Five years ago, I wrote a story for Cigar Aficionado that focused on guys who managed to win six-figure sums by playing fantasy football. At the time, online poker thrived and offshore sports books operated with little interference. In that environment, fantasy football came off as one more opportunity for gambling at your computer. I expected it to be a fringe player in the online wagering world. I could not have been more wrong.
As was blasted on the cover of Fortune magazine this week, fantasy-sports betting has since turned into a multi-billion dollar industry, headed by DraftKings and FanDuel. But, soon after Fortune hit newsstands, the sites garnered other headlines for all the wrong reasons: Employees personally winning hundreds of thousands of dollars, premature leaking of information, and New York Attorney General Eric Schneiderman questioning the legality of the entire concept.
On Wednesday, a daily fantasy sports participant by the name of Adam Johnson launched a federal lawsuit against DraftKings and FanDuel. He maintains that the two sites conspired to commit negligence, fraud and deception against him. Could a class action suit be far behind?
Back when I wrote the original story, fantasy sports betting looked like a cottage industry and I ranked as nothing close to an expert on the genre (the latter situation has not changed significantly). But this much was certain to me: It is bonafide gambling, and anyone who bought into a tournament, especially for the higher stakes, without much in the way of forethought or strategy would lose. With the explosion of the segment—and accusations of employees gaining a leg up on outsiders—those factors are worth emphasizing.
"If you're an amateur and you think you can play with the big boys, you are better off throwing your money out the window," says Kevin Moss, a professional handicapper who sells picks on thesportsbrokers.com and frequently participates in high-stakes fantasy leagues. "On any given Sunday I will put my money up against that of an amateur, and I guarantee you I will win."
That may sound dubious if you buy into the TV commercials that depict regular-looking guys winning not-so-regular sums of money—or not so dubious, if you know anything about consistently winning gamblers. Whatever the case, those play-hard/win-big TV spots (which dominated last Sunday's football games and were not well received by viewers) fail to mention that tournament fees on DraftKings go as high as 12 percent. When you consider the World Series of Poker takes 6 to 10 percent of tournament buy-ins, the figure sounds pretty brutal.
Despite the high cost of doing business, FanDuel and DraftKings were expected to bring in $60 million worth of entries during the first week of NFL, according to Bloomberg Businessweek. Las Vegas sportsbooks, on the other hand, anticipated only half that amount. And, of course, most of the money comes from suckers. A study conducted by RotoGrinders.com showed that the top 10 players combine to win 873 times daily; all told, the other 20,000 players come out on top an average of just 13 times per day.
That's really brutal.
Nevertheless, in one form or another, fantasy sports wagering is here to stay. The public likes this form of gambling too much for it to go away, it is technically legal, and the government will ultimately need to regulate it. Eventually, players who view themselves as being sharp enough to pony up for something heavily rooted in mathematics, will run the numbers in order to know exactly where their money is going and to decipher the true likelihood of winning.
Maybe, for them, that's when fantasy will get real.