Daily Fantasy Sports: Where Are the Regulators?

DFS2

The daily fantasy sports (DFS) industry was rocked by a scandal last week when it was revealed that Ethan Haskell, DraftKings’ written content manager, had mistakenly leaked player ownership percentages for his site’s Millionaire Maker prior to the start of some of that week’s NFL games. Haskell then went on to win second place and $350,000 in the NFL Sunday Million at rival site FanDuel that same week.

This incident has led to speculation that Haskell’s success may be attributed to his improper use of insider information. Though DraftKings bans employees from playing on their own site, there were no prohibitions from playing on rival sites—until the scandal broke.

As of Monday, October 5, both DraftKings and rival FanDuel released a joint statement which says in part, “We are temporarily restricting employees from participating in DFS contests as an interim measure while we work with the fantasy industry to develop and implement a more formal policy.” The key words here are “fantasy industry,” which points to the glaring fact that there is no outside oversight of this fledgling industry.

Even before this story broke, many were asking, “Where are the regulators?”

Fantasy sports benefitted from a special carve-out in the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which essentially sounded the death knell for online poker. Unlike online poker, fantasy sports holds a special status as the UIGEA classifies it as a game of skill stating, “All winning outcomes reflect the relative knowledge and skill of the participants.”

Launched only in 2012 during Major League Baseball’s opening day, DraftKings seems omnipresent now due to the fact that you can’t miss being bombarded by ads every time you turn on your television. The massive marketing budget is funded by the money flowing to the site from investors and players alike.

According to an article on Fortune.com called “Fantasy Sports Site DraftKings Takes Bets from More Big Name Investors” dated July 27, 2015, DraftKings announced a new round of funding worth $300 million lead by FOX Sports and the Kraft Group, owners of the New England Patriots. This round also included investment from the National Hockey League (NHL) and Major League Soccer (MLS) as well as the Madison Square Garden Company. Major League Baseball (MLB) also increased their stake in the company after investing an undisclosed amount in April 2013, becoming the first US professional sports organization to invest in DFS.

In addition to the funding, DraftKings has also benefitted from valuable partnering agreements. In April, DraftKings and Major League Baseball announced a multi-year deal making DraftKings the league’s “Official Daily Fantasy Game.” The agreement allowed individual teams to offer in-stadium fantasy-related experiences. And in July, DraftKings entered into a three-year advertising deal with ESPN Inc. valued at $250 million.

DraftKings seemed to be on top of the world claiming to have over 1 million registered players, the same position online poker held in 2006 at the peak of the poker boom. And in one fell swoop, the government seized the domain names of the three biggest names in online poker on April 15, 2011, the day dubbed “Black Friday,” and the poker industry has never been the same.

As I write this article, “a federal grand jury focused on DFS has been convened in Florida,” according to legalsportsreport.com. The US Attorney’s office in Tampa, Florida, is investigating whether DFS operators are acting in violation of the Illegal Gambling Business Act (IGBA). And the New York State Attorney General Eric Schneiderman has sent a letter to both DraftKings and FanDuel requesting the names of employees who had access to data that could have been used gain a personal advantage. The parallels to “Black Friday” are eerily similar.

This story is evolving with new developments seemingly every day. I have no idea how it’s going to end, but I do know one thing: It’s time for the gaming regulators finally to step up and regulate this new industry.

Regulators have a duty of care to protect the industry and public alike. It seems in this case they were asleep at the wheel. DFS is hindered by a lack of regulation and transparency. Players deserve a fair game. Like anything else in life, without trust, you have nothing.

Robert Turner is a legendary poker player and casino/billiard marketing expert. Robert is most well-known for creating the game of Omaha poker and introducing it to Nevada in 1982 and to California in 1986. He created Legends of Poker for the Bicycle Casino in 1995. He also helped create Live at the Bike, the first live gaming site broadcast on the Internet in 2002.

He has spent over 30 years in casino marketing and player development. He has served as an executive host at the Bicycle Casino and MGM. He is currently working as a casino consultant.

Robert can be reached at robertturnerpoker@gmail.com for consulting, marketing and coaching. Find Robert on Facebook at https://www.facebook.com/thechipburner and on Twitter @thechipburner. Subscribe to receive Robert’s articles as soon as they are published.

