Our Opinion: Emergence of daily fantasy sports merits close look

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The relentless DraftKings ads, as plentiful and redundant as political ads will be a year from now, tell us real money is being made from fantasy sports. The legal ramifications of this bear scrutiny.

Massachusetts Attorney General Martha Healey is exploring an industry that has essentially emerged overnight, largely centered around Boston-based DraftKings and FanDuel of New York City. U.S. Representative Frank Pallone has requested that House leadership conduct hearings on this fledgling industry.

There is nothing new about fantasy sports, usually involving baseball or football, in which fans draft imaginary teams made up of real players whose statistics are used to determine a winner at the end of the season. DraftKings and FanDuel, however, cater to Americans' limited attention span by allowing fans to build lineups daily, and large amounts of money are at stake based on the performance of the fantasy teams. DraftKings, for example, plans to award a billion dollars this year.

Most forms of online gambling are illegal, but the fantasy sports entrepreneurs are able to exploit an exemption in federal law for competitions that "reflect the relative knowledge and skill of the participants." It is doubtful that daily fantasy competition constitutes a game of skill for most who engage in it, and this loophole should be looked into by the committee Representative Pallone seeks.

While professional sports are supposedly vigilant about gambling not corrupting their competitions, as has happened in the past, The Boston Globe reports that leagues and teams, including the Kraft Group, the owners of the New England Patriots, have invested millions in the daily fantasy sports organizations. When, as seems inevitable, an injury to a prominent player is leaked and affects betting that day, triggering a scandal, some of those teams and leagues will be hugely embarrassed.

On the state level, Ms. Healey, who told the State House News Service of her plans to look into the practices of the daily fantasy competitions, should determine if Massachusetts law enables it to tax the fantasy businesses. The only good argument for the casinos coming to Massachusetts is that they will contribute tax revenue to the state, and the emerging fantasy sports behemoths, especially the one with Boston roots, should pay their fair share as well.

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