Last week, Major League Baseball announced an extension and enhancement of its previously under-the-radar partnership with DraftKings, a leading daily fantasy sports Web site. The deal gave baseball a small ownership stake in the company, with which baseball had been in business since MLB’s Advanced Media struck a deal in 2013.
Baseball is smart to leap into the daily fantasy sports business, a booming industry that will provide the league new revenue and, more importantly, boost engagement with fans, particularly those in the coveted 18-to-35 male demographic. But the league must also confront and reconcile the ethical ramifications of doing so, something it has not shown it is willing to do.
Daily fantasy sports companies make a profit – a very large profit – by taking a cut of prize pools created by users who enter contests for cash. They choose a lineup of players while remaining under a salary cap and earn points based on the statistics their players compile. The contests last a single day, and winners receive prizes immediately.
Major League Baseball is now in that business. The league supports and profits from the public risking money on the performance of its players. What ethical difference, then, does Commissioner Rob Manfred see between daily fantasy and regular sports betting?
“The difference is one’s legal and one is not,” Manfred said Monday while in Washington for the Opening Day game between the Nationals and New York Mets. “It’s a pretty definitive line. We see DraftKings as a form of fantasy baseball akin to the traditional fantasy that has been a part of our game for years and years. We’re comfortable that the games on DraftKings are on the right side of the legality line. We see it as a continued growth of the fantasy activity.”
For-cash fantasy is protected by a carve out in the 2006 federal law that prohibited online poker and sports betting. Daily fantasy is a form of the game that lawmakers did not foresee, but the companies have designed their contests to fit under the law. So Manfred is right that the game is legal. But he chose not to grapple with the broader ethical dilemma.
“We see the issue as the difference between fantasy, which is legal, and sports betting, which is not,” Manfred said.
Manfred has declined to take the public stance of NBA counterpart Adam Silver, who argued for the federal legalization of sports betting in a New York Times op-ed last November. But Manfred hasn’t taken a stand against Silver’s position, either. And in February he said he was “getting ready to have a dialogue with the owners” about where baseball stands on legalized sports betting.
With their stake in daily fantasy, baseball has entered a space that recalls the old line: “We’ve established what you are, madam.” If baseball is comfortable with one form of fans risking money on the performance of its players, why not another?
Baseball’s history with sports betting – the sport’s original sin that stretches from the 1919 Black Sox to Pete Rose to even Jarred Cosart, the Miami Marlins pitcher fined Friday for placing illegal wagers – makes Manfred’s public stance more fraught than Silver’s. But the winds are shifting. Even if he will not acknowledge it yet, baseball’s deal with DraftKings brought Manfred a step closer to aligning with Silver.