Daily Fantasy Sports – Skill or Luck?

 

 

You may or may not have heard of what happened on the opening of football in the 2017/2017 season, but for some people in the United States, it felt as though the world was ending.

What could have possibly happened to warrant these reactions? ESPN’s Fantasy Football app crashed on the biggest day of the year. Fantasy Football and Daily Fantasy Sports have taken the nation by storm. The platforms that allow betting on sports games, mostly football, have become a pastime and profession for many Americans. Like all activities surrounding betting, drama, confusion and legal issues has followed Daily Fantasy Sports through its explosion into American life. Background Online sports betting games range from season long big money to daily exchanges of 25 cents. Fantasy Football is a season long game where there is a team of coworkers or friends who put money in a pot and play throughout the whole season. At the end of the season the persons whose teams played the best win the money. Daily Fantasy Sports are apps/websites where people can place daily bids ranging from $0.25 to thousands of dollars while competing against other players on the site. The two most successful Daily Fantasy Sports (DFS) companies are DraftKings (DK) and FanDuel (FD). Both companies raised huge rounds of investment in 2015 (DraftKings’s $426 million and FanDuel’s to $363 millionvaluing them both at over 1 billion dollars in 2015. This type of sports betting has seen a dramatic increase in participation over the last few years. Players range from the young college student to people with advanced degrees in mathematics, all attempting to place the right bets off of the information provided to see a return. At its peak (summer 2015), a DFS “get-rich-now” commercial aired every 90 seconds on TV.

Throughout the weeks leading up to the 2015/2016 NFL season, DK and FD spent more money on advertising than the entire American beer industry. This year there is more demand for these sites and their games is higher than ever before, but is DFS is legal? The Controversy  The big question surrounding DFS is whether or not it is gambling. The definition of gambling is playing games of chance for money. Last year the Gaming Control Board of Nevada ruled DFS was gambling and wanted DK and FD to apply for gambling licenses to operate legally within their state. Nevada Gaming Control Board chairman A.G. Burnett told ESPN “We have found that [an entry in a daily fantasy sports contest] is a wager and obviously, it’s on a sporting event, and DFS companies are in the business of accepting those wagers”. Proceeding this, New York’s Attorney General ruled that people playing DFS within the state are participating in illegal gambling and banned the apps within the state. These sites claimed to be 100% legal because they are “skill gaming“. Congress passed a bill (the Unlawful Internet Gambling Enforcement Act of 2006) stating that gambling online which involves skill is not illegal. Some studies show that DFS is a game of skill, proven by the fact that 91% of the winnings are won by 1.3% of the players. These players are very well researched and part of a small, exclusive group equipped with intricate statistical modeling and automated tools. These tools can manage hundreds of entries into one contest and identify the weakest opponents. Here is a breakdown of the players from cnbc.com fantasy_players When asked about these elite players, Nigel Eccles, chief executive of FanDuel, stated “We don’t make any apologies that it’s a game of skill, and you might go up against the best in the industry. Some of the people are really good.” In other words, players are making well researched guesses about how players are going to act and play, not hoping for 5s on the next deal because it is raining outside and you’ve got your lucky socks on. In October of 2015, users in online forums inquired on whether a DraftKings employee might have used DK information about lineups to win $350,000 in a competing contest on the FanDuel site. The information detailed the percentages of entrants who selected certain fantasy players raising issues on the transparency and fairness of the two platforms. ESPN, CNN and FOX have all invested in some type of daily fantasy sports for advertising on their TV Networks. The NBA has an equity stake in FanDuel, MLB in DraftKings and 28 of the 32 NFL teams have advertising deals with FD and DK. Here is a DraftKings advertisement at the NFL ANC Championship Broncos vs. Patriots game in 2015.

