Gambling regulators approve new fantasy sports model
LAS VEGAS — A new gambling platform approved by Nevada regulators Thursday will further blur the lines between traditional sports betting and fantasy sports contests, an industry that insists its games are not gambling in the face of legal challenges across the country.
The Nevada Gaming Commission gave a gambling license to Henderson-based US Fantasy, calling it a fair model as daily fantasy sports businesses such as DraftKings and FanDuel stand accused in several states of operating as illegal, unregulated betting systems.
“It’s so transparent and open,” commission chairman Tony Alamo said of US Fantasy, which will offer 11,000 sports events for betting annually and open later this year.
Like DraftKings and FanDuel, it will allow people to bet on their picks of the top professional sports players and win money based on the athletes’ performance. But they differ in how they pay out winners and whether they believe their business model constitutes gambling.
US Fantasy owner Vic Salerno said it could easily be reframed to fit states that have approved guidelines allowing fantasy sports to operate. But an industry leader predicts it won’t have a major effect on fantasy sports overall because it may only work in Nevada, where sports betting is already legal.
In the US Fantasy system, users will bet against each other on individual player stats, with a pot of prize money that can change depending on how many people are wagering and how much they bet. Using football as an example, someone can bet that Tom Brady will throw the most yards that week.
In traditional fantasy sports, users generally pick a group of players to create a team, and if they win, they know they are getting an established payout. In the football example, Brady’s performance would help rack up points along with the rest of the players of the imaginary team.
Several states over the past year have challenged the fantasy sports industry, which first drew widespread scrutiny last year amid a flurry of advertising that promised the savviest sports fans millions of dollars in payouts. DraftKings and FanDuel ceased operations in states such as Illinois, New York and Nevada.
The industry has lobbied states to approve laws that would allow them to operate without legal ambiguity. So far, Virginia, Indiana, Tennessee, Missouri, Mississippi and Colorado legislators have done so, while New York’s governor has yet to sign off on the state’s version.
In Nevada, regulators had urged fantasy sports sites to apply for gambling licenses, a move the industry opposes as too costly and time consuming.
DraftKings operates in dozens of states, according to company spokeswoman Femi Wasserman. She declined to comment on the US Fantasy proposal but said its payout system is not the same as the Boston-based company’s model. New York-based FanDuel didn’t respond to a request for comment.
Peter Schoenke, chairman of the Fantasy Sports Trade Association representing 300 operators, said he has not seen US Fantasy’s system.
“Is it truly a fantasy game or some sort of contest or instrument that is a regular gambling product? The industry is curious what exactly it is,” Schoenke said.
The hallmarks of fantasy sports are analyzing professional sports players’ stats and camaraderie among contestants in a league, he said. Neither is required with Salerno’s hybrid platform, though “fantasy sports” is a loose term that does not have a uniform definition, he said.
“It doesn’t feel like fantasy if you’re not putting up your knowledge against someone else,” Schoenke said.