Real growth for fantasy football industry raises legal questions

Any football fan who has turned on the TV to catch their team's game, logged on to see the score or tuned in to hear sports commentary, is probably all too familiar with the commercials for daily fantasy leagues, touting the huge sums of money they've paid out. For daily fantasy companies like FanDuel.com and DraftKings.com, business couldn't be better; but their staggering growth has come at a cost. The Denver Post reported Sept. 25, that regulators are questioning the legal status of such games.

Fantasy sports have been around since the late 60s, but it wasn't until recent years that the games have exploded. The growth of the internet has led to the development of an entire industry of support services that capitalize on the craze. According to Australian research company IBISWorld, these support services are already a multi-billion dollar industry. As Inc.com reported, it's the third most profitable industry in the U.S. and it's still growing.

Most online gambling was made illegal by the 2006 Unlawful Internet Gambling Enforcement Act, but that doesn't apply to fantasy sports (or horse races). Unlike most casino games which are considered games of chance, fantasy sports are ruled a game of skill. That could change if some politicians have their say. As reported by The Washington Post, U.S. Rep. Frank Pallone, a Democrat from New Jersey, called for a hearing regarding the legality of the booming industry, just earlier this month. U.S. Rep. Diana DeGette, a democrat from Denver, as the ranking member House Energy and Commerce Committee's oversight subcommittee, for her party, DeGette would most likely hear such testimony. And to her it looks a lot like gambling. Like many, the politician was surprised by the bombardment of advertisements during a recent football game.

"I watched the Broncos' Thursday night game, the Sunday games and 'Monday Night Football,' and I could not believe the number of ads I saw for these fantasy football websites," DeGette said. "It just seems to have blown up this year, and it's been shocking to see.

While the payouts may seem to be no more than simple bets, there is a good deal of research and skill involved with fantasy sports. Some who play are more successful than others. Peter Jennings, a 27-year-old from Lone Tree, Colorado, has won more than a million dollars playing daily fantasy games. The former stock trader has taken the same skills from his old job and applied them to fantasy sports.

"It's just like investing, but instead of stocks you're trading in athletes," Jennings said. "The challenge is understanding how the metrics work."

Jennings isn't alone in his investment in fantasy sports. Nearly all of the NFL teams have inked deals with fantasy football companies and there are countless investors pouring money into the industry. For many including Derek Thomas, the Broncos' director of corporate partnerships, fantasy sports seem like a safe bet, that will continue to pay off.

"Daily games and contests are truly the next frontier for fantasy sports, and the Broncos are proud to align with DraftKings, the company that is leading this charge in the U.S.," Thomas said. "Our partnership is an exciting way to provide our fans with another touch point for engaging with the sport and team they're so passionate about."