Jan 24, 2016; Denver, CO, USA; General view of Draft Kings logo on an advertising LED screen during the Denver Broncos game against the New England Patriots in the AFC Championship football game at Sports Authority Field at Mile High. The Broncos defeated the Patriots 20-18 to advance to the Super Bowl. Mandatory Credit: Mark J. Rebilas-USA TODAY Sports
Jan 24, 2016; Denver, CO, USA; General view of Draft Kings logo on an advertising LED screen during the Denver Broncos game against the New England Patriots in the AFC Championship football game at Sports Authority Field at Mile High. The Broncos defeated the Patriots 20-18 to advance to the Super Bowl. Mandatory Credit: Mark J. Rebilas-USA TODAY Sports

Other investors range from from Comcast to Google to private equity firms to Jerry Jones and Robert Kraft (two of NFL’s most influential owners). A congressional subcommittee began examining the daily fantasy sports industry in their hearing “Daily Fantasy Sports: Issues and Perspectives”, which could lead to further discussion on sports-betting laws in the United States. Rep. Frank Pallone (D-N.J.) stated after the hearing “The biggest thing for me is that I would like us to legalize sports betting, I am hoping this panel and the statements that were made about why it doesn’t make sense to allow (sports betting) to go underground and run by organized crime would lead us to some kind of legislation. The point is allowing sports betting to be legal in states like New Jersey who want it. That’s what I was hoping this would contribute to, primarily.” Here is where every state stands on daily fantasy sports currently. The Bills There are currently 31 bills pertaining to Daily Fantasy Sports in the US. These bills range from legalizing Daily Fantasy Sports to defining DFS a skill game to regulations on DFS. Here is a map of all of the current bills covering DFS in the US.

Virginia passed the Fantasy Contests Act, SB646, making Virginia the first state in the nation to impose state-led oversight of the industry. The bill requires fantasy sports sites to pay the state a $50,000 registration fee and implement policies to verify that all participants are 18 years of age or older. It also requires the company’s operating funds to be segregated from player funds and bans employees of fantasy sports sites from competing in public fantasy sports contests.

New York passed A10736 which amends the state’s current gambling laws to include “regulated interactive fantasy sports contests with an entry fee”. It also restricts players under the age of 18 from participating, ensures the accurate odds of winning are represented in all advertisements, enables players to permanently exclude themselves from future games at any time and identifies the highly experienced players (sharks) on the platform.

In Illinois, any type of gambling is illegal. Their Attorney General, Lisa Madigan, stated that the law “clearly declares that all games of chance or skill, when played for money, are illegal gambling in Illinois”. They now have a bill aimed at legalizing DFS.

Indiana passed SB339 which sets a minimum age of 18 for players. It prohibits the use of college and high school sports results in a daily fantasy sports contest. Tennessee signed HB2254 which creates an advisory task force to review games of skill, including, but not limited to, online fantasy football, and recommends any necessary statutory revisions to the consumer protection and criminal laws that should be made to protect consumers when paying to participate in a game of skill.

Daily Fantasy Sports is an American pass time bringing together two things that many Americans love, sports and the prospect of winning. The trend we’re seeing is the states recognizing the money to be made off of this game of skill betting system is almost too good to pass up and the want to take away underground crime betting providing better regulation. What are your thoughts on the game? Do you think it is a game of skill or classic sports gambling? Where do you think it is going?

Marijuana, coming to an election near you.

Marijuana. Where have we gone in the last four years since Colorado and Washington legalized marijuana for recreational and medicinal purposes? Why do people believe in the legalization of marijuana? How has this legalization benefited or hurt society? What actions have other states and the federal government taken pertaining to this issue? Let’s find out!

Basics of Marijuana

Marijuana has been around for centuries and used to be a staple for many people. During the 19th century, a marijuana prohibition on marijuana was enacted along with the “Reefer Madness” propaganda campaign. http---a.amz.mshcdn.com-wp-content-uploads-2016-04-reefermadness-10

Reasons for the prohibition range from anti-Mexican sentiments to trying to propel cotton as a crop in lieu of hemp. For a more comprehensive post about the history of marijuana and other hemp benefits read this post.

