With FanDuel and DraftKings advertisements running on every TV screen, computer monitor, radio and billboard, some lawmakers have begun to ask if DFS sites are, in fact, legal. The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) seemingly gave the industry a carveout based on the assumption that such contests are skill-based, and therefore should not be considered gambling. But while giving DFS operators the green light, it put the brakes on online poker, which the legislation deems to be pure gambling.
DFS pros and small edges
But some ask, if DFS is considered a skill game, then why isn’t poker as well? CNBC recently spoke to Andy Frankenberger, Wall Street trader turned online poker pro turned DFS pro, about the parallels between poker and daily fantasy. It specifically asked if more skill was required to win in poker than is required to consistently win DFS contests.
“A daily fantasy pro’s competitive edge over a beginner is nothing compared to the edge of a poker pro versus a first-time poker player,” he said. “Your decisions in daily fantasy can’t be that bad when players’ prices are efficiently set by the sites,” he said.
Frankenberger believes that a DFS pros’ competitive edge comes from three key factors:
- Players can enter contests multiple times, giving them a clear advantage against someone who enters only one lineup.
- Pros take advantage of the large overlays which are common in big GPP contests. When not enough players enter to pay for the guaranteed prizes, those involved are effectively playing for more money with less competition.
- DFS pros spend countless hours poring over statistics, and use that knowledge to create lineups more likely to beat their opponents.
Poker pros vs. amateurs
Frankenberger is amused at the fact that DFS is considered a game of skill, while online poker is still classified as gambling. “It’s a joke that between online poker and daily fantasy, poker is the one that’s widely prohibited in this country,” he said. “Anyone who thinks poker is not a game of skill probably hasn’t played much poker.”
In fact, Frankenberger believes that the reason many former poker pros are playing DFS is because online poker games have gotten too tough to beat.
Legal US online gambling market
But public opinion on poker is changing. In 2011, the Department of Justice issued a ruling that the Wire Act should only prohibit sports gambling, not online poker. That statement effectually gave the green light for individual states to legalize online gaming.
At the moment, only Nevada, Delaware and New Jersey have approved iGaming. Operators like WSOP and partypoker have opened online card rooms, but have been hampered by the fact that their players need to be physically inside the state to play, thus limiting player pools. States have the option of creating compacts with other jurisdictions which have legalized the industry, but for now, online poker traffic remains low.
With the majority of the public just coming to know and understand DFS, it’s unclear if the industry can withstand a legal challenge. If daily fantasy remains classified as a game of skill, it stands to reason that lawmakers should consider the game of poker one as well.