The Fantasy Sports Trade Association held its winter conference in Las Vegas on the 21st and 22nd of January, 2013. Marco Valerio was there and conducted the following interview with FSTA President Paul Charchian.
Valerio: Can you tell me a little bit about the history of fantasy sports in America, and what your organization, the Fantasy Sports Trade Association, does for the industry?
Charchian: Well, fantasy sports has been played since the 1960’s at a very small level, and it continued to be pretty small until the Internet. By pretty small, we estimated there were something in the neighborhood of probably 3 million players pre-Internet. Once the Internet came, it solved two big problems. One was finding the other nine people to play with you, and the second was automating the tedium of the sport. It used to be extremely labor-intensive to score and tabulate fantasy leagues, or to even get contests going, you know, a lot of the things we take for granted now. And so doing it all pre-Internet was really, really difficult. People were faxing rosters around and literally mailing rosters to each other mid-week. With all the hurdles to playing, you had to really, really love it back then!
So the Internet really took down all the barriers to play and provided all these great tools to simplify playing, and it took off. We gained roughly 2 million players a year since the mid-to-late 90’s. And so the size of the sites, the participation numbers have really grown a great deal. We have 36 million players in the U.S. and Canada, aged 12 and over.
And where does the FSTA come in?
The Fantasy Sports Trade Association started in the late 90’s as a way to give a voice and advocacy to the industry, and to handle legal issues that may have arisen, to handle propagation of the sport, to handle acceptance of the sport with the leagues, which took a long, long time. We had to battle football even, the NFL, Major League Baseball and everybody else over the legitimacy of fantasy sports, and it was also no small deal to get past the notion that fantasy sports is gambling. That took a long time and a lot of work.
I’m very curious about that. If I looked up U.S. online gaming law today, I’d read that it’s practically all prohibited except for horse racing and fantasy sports, which might make one assume that fantasy sports has been legal forever. But you’re saying you had to deal with some legal battles yourselves along the way?
Well, not on the gambling front. We had to overcome perception, because there was an incorrect perception that fantasy sports involved, or was, gambling, because it involves sports and it involved money, sometimes a lot of it. A bunch of guys get together, they throw in a hundred bucks each, and now you got a pot of a thousand dollars, and at the end of the year you’re paying back some money. Well, you’re paying back all the money, actually. And that was one of the key things.
There were several key reasons why it’s not gambling. It’s clearly a game of skill. You can’t just guess your way into a championship. An also, no one is taking a rake. These are family leagues, leagues of friends, and if you get a thousand dollars in, you get a thousand dollars going out. So no player has ever been convicted of gambling. No fantasy company has ever been the subject of a criminal investigation for gambling or prosecuted for gambling. It just took a long time for the perception to catch up. Then in 2006, the same legislation that shut down the offshore casinos, the Unlawful Internet Gambling Enforcement Act (UIGEA), carved out fantasy sports, and that opened the floodgates for legality. We went from sort of being in a gray area, where we didn’t really know for sure if it was legal or not legal – there was no statute that suggested that it wasn’t legal, but that carve-out really made it clear that fantasy sports was legal, and now we’ve seen an explosion in the past few years of all kinds of new games and contests, especially daily games, that allow people to play for money, every day, within the boundaries that are set up in that legislation.
Do you have an opinion with what’s going right now with sports betting in this country?
I’d love to hear it! New Jersey right now is also up against the leagues, but what they want to do, sports betting, is definitely gambling, so how do you think they might get past that?
Yeah, clearly the leagues don’t like it, and… that’s fine for their prerogative. You know, we in the fantasy industry had a lengthy legal battle with Major League Baseball over who owns stats, and who owned player likeness and player names and things like that. They, the leagues, felt like they owned it, so we have a long-standing history of battling the leagues ourselves.
Our feeling is that it’s really not up to the leagues. As an industry and as a whole, we support New Jersey’s efforts towards legalizing sports betting. It’s not like sports betting isn’t happening. There are bookies in every state. We feel like it oughta be regulated, taxed and legitimized, and we should not be criminalizing people that want to place a bet in places other than Nevada. So while it’s not directly comparable to fantasy sports, we do feel that, as states embrace sports betting, that will ultimately make the legality of fantasy sports a complete no-brainer. We already feel like it is, but that’ll make it especially clear at that point.
And what about online poker? Do you have an opinion on the way that sector of the gambling industry is headed?
Yes. Like fantasy sports, online poker is clearly a game of skill, without a doubt game of skill, and so we feel like it should not be treated the same way as an online slot machine should be treated. We feel like they ought to be treated differently. Hopefully, online poker will also be legalized and, you know, to some degree that too does tangentially affect the fantasy sports industry, where we feel like this is clearly a game of skill.
But one of the key distinctions I want to make between fantasy play and, say, sports betting or even poker, is… our average entry fee when you’re playing with your friends is about 70 bucks, so it’s like 6 dollars a week. And you know, your average hand of poker is about 6 bucks, or a hand of blackjack is 6 bucks, so one of the key distinctions between fantasy play and sports betting and poker is that, in fantasy, the amount of money is so comparatively low and the amount of play is so comparatively long, that it’s really clear that people don’t have a money motivation to play fantasy like they do when they’re playing poker, where money is a primary motivation. The motivations we have in fantasy sports are camaraderie and competitiveness and, you know, sitting around the water cooler and being able to talk about it. So the motivations are different, but broadly speaking, the more legitimacy and legality the gambling and gaming industries gain, the better it is for fantasy sports.
How remarkable. My impression is that different gambling interests combat each other all the time. Nobody wants the other to be legal because they all fear they’ll lose revenue to someone else. You don’t think you have anything to fear from more legalized gambling?
We have nothing to fear from it at all. We feel it’s just a really different sort of subset of people and activities and so, yeah, generally speaking we feel like if it’s good for gaming and gambling, it will probably have a good outcome for fantasy as well. But we’re not dependent on it.