Many states are contemplating the legalization of marijuana to increase state tax revenue, reallocate criminal justice and law enforcement resources to more important matters, take away money that supports organized drug crime and the medicinal benefits for some diseases and conditions. Aspects that are holding some states, and the federal government, back from legalizing recreational or medicinal marijuana are the addictive nature of the substance, its gateway drug status, increasing driving while high (DUI), issues with lung health, second-hand smoke and ease of access for children.

Medical vs. Recreational Marijuana 

Medical marijuana is using the whole unprocessed marijuana plant or its basic extracts to treat a disease or symptom. In order to purchase medical marijuana, the person must receive a prescription for the drug from a doctor.

As of now (September, 2016) 18 states allow cannabis use for certain medical conditions. Known applications for marijuana range from easing pain and muscle spasms in people with multiple sclerosis to treating the insomnia, anger, nightmares and anxiety that often come with PTSD to reducing nausea and vomiting during chemotherapy to improving appetite and other symptoms of AIDS. Here is a list of 23 other healthy benefits of marijuana.

Medicinal uses for marijuana are still in the early stages of their realization due to how hard it is for researchers to study the possible effects of cannabis and cannabinoids. To do clinical research with marijuana, you need a DEA license and you to have your study approved by the FDA.

Recreational marijuana is using a drug without medical justification for its psychoactive effects. Recreational marijuana is legal for persons to purchase in quantities designated by some states if they are above the age of 21.

Recreational marijuana is used, for the most part, like another recreational drug but accompanied by a much stronger stigma – alcohol. Many advocates for legalization of recreational marijuana say that the drug is much safer to use for several reasons. For example, drinking too much alcohol can kill you, whereas no one has ever died from ingesting too much marijuana. Also advocates say marijuana is known for making people more peaceful while alcohol is known for causing aggression. Both drugs can cause brain damage in youth if consumed before the legal age (21) and both have the possibility to lead to cancer (liver or lung).  This article goes in-depth to the comparison of use of alcohol compared to marijuana.

Here is a “guide” showcasing how these two different types of marijuana are treated in the states that have legalized marijuana for better understanding of the differences between medical need and recreational use.

Some Effects of Legalization

According to this article, Colorado has experienced many benefits from the legalization of marijuana. Among these are lower crime rates, increased taxes, decreased arrests, lower traffic fatalities and increased employment. One city in Colorado, Aurora, decided to use the $1.5 million generated from their tax on recreational marijuana to support homeless people.

Despite the benefits, the impact is not all good. Downsides of this legalization have included no contaminate testing, lawsuits and limited areas for legal consumption. Colorado made headlines in 2015 for having a suit filed against them from neighboring states (Nebraska and Oklahoma) with the Supreme Court stating it is difficult for them to enforce a federal ban on marijuana with the substance entering their state because they border Colorado. The Court claimed“The state of Colorado has created a dangerous gap in the federal drug control system.” Two of the main issues cited in the suit are: one, they do not require background checks for buyers and two, they do not mandate that purchasers consume the substance where they purchase it.

One thing is for sure, states are becoming more and more active every year with legislation pertaining to multiple aspects of regulation of marijuana. Look at the difference of these two maps depicting the amount of legislation across the country in 2015 and 2016 (darker states have more bills).

screen-shot-2016-09-07-at-9-23-05-pm

Here is a list of all of the bills for 2015 and 2016.

The Bills and Ballot Measures

As of now, Colorado, Washington, Oregon, Alaska and the District of Colombia have legalized marijuana for both medicinal and recreational use.

Arizona, California, Maine, Massachusetts and Nevada all will have measures on the ballot to legalize marijuana for recreational purposes. Arkansas, Florida, Montana and Missouri, will decide whether to allow doctors to prescribe marijuana for medicinal use.

Aaron Smith, executive director of the National Cannabis Industry Association, stated “What we have now on our side is actual experience in states like Colorado and Washington. Now voters can actually see how these programs are working in these states. Before, there were prophecies of doom and gloom.”

