With football season in full swing and baseball rolling into the World Series, the headlines are once again inundated with reports about the growing popularity of fantasy sports. Since 2009, the fantasy sports industry has been on fire, growing into a multibillion-dollar market. While the contests have been around in one form or another for decades, today’s fantasy sports providers allow millions of customers to pit their fantasy teams against other customers in games of all sizes and stakes. In the United States, regulations on these contests are decidedly lax, which is creating an inviting environment for new companies to throw their collective hats in the ring.
As you’d expect, an unregulated online industry is ruffling some feathers in the brick-and-mortar casino industry. Much like the charge against online poker sites in 2011, billionaire casino developers are beginning to take note of the massive popularity of fantasy sports sites, and they’re less than pleased. To date, fantasy sports sites have been able to dodge regulatory action by insisting that they involve skill rather than luck, thereby classifying themselves as something other than gambling. History buffs will recall that poker sites did the same thing, and the three largest online poker destinations were nonetheless forced out of the United States when the casino industry decided that enough was enough.
The first step to getting rid of this burgeoning annoyance seems to be swaying popular opinion. Earlier this month, an employee of one of the largest fantasy sports providers made headlines when he won $350,000 in a tournament on a competing site. National media outlets quickly vilified the scenario with scary financial terms such as ‘unregulated’ and ‘insider trading’. For observers, this would seem to be just the thing for limiting the popularity of fantasy sports, but the two companies promptly announced a rule change that banned employees from playing on other sites and results stayed strong. In fact, one of the sites achieved a 40 percent increase in profits the following week.
Despite popular opinion, Nevada’s Gaming Control Board seized the moment by issuing a cease-and-desist order to both of the sites, establishing an opposing stance in line with the Las Vegas casino industry. According to the report, the Gaming Board decided that fantasy sports do qualify as ‘gambling’, which makes them illegal under existing state legislation. In unrelated news, Nevada’s largest casinos have lost over $2 billion over the past two years as the fantasy sports market has continued to gain steam.
Moving forward, the results of the impending legal battle between fantasy sports providers and the U.S. casino industry could have major implications on the popular pastime’s ability to build on its current growth. For the time being, it appears that the biggest opponents of online fantasy gaming are its competitors in the casino industry, and those competitors have demonstrated considerable power in eliminating unwanted competition in the past. Will fantasy sports follow in the footsteps of the U.S. online poker market? You know what they say; the house always wins.