Player Pricing Mechanisms and the Daily Fantasy Sport Chance Versus Skill Debate

Differentiating and defining games of skill versus chance have major legal implications when classifying gambling, especially in relation to daily fantasy sports in the United States. This paper provides a theoretical discussion and introduces an empirical approach to analyzing game player pricing mechanisms. If game pricing mechanisms are fully efficient—player prices fully reflect the expected contributions from players—then that game is one of chance since there is no opportunity for skill to play a role in outcomes. This paper examines player prices from DraftKings’ daily fantasy football product. Empirical results show that there are strategies deriving from the pricing mechanism that can be incorporated by skilled participants to increase their expected performance and improve their chances of winning. This provides evidence that daily fantasy sports are skill-based—a necessary condition for skill to be a predominant factor in game outcomes as part of the legal debate.

Daily fantasy sports and the law in the USA

This chapter examines legal, regulatory, and social issues surrounding the phenomenon of the daily fantasy sports (DFS) industry in the USA. Traditional fantasy sports contests largely involved groups of family or friends creating their own respective “fantasy” teams of real professional athletes, whose actual games results over the course of an entire season determined the success of one’s fantasy team. Fantasy sports contests were not considered gambling on sports, and federal legislation exempts “fantasy sports” from prohibitions against online gambling. As the name implied, DFS is a different product, offering users who pay the DFS operating company to select their team roster on a daily basis, competitions can occur over a day or a week depending on the contest, and among thousands of users, few of whom are consistent winners in the contests. The DFS commercials and advertisements are again blaring the airwaves. Major DFS operators are expanding their product lines and are now fully immersed in online, mobile, and casino sports gambling in states where legal. The DFS and sports gaming market is booming; the technology, analytics, user sophistication, financial stakes, and the distinction between DFS and gambling are increasingly blurred. This chapter considers the legal, regulatory, and social issues arising from the expanding DFS and sport gaming business.

Productive play: The shift from responsible consumption to responsible production

Regulatory approaches to games are organized by boundaries between game/not-game, game/gambling game, skilled/unskilled play, consumption/production. Perhaps more importantly, moral justifications for regulating gambling (and condemning digital games) are rooted in the idea that they consume our time and wages but give little in return. This article uses two case studies to show how these boundaries and justifications are now perforated and reconfigured by digital mediation. The case study of Daily Fantasy Sports (DFS) illustrates a contemporary challenge to rigid dichotomies between game/not game, skilled/unskilled play, and game/gambling game, demonstrating how regulation becomes deterritorialized as gambling moves out of state-regulated physical casinos and takes the form of networked, digital games. Our second case study of Pokémon Go approaches regulation from a different direction, complicating the rigid dichotomy between production/consumption in online networked play. We show how play is increasingly realized as productive in economic, social, physical, subjective and analytic registers, while at the same time, it is driven by gambling design imperatives, such as extending time-on-device. Pokémon Go exemplifies analytic productivity, a term we use to refer to the production of data flows that can be leveraged for a wide variety of purposes, including to predict, shape, and channel the behaviour of player populations, thereby generating multiple streams of revenue. Ultimately, both cases illustrate how digital games and gambling increasingly blur into each other, complicating the regulatory landscape.

When Games and Gambling Collide: Modern Examples and Controversies

The intersection of gaming and gambling has a long lineage. In recent years this process has amplified, arguably accelerated by developing technological infrastructures which facilitate rapid payment purchases and online and real-time systems which allow companies to communicate directly with users and users to communicate with each other. This chapter traces key issues relating to some notable recent examples of the gaming/gambling intersection. It includes controversies about the status of social casino games and loot boxes; the development and expansion of daily fantasy sports markets; the betting and wagering of skins won or bought through digital games, and; rising opportunities to bet on esports. Each exemplifies how these activities are products of a unique set of social and economic circumstances, how corporations are diversifying and becoming part of a more complex gaming/gambling ecosystem and using data to drive growth, all of which raise particular issues for consumer protection.

Market Efficiency and the Setting of Salaries for NBA Daily Fantasy on FanDuel and Draft Kings

The market for daily fantasy sports for the NBA is examined with respect to efficiency when pricing player salaries for the games. Simple factors such as home court advantage, rest, and opponent are shown to significantly effect performance beyond posted salaries in the respective markets. In addition, a “hot hand” effect is found in that players that exceed expectations in previous games are shown to outperform salary-based expectations in the next contest. These factors yield a rejection of market efficiency as it relates to salaries in the marketplace. Legal ramifications for these contests as games of skill are examined.

Optimising Daily Fantasy Sports Teams with Artificial Intelligence

This paper outlines a novel approach to optimising teams for Daily Fantasy Sports (DFS) contests. To this end, we propose a number of new models and algorithms to solve the team formation problems posed by DFS. Specifically, we focus on the National Football League (NFL) and predict the performance of real-world players to form the optimal fantasy team using mixed-integer programming. We test our solutions using real-world data-sets from across four seasons (2014-2017). We highlight the advantage that can be gained from using our machine-based methods and show that our solutions outperform existing benchmarks, turning a profit in up to 81.3% of DFS game-weeks over a season.

Behavioral Markers of Risky Daily Fantasy Sports Play

To understand the natural groups of daily fantasy sports (DFS) players and their associated problematic play, we obtained DFS participation records for 11,130 DFS players from a leading provider. A cluster analysis suggested four player clusters. Cluster 4 included a single highly successful player (i.e., an outlier). Players in Cluster 1 had shorter playing durations than players in Clusters 2 and 3 and picked riskier contests than players in Cluster 3. Players in Cluster 2 picked riskier contests than players in Cluster 3 and had longer playing durations than players in Cluster 1. Players in Cluster 3 experienced greater financial DFS success than others. This suggests that measures of DFS involvement can identify natural DFS player groups with distinct problematic play experiences.