Five states, Arizona (Proposition 205), California (Proposition 64), Maine (Question 1 ),  Massachusetts  (Question 4) and Nevada (Question 2) have legalization of recreational marijuana on their ballot this year. Most of these states focus on regulating the substance like alcohol, classifying what can be done with hemp and the amount of marijuana that can be purchased. Three states, Florida, Missouri and Arkansas, have legalization of medical marijuana on their ballot for November. Pennsylvania (SB3) and Ohio (HB523) both passed bills legalizing medical marijuana. Colorado passed Jack’s Law, or HB1273, which requires school districts need to provide reasonable accommodations to students who require medical cannabis, and prohibits school districts from disciplining a student who is enrolled in the state’s medical marijuana program.

In 2015, two senators introduced two separate bills that would have effectively made marijuana legal on a federal level (both were referred to subcommittees). Colorado representative Jared Polis introduced the Regulate Marijuana like Alcohol Act which proposed that marijuana should not be regulated as a controlled drug substance, but instead, regulated similarly to alcohol. This would take away marijuana regulation from the DEA and give the responsibility to the Bureau of Alcohol, Tobacco, Firearms and Explosives. Bills like this are important because earlier this year (in August 2016) the DEA decided that marijuana will remain a Schedule 1 substance (illegal) under the Controlled Substances Act. The FDA determined that substances in Schedule 1 have no medicinal value and high potential for abuse. (For more on these substances read here.) This ruling means that states which allow marijuana for medical use or legalize recreational use remain in defiance of federal law. The DEA stated “At this time, the known risks of marijuana use have not been shown to be outweighed by specific benefits in well-controlled clinical trials that scientifically evaluate safety and efficacy.

The second act proposed by Oregon representative Earl Blumenauer, the Marijuana Tax Revenue Act, moves to impose a federal excise tax on regulated marijuana. Although additional taxes can be seen as a deterrent for consumers, the extra revenue is certainly incentive for politicians to proceed with federal legalization. An important fact to note is that these acts will not automatically make marijuana legal in all states and, if a state chooses to do so, they can still enact their own, individual prohibitions of the substance. Bernie Sanders introduced the Ending Federal Marijuana Prohibition Act which would remove marijuana from the Drug Enforcement Administration’s list of “most dangerous drugs” and from the Controlled Substances Act.

Florida introduced HB307, which amends parts of their Right to Try Act a law allows patients with less than a year to live to take experimental drugs. Supporters of measure HB307 say terminally ill patients should have access to marijuana so they don’t have to rely on drugs like morphine to relieve their pain. Following this same train of thought, Utah’s Medical Cannabis Act, SB73, would allow sick patients dealing with a handful of illnesses to ingest cannabis for relief, but only with approval from a licensed physician and with much oversight and regulation. Under the bill, smoking pot would still be expressly illegal in Utah, but certain individuals would be permitted to use marijuana in an oil form, or to inhale vapors, or to consume edible forms.

Other states are not taking legalization steps, but steps towards lessening prison time and punishment for having the substance in states that still have an active prohibition. Georgia introduced a “no felony possession” bill, SB254, addressing both misdemeanor and felony amounts: half ounce or less = civil infraction (citation), more than ½ ounce – up to 3 ounces = misdemeanor, and more than 3 ounce = felony. Today, more than 1 ounce is felony. Illinois passed SB2228 which decriminalizes possession of small amounts of marijuana. Effective immediately, the new law makes possession of up to 10 grams of marijuana a civil offense punishable by a fine of between $100 and $200.

Marijuana, in my opinion, should be legal both for medicinal and recreational use. It is a waste of time, resources and money for our states to continue to enforce laws forbidding its use. And if making it easier for researchers to do their work can lead to new medical treatments to improve the lives of people struggling with illness, all the better. As a Colorado resident, I have seen the “effects” of marijuana with my friends and people in my life. There are far better things for us to be spending money and time on than this substance. Check out other, way more important issues, to our country here.