Draftkings New Single Game Contest For The Masters

Draftkings New Single Game Contest For The Masters

Just a week or so after revealing that it would offer single contest action for the opening day of the Major League Baseball season, daily fantasy sports leader DraftKings rolled out a similar option in time for the first round of the PGA Tour’s Masters Tournament.

Essentially, the rules of the aptly named “Single-Round Showdown,” which debuts on April 6 (during the second round of the tournament at the famous Augusta National) are not much different from the usual fantasy golf system, but there are some new additions to spice things up for longtime users and newcomers alike. Players still pick a “lineup” of six golfers using an in-game $50,000 salary cap, but the final round of the tournament will also reward players with bonus points based on the finishing positions of their golfers. That means golfers that do well later in the tournament could get a huge boost in the DraftKings standings as well, but it also means that the only substantial difference between the Single-Round Showdown and typical fantasy golf is that all this really is happening within the context a single event.

Stuff like that used to be considered illegal, but now nobody – least of all operators like DraftKings, a company with a claimed 10 million users and tens of millions of dollars in annual revenues – seems to be worrying about it too much.

How the times have changed. The announcement of daily fantasy sports (DFS) contests like this one would have probably set off more than a few alarms from federal prosecutors hungry to bust operators on DraftKings’ level for violating anti-sports betting laws as recently as a few years ago. However, with what appears to be an imminent decision from the U.S. Supreme Court regarding the future of broadly legalized sports betting coming literally any day now, the DFS industry seems to be confident that any scrutiny it was under for edging too closely on prohibited wagering activities won’t last much longer.

Appropriately enough, DraftKings experimented with the format that would coalesce into its growing stable of daily single game contests with a similar successful product around the close of the 2017-2018 NFL postseason, the most crucial time of the year for fantasy sports operators. With daily traffic in the millions of individual users, DraftKings was poised to start branching out – or toeing the line, if you will – into the realm of offering contests to users that closely resembled single event sports betting, but thus far nobody in any federal government entity has so much as blinked an eye.

In fact, the feds may have flinched. The daily fantasy sports (DFS) industry tried for years to distance itself from any connection with sports betting, which it characterized as “games of chance,” by identifying its own contests as “games of skill.” All the semantic wrangling and hand wringing aside, what “game of skill” means in practice is that, according to the DFS operators, in their contests it was possible for a player to have an advantage by virtue of knowledge, time and effort spent in researching which players to choose and so on. Again, according to operators like DraftKings, that is what separates DFS contests from sports betting as traditionally defined, which is to say that fantasy events don’t involve a single sporting event taking place in the real world between real teams – hence the “fantasy” part.

Nevertheless, many states were not buying it, and there was some discussion at the federal level about whether or not to pull the plug on the whole DFS industry until the passage of the universally reviled Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) was passed. The UIGEA’s only proponent, seemingly, was the DFS industry, because of a clause in the law that differentiated between “contests of skill” and gambling, provided that DFS games followed a few criteria. Among those requirements were such things as we’ve talked about before: fictitious teams, multiple real world games, scoring systems based on occurrences beyond wins or losses in those real world games, et cetera.

But then, having found safe haven inside the law that basically killed the entire online poker industry in the US and finished off what was left of the domestic internet sports betting market, DraftKings and other DFS companies came under scrutiny from various state prosecutors. Things got so bad at the state level for DraftKings that it had to pull out of New York and a couple other key markets over fears of a devastating suit at best. The company tried to merge with its rival FanDuel as recently as 2016 but then the two firms were hit with preliminary antitrust proceedings, leading to the decision to part ways again, and that led into the need to start offering some innovative new products (like these new single game contests) just to stay alive.

Things are different now. New Jersey, home of the second biggest gambling market in the United States after Nevada and the undisputed leader in the eastern half of the country, has taken its case that the Professional and Amateur Sports Protection Act of 1992 (PASPA) violates its constitutional rights as a sovereign state all the way the highest court in the land. If the case brought forward by the Garden State’s congressional delegation is upheld by the U.S. Supreme Court – and only five of nine justices need to agree to the premise – then the whole practice of wagering on sports would presumably be legal or at least possible to be legalized around the nation. Any state that wanted to jump in and get a slice of the pie (which for the sports betting industry is valued at somewhere between $150 billion and $250 billion in annual handle) would be able to pass laws to regulate and tax sports wagering industries of their own, and several already have done this.

Circling back around to DraftKings new slate of single game fantasy contests, it is worth pointing out that the company quite obviously feels emboldened by these trends and the possibility of nationwide legality for sports betting. If there was no legal issue with placing wagers on sports, then DraftKings, FanDuel and all the other operators in the DFS industry would not need to rely on the UIGEA for protection – however meager that might be, given that if PASPA falls its days are probably numbered too. No matter what happens with UIGEA, it is clear that it, like PASPA, has become largely powerless to stop the activities it was designed to curtail and that means the DFS operators do not actively need to hew too closely to its protections of their industry – hence these single game contests.

If America’s sports fans (which a recent Nielsen Poll found overwhelmingly support sports wagering and a not insignificant percentage only watch sports to be on them) can go into almost any casino and put real money down on their favorite team to win, DFS outlets may pivot into becoming online sportsbooks. This is truly a fascinating and dynamic time in the world of sports and gambling, and pretty much anything is up for grabs in the broader sports wagering context. Time will tell how it all pans out, but the odds are looking pretty good for something like a vastly expanded marketplace for making money by picking the winners on sports is coming and coming sooner rather than later at USA online sportsbooks.