Our Legislators: Knee-Jerk Know Nothings Who Banned Internet Gambling
It was just like Obamacare -- which they passed in order to figure out what was in it. And now it's impacting fantasy sports leagues.

In 2006, they passed a bill against Internet gambling -- which our then-pretend conservative President, George W. Bush, signed into law. Walt Bogdanich, James Glanz, and Agustin Armendariz write in The New York Times:

After nearly 10 years of maneuvering, compromises and, ultimately, anger, the House of Representatives in its last official act before adjourning on Sept. 30, 2006, passed a bill at 12:32 a.m. that proponents believed would deflate the expanding Internet gambling industry by prohibiting credit card payments or electronic fund transfers for any illegal Internet wager.

Chris Grove, who writes an influential blog, Legal Sports Report, questioned whether the bill's authors even knew what they hoped to accomplish. "You're talking about a law that was passed with no input, that was passed with no consideration, no deliberation, no debate," Mr. Grove said.

To ensure passage, and with legislators eager to adjourn for the 2006 elections, the House leadership hastily attached the gambling bill to legislation aimed at making ports safer. Not everyone was pleased.

"What does banning Internet gaming have to do with port security?" Representative Shelley Berkley, a Nevada Democrat, asked on the House floor. Another Democrat, Representative Bennie Thompson of Mississippi, complained that the Republican House leadership refused to accept any amendments to the ports measure, but did attach the gambling bill.

"I ask someone to explain to me how prohibiting Internet gambling is more important to our homeland security than making our trains, subways and buses safe," Mr. Thompson said.

Two weeks later - on Friday the 13th -- President George W. Bush signed the bill into law. While Internet gamblers might have seen that date as confirmation of their bad luck, other bettors had reason to rejoice. Embedded in the bill was the language exempting wagering on fantasy sports, except in the five states that consider it illegal -- Washington, Louisiana, Arizona, Montana and Iowa.

At Reason, Scott Shackford debunks the myths that these fantasy sports league sites have been "unregulated":

Fantasy sports leagues, like video games, are an example of a wildly popular activity that is treated like an odd, little, mistifying subculture, even though everybody knows somebody (or is somebody) who participates in it. Participants play pretend owners and build teams from actual playing athletes. The "owners" are competing against each other to build the best team, and the winner is determined based on how these actual athletes perform in real-world games.

...There are generally fees involved in participating in fantasy sports leagues in order to win the big bucks. The winnings have to come from somewhere, right? So fantasy sports has the whiff of gambling to it. Yes, there's skill involved in building teams, but of course, there's no small amount of luck. Julian Edelman could unexpectedly blow out his knee in the middle of a game, and there go millions of fantasy sports players' chances of winning.

Setting the luck aside, what also helps determine success is being able to evaluate huge amounts of information about players and make some rather technical team makeup decisions. That's where the supposed scandal comes in. An employee of DraftKings had access to information about which athletes players within his company were selecting. Though DraftKings says he didn't get the information until it was too late to use it, he subsequently participated in competing FanDuel's leagues and won $350,000.

The behavior has been compared to insider trading. Though the employee obviously had no idea how these athletes would perform on the field, he could have known the choices other players were making (and more importantly, not making) to maximize his odds of winning.

...It's ridiculous to say that fantasy sports companies are completely unregulated. What people really mean when they say this is that there are no specific regulations that oversee how fantasy sports leagues operate. There is no such thing as an unregulated business in America unless said business is actually operating in a black market, which is obviously not the case here. The Federal Trade Commission (FTC) can investigate and prosecute fraudulent business practices aside from whether there are any specific federal regulations for fantasy sports leagues. If one of these sites collected players' fees and then never paid out promised winnings (for example), you better believe the FTC would be able to intervene. A representative from the FTC would not speak specifically about the Draft Kings/FanDuel controversy or the possibility of an investigation, but did affirm that, just as with virtually any other business in America, the FTC could get involved in cases of deceptive business practices.

Of course, recently, it's public betting that comes with the real thievery.