THE BLOG
08/31/2016 02:53 pm ET Updated Sep 01, 2017

Big Government Involvement In Fantasy Sports Needs To Change

Strong support for the Libertarian approach of Govs. Johnson and Weld is found not just when the major party candidates open their mouths, but also in an unlikely place, namely ESPN. That's right, the sports people!

In a recent article, OTL investigates the implosion of daily fantasy sports leaders DraftKings and FanDuel. ESPN discusses at length the legal and business problems encountered by the daily fantasy sports ("DFS") industry. For the uninitiated, fantasy sports involve participants having a financial stake in the performance of real athletes. One 'flavor' involves season long competition while the one most at issue involves efforts on a particular day or other short period.

The involvement of government stems from the possible coverage of these activities, particularly the daily flavor, by federal and state laws prohibiting gambling. In general, these laws allow games of skill, but not games of chance. ESPN provides an exhaustive look at the efforts of various regulators, especially those in New York, to stop this activity once they were apprised of its existence.

These efforts reflect the need for a much less intrusive government. At a time when tension regarding national security and terrorism, not to mention 'ordinary' street crime, are running so high, there is no reason for government to be addressing such activity and the fact that it is reflects the need for a drastic shift in approach to focus on matters that genuinely impact the polity and ignore those that don't.

Even assuming arguendo the validity of the premises of the regulatory efforts identified in the ESPN piece, namely (i) existing laws prohibiting gambling do apply to DFS, the conclusion of some, but far from all, knowledgeable observers, and (ii) the games are to a significant extent, 'rigged' in favor of large, very frequent players, from the author's personal experience, probably true, there is no need for government resources to be expended in this manner.

Even if one believes that gambling should be illegal - a curious view in today's world of multi-state Powerball and other lottery games and ubiquitous state-licensed gambling casinos - the conventional rationale is irrelevant here. That is, there is no evidence that DFS are at all addictive in the same manner as traditional gambling, and there is no evidence of organized crime involvement. Nothing in the ESPN piece refers to lives being ruined by participation in DFS or any sort of use of profits to support criminal activities or violence against losing (or other) participants of the sort observed where organized crime is involved.

While those with heavy involvement in DFS may have an advantage over more casual players, this militates, at most, in favor of enhanced disclosure requirements and not total prohibition. Many would argue that our financial markets reflect the same 'tilt', but few go beyond advocating strong disclosure of such risk to support abolition. To me, it is the essence of freedom to allow citizens to participate in activities that may be ill advised but are considered gratifying. Our society should not involve government telling citizens what is good for them!

The efforts of government in this space reflect how it has run amok and seeks to oversee the lives of citizens, absent any evidence of harm to non-participants. Multiply this activity by several hundred to reflect how our governments seek to dictate the lives of citizens and the problem becomes clear.

Whatever may be dictated by technical legal analysis, this sort of prioritization of resources to tell citizens how they can live their lives is a serious mistake and undermines efforts to deal with genuine threats to the common good.

It is my view, and that of many mainstream economists that this sort of oversight is drastically impeding entrepreneurship and risk-taking and keeping economic growth to levels rarely seen coming out of recession. Whatever you think of the major party candidates, the 'live and let live' approach of the Libertarians is a badly needed remedy for this sort of suffocating oversight. Both major party candidates adhere to 'same old; same old' with respect to growth of government. The Libertarians offer a genuine alternative!

Note: The author has no connection of any kind to Jason Robins, the CEO of a major DFS company.