Schneiderman's overreach on fantasy sports



Attorney General Eric Schneiderman asserts that the fantasy sports competitions offered by FanDuel and DraftKings are obviously illegal gambling, and that, as New York's attorney general, he had no choice but to sue to stop the hundreds of thousands of New Yorkers who regularly enjoy participating in them from breaking the law.

Attorney General Eric Schneiderman asserts that the fantasy sports competitions offered by FanDuel and DraftKings are obviously illegal gambling, and that, as New York's attorney general, he had no choice but to sue to stop the hundreds of thousands of New Yorkers who regularly enjoy participating in them from breaking the law.

In an op-ed in the Daily News last week which harshly criticized DraftKings as well as FanDuel, the attorney general said that the law has been clear for "for more than a century."

One major problem with the attorney general's argument is that he has been attorney general for six years, and for each of those years, FanDuel has operated openly in New York without a single suggestion from him or anyone else that its operations were at all legally suspect. DraftKings entered about four years ago and has likewise operated openly and continuously without question or complaint ever since.

During those years, major companies like NBC Sports, Fox Sports, Comcast and private equity firm KKR have invested hundreds of millions of dollars in building platforms to offer daily fantasy-sports contests; none of them had any doubts about the legality of those contests either.

Nothing has changed about the nature of the contests FanDuel and DraftKings offer.

What changed is that the attorney general's office suddenly decided without notice or discussion that daily fantasy sports contests represented a violation of the law and a threat to public morals that had to be stamped out.

There are many things wrong with that decision, but right or wrong, no one can pretend that the illegality of these contests is clear or obvious β€” it certainly was not clear or obvious to Schneiderman or his predecessor, who, for eight years, did not think there was a problem.

If the attorney general (or anyone else) doesn't like the law, the proper course of action is to get the law changed. Changing the law is up to the Legislature, not any single public official, no matter how well-intentioned. The attorney general is entitled to change his mind. He is not entitled to unilaterally change the law.

Telling citizens they must stop participating in challenging and entertaining contests that they enjoy is a big step in a free society. If it is to be done at all, it must only be done by a democratically elected Legislature, not a single public official or the courts.

The reason that until this month the attorney general, his predecessor and everyone else believed that daily fantasy sports were legal is because they are. New York law has long permitted New Yorkers to pay entry fees to compete for fixed prizes.

Indeed, New York law also expressly permits New Yorkers to wager on contests of skill in which they personally participate. Under New York law, illegal "gambling" is limited to betting on a "contest of chance" or on the outcome of an event beyond the person's "control or influence."

Anyone who thinks the outcome of a daily fantasy sports contest is a contest of chance, or is not influenced by the skill of the participants, has never participated in a daily fantasy sports competition. Unlike games of chance in casinos, which the attorney general somehow defends as less "harmful," and unlike bets on individual games or players, daily fantasy sports competitions are decided by who does the best job of selecting his or her fantasy team.

Although he may not appreciate it, the attorney general himself recognizes the dominant role that skill plays when he writes that less than 11% of the players repeatedly win almost all of the prizes.

That doesn't happen in contests of chance. That doesn't happen when players cannot influence the outcome. That doesn't happen in casinos. That only happens in competitions based on skill. A statistician who has analyzed the results of DraftKings daily fantasy sports competitions reports that the likelihood that those results could have occurred by chance is less than one in one trillion trillions (or 1 in 1,000,000,000,000,000,000,000,000).

The attorney general is entirely correct when he says his "job is to enforce the law." I would simply ask the attorney general, for whom I have great respect, to consider two thoughts.

First, the law is what the Legislature has enacted, not what any one individual believes the law should be. Second, it is unfair to demonize a company, its employees and its customers for doing what everyone believed was legal and proper until the attorney general's recent and sudden about-face.

This is a reprint from nydailynews.com. to view the original, click here.


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