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// PUBLIC GAMING INTERNATIONAL // September/October 2016
try is not very clear on the distinctions between the different fan-
tasy game categories. Legislators, attorneys general, regulators, and
law enforcement seems to be treating DFS and traditional fantasy
sports with equal vigor, or at least with inadequate understanding
of the differences and actual market impacts.
Further, it has been reported that DraftKings lost an estimated
$280 million and FanDuel $137 million in 2015. In light of every-
thing that’s happened since the insider betting scandal broke in Oc-
tober of last year, it’s now estimated that the best case for the Daily
Fantasy Sports market by 2020 will be approximately $14 billion
and the worst case could be where it is today which is between $3
and $4 billion.
It is not my intent to minimize the impact and relevance of DFS.
It just needs to be understood and assessed in proper context and
perspective. The volume being played in DFS is not nearly as large
as the advertising of DFS might lead one to believe.
The regulatory environment is being shaped as we speak. At least
ten states have come out with opinions on the legality of Fantasy
Sports, and only two of those have found that the play of fantasy
sports is lawful. Legislation is pending in another thirty two states.
[Ed. Note: Since the date of this panel in April, 2016, legislation le-
galizing DFS has been enacted in Colorado, Indiana, Mississippi,
Missouri, Tennessee and Virginia. In addition, the legislature in New
York passed a bill legalizing DFS, and that bill awaits action by New
York Governor Cuomo. DFS had already been made lawful in Kansas,
and it is regulated in Massachusetts, although not legalized by statute.]
And the market for DFS has shrunk considerably since October 2015.
Even so, Fantasy Sports still holds a level of excitement that has piqued
the interest of lotteries, regulators, and other government agencies.
Gordon Medenica:
One of the broader issues for the topic
today is this intersection of regulation, technology, internet, and
emerging consumer trends. As we know, what happens at inter-
sections is collisions. Regardless of where DFS ends up, this is an
example of industry disruption—new game styles and distribution
methods that fall outside of current regulatory frameworks. How
will these disruptions impact Lottery and what can Lottery do
about it? Philippe?
Philippe Vlaemminck:
First, I think it is important for us to
nurture this dialogue between U.S. and Europe. We have much to
learn from each other and I expect there will be quite relevant ways
in which we can collaborate on initiatives to support the stability of
the government-gaming industry in the future.
European lottery operators have been dealing with major disrup-
tive forces for many years now. In fact, the internet has wreaked
havoc on European markets in ways that the U.S. has largely avoid-
ed. Europeans have tended to feel that we are the only ones with
these problems and so are encouraged to see that you finally have
your own problems!
You are correct, Gordon, in pointing out that DFS is not the
same phenomenon in Europe as in the U.S., probably because
sports-betting is already a highly developed and growing market.
The European consumer does not get excited about DFS because
they can engage in whatever variety of sports-betting they choose,
and have been able to do so for many years. The specific game of
DFS is not a problem or an issue for us. The thing that is a problem
and an issue for all of us is the inability of legislators and regulatory
agencies to keep up with changes in the games, new technologies,
consumer trends, the internet, and other forces that are disrupting
the market-place. As Gordon points out, the intersection of these
factors is creating a collision. The aftermath of the collision is a lack
of clarity as to how existing laws apply. And that creates a fertile
ground for further disruption. To make matters worse, the army
of lobbyists employed by the commercial sector is more likely than
government gaming operators to influence the way legislation and
regulations get updated. That’s why the trend in Europe is towards
opening up the markets to borderless competition between mul-
tiple operators. The monopoly model is under severe attack. You
think that will not happen here. And maybe your monopoly model
will remain intact. What will happen in the U.S. as it is happen-
ing everywhere is that the market-place is being reinvented by new
games, new technologies, and new distribution models. DFS is a
very small example of the potential for a new game to have disrup-
tive impact. It opens the way for a Pandora’s Box of ongoing change
that is likely to have far more dramatic impact on all games-of-
chance operators including government-lottery. We may be having
more issues than you are with the disruptive impact of the internet.
Right now, you may be having more problems with the disrup-
tive impacts of DFS or other entrants into the games-of-chance
space. But the fundamental dynamics of disruptive forces are quite
It might seem that the step from DFS
to a market-place being disrupted by an
invasion of highly sophisticated and
well-funded operators based outside
of the U.S. and selling all varieties of
products, many of which replicate
the lottery-playing experience, is a
big leap and not likely to happen anytime
soon in the U.S. It’s not a big leap.
That is exactly what happened in Europe
and, I would submit, can happen
anywhere including the U.S.
—Jean-Luc Moner-Banet
Panel Discussion
…
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