Though the daily fantasy sports empire has dramatically increased its presence around the country, Boston has a hometown connection to the industry through local provider DraftKings.
Despite the popularity of DraftKings, which was founded in 2012, the legal status of daily fantasy sports-based websites may soon be changing in Massachusetts, according to the office of Massachusetts Attorney General Maura Healey.
“The point is this, this is a new industry,” Healey said to Statehouse News on Monday. “It’s something that we’re reviewing, and we’ll learn more about it … We get calls from any number of the industry folks wanting to come in and talk about what they’re doing and it’s as simple as that, and we’ll leave it at that.”
Though Massachusetts offers a variety of options for gambling, raffles and other luck-related games in person, the state has yet to stand behind any state-regulated online gaming programs.
“The question is whether the fantasy sports league is gambling or not,” said Michael Harper, a professor at Boston University’s School of Law. “And that turns on whether, to my understanding, it is a game of skill or a game of chance. The argument is whether the whole year is skill because you’re skillful in predicting how well these players do, but any given day is primarily luck, too small of a sample size.”
Massachusetts would not be the first state to restrict the legality of daily fantasy sports. DraftKings subscribers located in Arizona, Iowa, Louisiana, Montana and Washington are currently ineligible to receive prizes from the website due to state laws, even with the existence of the Unlawful Internet Gaming Enforcement Act, a federal law that sets standards for fantasy sport play.
The Act states that fantasy sports can be wagered on as long as the outcomes “reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.”
In other words, the federal government considers skill, over chance, the larger factor in fantasy sports.
Daniel Ishak, a junior in the Sargent College of Health & Rehabilitation Sciences, agreed with the sentiment of the act.
“It’s all about skill,” he said. “If you could pick your roster, if you understand the players’ capabilities, how they’ll play that day, the defenses or offenses they’re playing against, it’s research. And then a little luck.”
Despite the federal law, there are still those five states that prevent daily fantasy sports websites in their domain.
“That’s a question as to if federal law preempts state law, and I would be surprised if it did because the federal law is not balancing interest on each side,” Harper said. “I would be surprised if the states could not be more restrictive in this area than federal law.”
Ishak, however, said that even if fantasy sports are a game of chance, they should not be seen as a conflict to state or federal laws.
“I do think DraftKings should be legal,” he said. “I don’t think it violates any different laws than the lottery.”
In Boston, DraftKings has a measurable impact on the city’s sports culture. Just last week, the New England Patriots opened the DraftKings Fantasy Sports Zone, a lounge dedicated to the fantasy powerhouse.
In April, The Walt Disney Company invested $250 million in the site, bringing the firm evaluation to approximately $900 million. Since, DraftKings has continued to bring in more customers and offer more prizes, including a guarantee to give out $10 million worth of prizes during the first week of the National Football League season.
If Healey ultimately finds evidence that DraftKings has no place in Massachusetts, the fantasy sports marketplace would undoubtedly shift. Though DraftKings was developed as a startup in Massachusetts, they also have an office in New York City, where the company could move the central function of their business, if need be.
When it comes down to it, Healey’s decision about the legality of DraftKings could be the start to defining online gambling laws in Massachusetts, which will eventually lead to the same question — skill or chance?
“If people are allowed to gamble for no reason at all, they should at least be able to gamble with their friends,” said Anu Prasad, a junior in the Questrom School of Business. “And for something they care about, such as sports.”
