I've been meaning to write sports
gambling "contest" sites for some time. Fortunately an article on DraftKings in The Boston Globe kickstarted my attention.
If you don't know what DraftKings and FanDuel are, you should probably remove the large rock you've been living under. Just kidding, I watch a good amount of sports and the commercials are everywhere.
These websites, along with some smaller ones, are known as Daily Fantasy Sports or DFS. People go to the websites, pay a fee, and create a team of players. The entry fee money is pooled and the team with the best performing players is the winner getting the bulk of the money.
That description makes it sound like a lottery right? You put in some money and some event churns out a winner who receives the bulk of it, with a sizable portion siphoned off for the lottery operator. Except that companies can't operate lotteries. State laws vary, but almost all of them frown on that. The states make an exception for a few operations that give the operating back to the state to fund infrastructure.
What's the difference? Law is just a passing interest of mine, but it seems to whether it is a game of luck or a game of skill. Games of luck are "bad." Games of skill are "maybe okay?"
State lotteries are quite clearly games of luck. Anyone trying to claim they know which way the ping-pong balls are going to bounce is simply nuts. However, there is a 2006 federal Unlawful Internet Gaming Enforcement Act that allows for fantasy sports to count as games of skill.
This has always been interesting to me. I don't understand why regulators would draw a line in the sand between luck and skill. It opens up a ton of issues.
There are many, many cases where gambling is a combination of luck and skill. Let's take some casino games for example. Roulette seems to fall under luck. As a (rare) craps player, I'd say there's some skill in making bets that gives the house the least advantage. Many argue that if you can count cards, you can even beat the house at "21." I'd say that counting cards is a skill and thus I could be justified in opening a "21" casino. Of course poker is the most obvious example. The cards you are dealt are luck, but the decisions you make after that are firmly in the skill category.
Gambling on sports, for some reason, is illegal in most states. One could claim that they are games of skill too. In fact, some experts have.
The result is a discussion of what games have substantial luck vs. substantial skill. I don't see how such a discussion is productive. It seems very subjective to attempt to quantify the luck vs. skill in a game that relies on both. Bad luck in poker can doom the most skillful player. Good luck can defeat the most skillful player.
Daily fantasy sports is the same way. I don't think anyone expected Jackie Bradley Jr. to have an offensive breakout game yesterday raising his slugging percentage by a hundred points. That's like picking the Bradley Jr. ping pong ball and having it come up in a lottery.
Logically, I keep coming back to sample size. If I'm playing one poker hand, my best friend is going to be Lady Luck. If I'm playing hundreds or thousands, I better develop some skill.
The problem with huge daily fantasy sports sites is that you are competing against potentially thousands or tens of thousands of people. If one of them picked that Bradley Jr. ping pong ball yesterday, you were at a significant disadvantage. Odds are that a hundred or more of your competitors did. Even if you were a baseball expert, you wouldn't have seen that coming and would have likely lost. Tonight it will be another player playing the role of Bradley Jr. Do you feel lucky is guessing him?
Don't feel bad if don't. Even computers aren't great at predicting March Madness. That brings up the point that even the top experts in college basketball bust their brackets just like a monkey throwing darts.
This is all long-winded way of saying, participating in these sites is not sound personal finance. I'm not sure if many thought it was. However, there are probably a few out there swayed by commercials of people holding million dollar checks. I suggest treating it like going to the casino, set a small budget. When you are out of money, stop and leave.
Fantasy sports can be a lot of fun... I've been in a couple of leagues that have existed for more than 10 years now. These free leagues don't cost money and winning is just for bragging rights. What's wrong with leaving fantasy sports as just that?
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