem gambling to flourish. As Forbes suggests, this means that users struggling with addiction “could lose thousands of dollars in relative anonymity.”

If addicts account for up to 60 percent of gambling industry revenue, it might not appear to make sense to give them more opportunities to gamble via a legalized Internal portal. But casinos have had the ability to curb such abuse for years: According to ABC News, Cambridge Health Alliance developed “an early warning system to identify problem gamblers” in 2005, which included analyzing patterns of behavior and data like hotel stays and other rewards.

In taking on problem gambling, a regulated online industry is actually the best solution to the issue. Websites like Facebook can predict—with often terrifying accuracy—the behavior of their users through complicated algorithms. The company’s data scientists announced in 2014 that they could calculate how long their users’ “Facebook official” relationships were going to last. If Mark Zuckerberg knows when your boyfriend is going to dump you, then it’s safe to say that websites like DraftKings would have the capability to inform users when enough is enough. But without real federal oversight, there are few consumer protections to compel them to do so.

That matters because while a small number of gamblers—like the fantasy football player in Boston—will make bank by learning how to beat the system, others will continue to bet everything and come up short. While Alex Stein doesn’t think his addiction to fantasy football has ruined his life, it’s certainly destroyed his wallet: He told ABC that he’s lost over $70,000 in his years of betting, and he’s hardly alone.

It might be disgraceful to become a symbol for America’s unregulated gambling addiction, but the real disgrace is that we continue refuse to fix the problem.

Nico Lang is a Meryl Streep enthusiast, critic, and essayist. You can read his work on Salon, Rolling Stone, and the Guardian. He’s also the author of The Young People Who Traverse Dimensions and the co-editor of the bestsellingBOYSanthology series.

Image via Marit & Toomas Hinnosaar / Flickr (CC by 2.0) 

Nico Lang

Nico Lang

Nico Lang is an essayist, movie critic, and reporter who specializes in the intersection of politics and LGBTQ issues. His work has been featured in Rolling Stone, The Guardian, The Los Angeles Times, Jezebel, Esquire, and BuzzFeed, among other notable publications.