In the 1980s, baseball fans started mimicking team owners by gathering with friends to pick players from any active roster to create their own teams in an activity known as rotisserie baseball.
Six to 12 friends typically participated in each “league,” putting up an ante, and the person whose players had performed best by season’s end collected the pot of money and gained bragging rights for the year.
But the internet disrupted how people gamble on sports.
By 2014, websites had emerged that allowed people, for an entry fee, to create their own rosters online and compete against other players elsewhere in the United States in a variety of professional sports. In addition to playing over an entire season, people could choose a slate of players for a single day of games in baseball or basketball or a weekend of games in football or a golf tournament. The websites could pay winners as much as $1 million in contests involving tens of thousands of players.
Today, 19 states allow this new form of web gambling on fantasy sports.
Voters in Louisiana will decide in November whether to legalize it as well. The Louisiana vote will come with a twist, however, since the state Constitution requires it to be conducted on a parish-by-parish basis. This means voters could authorize betting in some parishes but not others.
Experts say legalization presents at least two potential downsides: It will increase the number of problem gamblers in Louisiana. It is also expected to cannibalize some gambling revenue from the state’s existing casinos and truck stops.
This is the question that voters will see: “Should fantasy sports contests be permitted in the parish of __________”?
State Rep. Kirk Talbot, R-River Ridge, who sponsored the legislation authorizing the ballot measure, expects that at least 50 of Louisiana’s 64 parishes will legalize fantasy sports betting. He said he sponsored the legislation at the suggestion of lobbyist Randy Haynie, who initially represented the two major companies in the fantasy sports business, FanDuel and DraftKings. Haynie later had to bow out because he was working for Caesars Entertainment, owners of the Harrah’s casino.
Since 1990, Louisiana has legalized a lottery, a land-based casino in New Orleans, 15 floating casinos that now have the right to move onto land and operate more slot machines, plus slot-machine emporiums at four racetracks and video poker at 3,600 bars and 205 truck stops. Given that array of wagering options, Louisianans might be surprised to learn their state constitution prohibits gambling.
But it does, and to get around that ban, Talbot’s measure, House Bill 484, specifically said “participation in any fantasy sports contest ... shall not be considered gambling.”
Even though it’s constitutionally banned, gambling is now the fourth-biggest source of tax revenue in Louisiana, bringing in far more money than the longtime champion, oil and gas.
But those hoping that legalizing fantasy sports betting will help solve the state’s budget problems will be disappointed. It will generate perhaps only $3 million or so a year in state tax revenue, estimated Talbot, based on how much other states have collected.
Daily fantasy sports has become especially popular among young men who track the performance of their players on smartphones while watching weekend NFL games.
Fantasy sports differs from online sports betting in which gamblers bet on the outcome of a particular game, race or season. That has mostly taken place in Nevada or at offshore online betting sites, although a recent Supreme Court decision has legalized the activity throughout the country. The Louisiana Legislature this year did not approve a measure that would have legalized sports betting despite the exhortations of its sponsor, state Sen. Danny Martiny, R-Kenner.
In fantasy sports, there’s no concept of covering a “spread” since the contests involve the performance of a fantasy team, not the outcome of a real game.
In daily fantasy sports, the football players selected gain points depending on the number of yards they gain and touchdowns scored or another set of statistics. The baseball players are rated on their batting and pitching statistics.
“It is a contest with prizes set in advance, based on statistics accumulated by athletes rather than the scores of a particular game,” said Justin Fielkow, a Chicago-based attorney from New Orleans who represents companies that offer the contests. “The winner accumulates the most points relative to other contestants.”
Two companies — FanDuel and DraftKings — account for about 95 percent of the activity, said Dustin Gouker, managing editor of Legal Sports Report, a website, which reported in 2017 that annual industry revenue was $3.2 billion, with the companies earning about $320 million. Each of the two companies has well over 1 million active players, he said, and industry officials estimate that the average player wagers $465 per year.
“But daily fantasy sports does not go on in Louisiana in any meaningful way,” Gouker said.
That would change in the parishes that legalize the activity, in the same way that voters in 31 parishes legalized that form of betting in 1996, while 33 parishes didn't.
The Louisiana vote creates a potentially complicated situation because voters in say, East Baton Rouge Parish, might legalize fantasy sports while those in West Baton Rouge reject it. What then would stop people in West Baton Rouge from entering contests on their computers and smartphones?
The answer is a new technology known as geo-fencing or geolocation. That allows the companies to know the exact location of those who enter the contests through their computer IP address or their smartphone locator, Scott Ward, a Washington, D.C.-based attorney, said when he testified before the House Criminal Justice Committee in favor of the bill on behalf of FanDuel and DraftKings.
The technology allows the companies to block people who are not in states — or parishes — where the activity is legal.
“They can actually pinpoint you down,” Ward said.
So the same technology that prevents people in Louisiana from entering contests on FanDuel or DraftKings today would keep them from playing in parishes that do not authorize the activity in November.
“Louisiana is a place where you haven’t been able to play daily fantasy,” Gouker said.
Talbot gave a different impression when he advocated for HB484 before the House Criminal Justice Committee on April 11.
“There are literally tens of thousands of people that play that game already in Louisiana,” he told other House members.
Talbot’s comment prompted state Rep. Denise Marcelle, D-Baton Rouge, to voice her support.
“It looks like we’re trying to regulate something people are already doing,” she said. “I do believe we should regulate it.”
In a recent interview, Talbot said he meant that people in Louisiana are using free websites to assemble their fantasy teams and then pool money privately among friends, with the winner collecting the pot.
“Money is exchanged, but it’s not through DraftKings or FanDuel,” he said.
Talbot’s bill zipped through the House and the Senate without any members asking questions in either chamber.
The Legislature will have to decide next year how to tax the web companies that offer the contests.
If legalized in Louisiana, fantasy sports will take away some business from the other forms of gambling already allowed in the state, said Marc Edelman, a law professor at Baruch College, Zicklin School of Business, who also consults for the sports fantasy companies.
“There is a risk that those who suffer from pathological forms of gambling will end up losing substantial amounts of money,” Edelman said. “Some of the worst will go bankrupt and become wards of the state.”
Kathleen Benfield, legislative director for the Louisiana Family Forum, a conservative, faith-based group, emphasized this point in her testimony against the bill before the Criminal Justice Committee.
“The underage issue, that’s going to be a big problem,” Benfield said. “Make no mistake about it, this is targeted at youth. ... This is not kids playing 'Grand Theft Auto.' ... This is aimed at addictive behavior. ... This would be a brand-new form of internet gambling in Louisiana.”