TOO GOOD TO BE TRUE

Fantasy sports sites like DraftKings and FanDuel trick people into believing everyone wins big

Obsession
Business of Sport
Obsession
Business of Sport

Thanks to the ubiquitous ads by DraftKings and FanDuel, almost everyone knows that you don’t need to be a professional athlete or coach to enjoy firsthand the thrill of elite sports competition. This increasingly popular past-time has also garnered great media attention, however, as many are asking whether fantasy sports equal gambling.

While the gambling question is a very good one, overlooked is another important issue involving many fantasy sports ads: The commercials often convey atypical results that make the promotion illegal as well as unethical.

If you’re new to fantasy sports, here are the basics: You choose, or “draft,” players from a professional sports league like the NFL (American football), NBA (basketball), or NHL (ice hockey) in order to form your unique fantasy sports team, which competes against other teams in a fantasy sports league. Your team’s success depends on the real players’ statistical performance in their actual games. Football players, for instance, typically earn you points for things like yards rushing, yards passing, and touchdowns.

In some fantasy sports leagues those points just translate into victories and bragging rights. In other leagues, however, real money is wagered and won/lost, giving rise to the gambling issue. That issue is escalated by the fact that fantasy sports have become a multi-billion dollar industry that continues to grow even as it already engages about 50 million Americans a year.

While the competition in some fantasy sports leagues spans the entire professional sports season (such that your team’s ultimate results are not known for many months) other options have evolved to satisfy the need for instant gratification, namely DraftKings and FanDuel. These firms offer daily payouts for one-day contests. Here also is where other important legal/ethical issues arise.

As of Oct. 10, 2015, DraftKings and FanDuel have reportedly spent over $200 million in advertising. Although the frequency of the ads has annoyed some viewers, the real problem lies in the payouts that many of their ads suggest. For instance, the following are verbal quotes and visual text from several of their most common commercials:

DraftKings:

FanDuel:

  • “FanDuel’s one-week leagues are paying out two billion dollars this year—more money to more winners than any other site.”
  • “Wesley M.—Winnings: $9,264; Mike B.—Winnings: $49,893; JP M.—Winnings: $3,725; Scott H.—Winnings: $2,136,431; Bradly C.—Winnings: $349.”
  • “My third week of playing, I won $15,000 off of a five dollar entry.”
  • “I’ve deposited a total of $35 dollars on FanDuel and won over two million.”

Watching these commercials could easily lead one to conclude two things: 1) that people playing DraftKings and FanDuel never lose, and 2) that those who win typically score thousands, tens of thousands, or even millions of dollars. Of course, after briefly thinking through the business model, it’s also easy to establish that neither of these promotional posits could be true: The only way firms can be paying out big winnings to even a few participants is if many more people are losing loads of cash.

The silliness of the suggestion that everybody wins big hasn’t been lost on some creative copywriters who have posted comical FanDuel commercial parodies like this one on YouTube. It’s also telling that the National Collegiate Athletic Association (NCAA) has recently decided to ban DraftKings and FanDuel ads during NCAA championship events, including the NCAA women’s and men’s basketball tournaments.

What’s surprising is that the Federal Trade Commission (FTC) has yet to crack down on these ads. For many years weight loss ads and others had benefited by describing just the best scenarios of their most outstanding consumers. The advertisers would then protect themselves legally by adding a disclaimer to the ad: “Results Not Typical.” In 2009, the FTC targeted this practice with a new mandate:

Under the revised Guides, advertisements that feature a consumer and convey his or her experience with a product or service as typical when that is not the case will be required to clearly disclose the results that consumers can generally expect. In contrast to the 1980 version of the Guides—which allowed advertisers to describe unusual results in a testimonial as long as they included a disclaimer such as “results not typical”—the revised Guides no longer contain this safe harbor.

Somehow DraftKings’ and FanDuel’s advertising has been allowed to side-step this very specific FTC ruling. By highlighting only their best client outcomes with no clear recognition of the much more typical consequences (monetary losses), these fantasy sports leagues violate both pre- and post-2009 advertising law. Beyond the legality, however, it’s also easy to imagine how such deceptive promotion might mislead people to think that they’ll be the next big winner, even though the odds are invariably against them.

Given the unusually high frequency of these ads, as well as the rapid growth of fantasy sports, it’s very likely that DraftKings’ and FanDuel’s commercials are an effective marketing tool. The promotion’s deceptive content, however, compromises a very important societal value: honesty. As a result, the call on the field should be that these fantasy sports ads are, well, “foul.”

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