Even the most casual fan of the National Football League is well aware of the fantasy leagues in which one can bet on the performance of individual players. DraftKings and FanDuel, the two websites controlling 95 percent of the North American market for so-called day leagues, are in the midst of a $500 million ad buy to attract new customers.

There are plenty of them to attract. There are an estimated 57 million people in the United States and Canada participating in fantasy sports this year. Their bets, even though technically not considered gambling, are included in the projected $95 billion Americans will wager on NFL and college football this season.

If you believed online gambling was illegal in this country, you were right. But the Unlawful Internet Gambling Enforcement Act passed by Congress in 2006 carved out exceptions for fantasy leagues. Lobbying interests, including major sports leagues that also are investors in DraftKings and FanDuel, were able to persuade lawmakers these are not games of chance.

“These are skill-based games that match sports fans against each other in a contest of sports knowledge and strategy that is fundamentally different from wagering on the performance of an individual player or the outcome of a particular game,” said Peter Schoenke, chairman of the Fantasy Sports Trade Association.

Preying on a sports-crazed and gambling-prone American public is paying off handsomely for the two primary websites, if not necessarily for those purchasing players. And an investigative report in the New York Times earlier this week shed light on the identities of the relatively small numbers of winners. Some of them are employees at the competition.

A DraftKings employee who inadvertently released data about how many fans had selected particular players turned out to be the winner of $350,000 at the FanDuel site the same week. According to the Times, “the two major fantasy companies were forced to release statements defending their businesses’ integrity after what amounted to allegations of insider trading, that employees were placing bets using information not generally available to the public.”

Both companies rushed to assure the public there is integrity in the games, but also told the Times “employees of both companies had won big jackpots playing at other daily fantasy sites.”

DraftKings issued a statement in which it said its own “thorough investigation” showed nothing improper had taken place.

Congress should not be satisfied with an internal investigation on the matter. Lawmakers created the loophole; it’s now big enough for a truck to drive through. Make that fleets of trucks — all armored carriers stuffed with cash.

Somebody needs to follow the money. These startups have attracted so much cash in such a short period of time, it is not enough to say “let the buyer beware.” These fantasy leagues need the same regulation and rules imposed upon casinos and state-run gambling ventures. We don’t see much difference between them, other than fantasy league employees with access actually have outside outlets with which they can take advantage. The real skill being rewarded is not sports knowledge, it’s game theory. There is no way those setting up the game should be betting on it.

Hopefully Congress treats seriously allegations of insider trading in this multibillion-dollar infant industry. It sounds a bit rigged.


Editorial by Patrick Lowry