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Honor and Integrity in Poker and Gambling

Bicycle Casino

The poker world has been rocked in recent years by various scandals from the Absolute Poker super user and the collapse of Full Tilt Poker to the recent Borgata counterfeit chips scandal. This got me to thinking about honor and integrity in gambling and reminded me of the words a bookie in Alabama told me over 35 years ago.

Eddie was the life of our home poker games for years. Every Tuesday he would come by our game and settle up with the poker players, and then he would throw a little money away in the game. He was not really trying to win; he just liked to gamble.

This week was different. He owed around $25,000 and called to say he would need a week to settle up. This sent shockwaves through our small poker world. How could this happen?

When he stopped by the next week, I called him into a room and said, “Eddie, what happened? You have always been so honorable.” He said, “The truth is I didn’t pay attention to my business. I always wrote the parlays and teasers and put them in a cigar box and looked at them on Monday mornings because they were usually losing propositions. This time they all won, and it was for over $1 million. I got broke. I’m now poor Ed. Robert, you can only be honorable as long as you can be honorable.”

The mistake Eddie made took away his honor, but he had confronted the issue head on; he didn’t try to hide from it. The following story told to me by legendary Las Vegas bookmaker Jimmy Vaccaro, now running the South Point’s Race and Sports Marketing division, demonstrates the opposite.

Jimmy was talking to a bookmaker friend of his that was having a bad season. He said, “Jimmy, it has all come down to an airplane game.” Jimmy asked him what an airplane game was, and he replied, “I’m going to the airport to watch the game. If my players lose the game, I’m back in action and have a bankroll. If my players win, then I’m catching a plane to who knows where.”

Poker in California was in a similar predicament at one time. For over 50 years, California had become the training ground for the best cheats in the world because everybody handled the deck in pass-the-deal games. This created games that were plagued by everything from petty cheating to full-blown organized theft.

However, when hold’em was legalized in California, it changed everything. George Hardie and Mike Caro were at the forefront of this change. As Caro says, “I realized that the old days of pass-the-deal and five-card draw would vanish.” He explains that this change would “lead to a complete rethinking of the California poker product with professional dealers and much safer and ethical games.”

After George Hardie cleaned up the games, I remember a couple of cheaters came down from Northern California and cheated the high-limit games at the Bicycle Casino with marked cards which they had managed to get a floor person to put in. This resulted in thousands of dollars being lost at the big game. Hardie instructed his management team to give the players their money back, which was over a hundred thousand dollars.

Hardie could do this because he had the money, and it protected the integrity of the game and the business he founded. He let people know he would do whatever it took to restore the honor of the game.

I faced similar challenges as the General Manager of the Horseshoe Casino in Gardena, California, as we transitioned from the old pass-the-deal days to center dealers. Changing the way people perceived the card room was my biggest task.

Today the new frontier is online gaming, and it is experiencing some of these same growing pains. Caro, along with his colleague Bill Handy, continues to advance ethical poker by working on a new system called COPS to detect online cheating. This shows how things change and still stay the same.

This takes me back to the words Eddie said at the beginning of the article. You can be honorable only as long as you can be honorable. And in the case of Borgata, regulation can only go so far; you can only regulate what you can regulate.

If someone is determined to cheat, he will find a way. We, as players, always need to be vigilant to protect each other and the game we love. That is the only honorable thing to do.

Robert Turner is a legendary poker player and casino marketing expert. Robert is most well- known for introducing the game of Omaha poker to Nevada in 1982 and to California in 1986. He created Live at the Bike, the first live gaming site broadcast on the Internet in 2002, and he also created Legends of Poker for the Bicycle Casino and the National Championship of Poker for Hollywood Park Casino both in 1995.

In the year 2000, he created World Team Poker, the first professional league for poker. He has spent over 30 years in casino marketing and player development and has served as an executive host at the Bicycle Casino and MGM. He is currently working with his new companies Crown Digital Games developing mobile apps and Vision Poker, a poker marketing and managing group.

Find Robert on Facebook at https://www.facebook.com/thechipburner and on Twitter @thechipburner.
Robert Turner can also be reached at robertturnerpoker@gmail.com for consulting, marketing and teaching.