Nearly a decade ago, the NFL — along with other pro sports leagues — carefully carved out an exception for fantasy sports in a congressional anti-gambling law. Today, it hosts fantasy games on its website and hawks them in commercials that play constantly during its games.
The reason is simple: Fantasy drives ratings and, in doing so, makes the NFL a ton of money. But as daily fantasy sports explode in popularity and blur the line between fantasy and gambling, the league's position is becoming less and less tenable.
Even though several of the NFL's founding owners had made their fortunes through gambling-related activities, the league opposed it nearly from the start, largely because of the fear that it could lead to match-fixing. In the '40s and '60s, it suspended several players for betting on games, and in 1976 it unsuccessfully sued the state of Delaware to block the state's sports lottery.
Afraid of such activities spreading from state to state, in 1992, then-NFLCommissioner Paul Tagliabue successfully lobbied Congress to pass a law that prohibited gambling on sports anywhere that it hadn't already been legalized. "It is a matter of integrity," Tagliabue said at the time. "It is a matter of the character of our games, of the character of our fans, and a matter of values."
Over the next decade, though, something new came along: fantasy sports.
The basic idea — assembling imaginary teams of players that compete on the basis of their individual real statistics over the course of a whole season — was first developed in the '50s, and for decades, fantasy baseball was the most commonly played. But fantasy football's popularity exploded once computers allowed for automatic stat tracking, and especially after 1999, when Yahoo became the first major site to host leagues for free.
One might have expected the NFL to try to stamp out fantasy. But for whatever reason — perhaps because it didn't share the historical association with organized crime, or maybe because it seemingly appealed to a different group of players — the league did the opposite.
In 2000, it began hosting leagues on NFL.com and promoting fantasy in commercials. One reason was obvious: Fantasy made people watch a lot more football.
As early as 2002, an NFL-commissioned survey found that male fantasy players watched 8.4 hours of football per week, compared with 6.6 hours for average male fans. "This is the first time we've been able to demonstrate specifically that fantasy play drives TV viewing," Chris Russo, an NFL executive, said at the time.
Even after the NFL began promoting fantasy, its stance against gambling on the outcome of games remained as rigid as ever. In 2005, for instance, it blocked a Super Bowl ad for a Las Vegas casino and banned networks broadcasting games from picking point spread winners, which could promote betting on games.
The next year, though, as Congress debated what would become UIGEA — the Unlawful Internet Gambling Enforcement Act, which was primarily intended to shut down poker sites and other sorts of online gambling — the NFL and other pro leagues arrived to lobby them with an interesting request. They supported the bill, but believed that fantasy games should be given an exemption.
The bill originally had no such exemption. But due to pressure from a number of House members, its primary author — Iowa Rep. Jim Leach — agreed to stick in what became known as the "fantasy carve-out." It specifies that the law allows "fantasy sports games" as long as they meet three criteria:
- Prizes can't be determined based upon the number of participants or the size of their entry fees.
- The leagues must be skill-based, rather than based on random chance.
- The outcome can't be based on the score or stats of an individual athlete in a single event.
These criteria might seem random, but they were intended to finely distinguish between what are ultimately two very similar activities: gambling and fantasy. The skill versus chance distinction has been used in several other anti-gambling laws, while the third requirement effectively banned betting on a player's performance in a single game.
Of course, by making an exception for fantasy games, the law didn't actually legalize them; it just left their status to be determined by state laws and other federal statutes. But while scholars debate the legality of fantasy from state to state, the UIGEA exemption has effectively ensured that the many websites that host fantasy leagues don't actually get prosecuted.
The carve-out has proven hugely beneficial for all pro leagues — but most of all for the NFL.
About 30 million people play fantasy football, more than any other fantasy sport, and in 2014 they spent an estimated $11 billion on it. The NFL doesn't collect this money directly, but it profits from the countless extra hours of football people watch to follow the members of their fantasy teams.
A 2011 study by Fordham professor John Fortunato found that games featuring more fantasy-relevant players tend to get higher TV ratings, regardless of the team's winning percentages. Fantasy makes people stay tuned for the otherwise meaningless final minutes of blowouts and gets them to watch boring matchups between terrible teams.
The NFL knows all this. It's why its broadcasts are awash in stats and why it produces a hugely popular channel that simply bounces live from touchdown to touchdown instead of showing a complete game. Within a decade, fantasy has thoroughly permeated football culture, going from a fringe hobby to the mainstream — and the NFL has ridden fantasy to new heights of profitability.
The latest craze in fantasy is daily leagues, in which you draft a new set of players each week. (They're called "daily" because for other sports you pick a new team each day, but a set of football games is spread over a week.)
The sites that run them — such as FanDuel and DraftKings — take in entry fees and pay out cash prizes. The rapid feedback of daily fantasy has led to explosive growth, and just a few years after their founding, the two sites are reportedly valued at $1.5 billion and $900 million, respectively.
But some say daily fantasy sounds a lot like gambling. Many legal scholars allege that these sites' games fail to meet several of the UIGEA's carve-out criteria: They clearly pay out prizes based on user entry fees and depend upon athletes' performances in single games. And as sports law professor Marc Edelman notes, basing the results on a much smaller number of games dramatically increases the influence of chance — and reduces the role of skill.
FanDuel and DraftKings, of course, constantly claim that they're "100% legal," and there's no indication that law enforcement is planning to shut them down. Though the NFL hasn't formally partnered with either company — as Major League Baseball and the NBA have — it implicitly endorses daily fantasy with coverage and videos on its website. (The league did not return requests for comments on its stance for this article.)
But lots of observers point out that daily fantasy is erasing the UIGEA law's distinction between gambling and fantasy — and is making the NFL's position look increasingly hypocritical. "On the spectrum of legality to illegality, they’re getting pretty close to the line," Florida State legal scholar Ryan Rodenberg told the New York Times. "It’s tough to make an intellectually honest distinction between the two."
All this has put the NFL in an increasingly untenable position. The league aggressively combats gambling, ultimately due to the fear that it could lead to match-fixing and damage the integrity of the game. But the league has done little about the reports of "undue pressure some players and coaches feel from big-money fantasy-football players," and the NFL openly promotes the fact that many of its players play fantasy themselves. Somehow, these aren't threats to football's integrity in the same way.
In January, NFL Commissioner Roger Goodell was asked why, and his answer was utterly incoherent. "We don’t put fantasy football in that category at all," he said. "Fantasy has a way of people engaging more with football, and they do it in a fun, friendly, in this case, a family manner."