The NFL Has a Gambling Problem
Business of Football

The NFL Has a Gambling Problem

With Daily Fantasy Sports industry leaders FanDuel and DraftKings—both tied closely to the NFL—coming under heavy scrutiny from the government, it might be time for the NFL to rethink its conflicting stance on gambling

Cliff Hawkins/Getty Images

The gambling paradox in the NFL—and in all sports—is approaching an inevitable inflection point. Having habitually used the mantra of “integrity” in distancing itself from traditional forms of gambling, the NFL’s days of plausible deniability about association with gambling seem numbered.

The reality is that the NFL has accepted gambling—in softer tones—for some time. It may be a bumpy ride from a public relations standpoint, but the walls between the NFL and gambling are being broken down, in large part due to new monetization angles and revenue streams flowing from Daily Fantasy Sports (DFS).

Integrity

Integrity is the watchword for sports—and business—leadership. Commissioner Roger Goodell has invoked the phrase often over the past couple of years, whether about domestic violence, ball deflation or, now, gambling. When in doubt, cite integrity.

Sports leagues have historically dealt with even the perception of gambling influence swiftly and harshly. Former Major League Baseball commissioner Bart Giamatti banned Pete Rose in 1989 and, now 26 years later, baseball’s hit king continuously strikes out in attempts at reinstatement. Former NBA commissioner David Stern immediately dismissed referee Tim Donaghy—alleged to have fixed games through his officiating—as a “rogue official” and assured the public there were no ripple effects to the game’s integrity.

While the Rose and Donaghy incidents represent more traditional forms of gambling, we have arrived at a point when sports gambling with a softer name—fantasy—has achieved critical mass.

Enter Fantasy

Fantasy football has existed innocuously for decades as a way for fans to become more engaged, playing general manager, head coach, scout and, in some leagues, salary cap manager. Indeed, at the Packers we had a league with actual scouts and cap managers, with two simple rules: (1) no fees, and (2) no picking Packers. As innocent as it was, I still checked in with the league office to be sure we were not running afoul of any gambling guidelines (yes, I’m paranoid; and no, we weren’t). One interesting observation from my fantasy football experience at an NFL team level: The worst fantasy football players actually pick NFL players for a living! Our scouts would brag about drafting some unknown player they had scouted that no one knew about, and I would simply say, “But he’s not going to play!”

I have often compared following fantasy football to the way I followed football as a player agent. Agents, like fantasy owners, follow “their guys” with much more interest than team outcomes.

• HOW DAILY FANTASY IS CHANGING THE GAME: FanDuel and DraftKings are now entwined with the NFL experience. But with multiple controversies converging at once, will it stay that way?

Photo:

The DraftKings logo has become omnipresent at New England's Gillette Stadium. Owner Robert Kraft has a stake in the company.

NFL Ties

The hyperspeed growth of DFS, particularly industry leaders FanDuel and DraftKings, has now brought attention to whether these services are actually gambling and should be treated (and regulated) as such.

The two companies now find themselves under siege from both litigators—including an NFL player, Pierre Garcon—and regulators. However, during the run-up to this discomfort (which they had to expect was coming) they achieved extraordinary “mindshare” through a storm of promotional and advertising impressions. They are top of mind in the space as two of the fastest growing companies in the world, each with reported valuations approaching $1.5 billion and solid backing from the venture capital community. And they have immersed themselves in the NFL on the team sponsorship level: FanDuel has sponsorship deals with 16 NFL teams while DraftKings has deals with another 12 teams and the NFLPA.

Despite the team sponsorships and ubiquitous advertising on its product, Goodell maintains that “integrity” is not compromised due to two positions. First, he notes that DFS is not “outcome-based,” rather a mash-up of players judged by individual, not team, statistics. To me, however, one can argue that NFL players are more susceptible to potential manipulation with DFS, as professional gamblers could more easily influence an individual player’s statistics rather than a team sport outcome.

Second, Goodell points out that the NFL has taken no equity positions in either company, contrasting investments of Major League Baseball (DraftKings) and the NBA (FanDuel). However, two important NFL team owners, Robert Kraft and Jerry Jones, are investors in DraftKings. DraftKings’ Series D funding of $300 million this summer listed the Kraft Group as an investor, and Jones was an investor prior to that. (The DraftKings logo hangs above the Cowboys’ team tunnel, as prime a location as the Notre Dame “Play Like a Champion Today” sign).

As calls for DFS regulation as a form of gambling increase, these investments will face increasing scrutiny and likely force (another) uncomfortable conversation between Goodell and Kraft, as well as one with Jones.

• FOUR KIDS, 27 FANTASY LEAGUES: Meet the next generation of NFL fans

A Mixed Message

The NFL is fighting New Jersey governor Chris Christie, friend of DraftKings investor Jerry Jones, in Christie’s attempt to legalize sports gambling at racetracks and casinos in his state. The league also shut down appearances of Tony Romo and other players at a fantasy football convention this past offseason, citing a casino association as the reason.

Meanwhile, the Saints, Patriots and Cardinals have set up camp this year at The Greenbrier, a resort in West Virginia where a primary attraction is—you guessed it—a casino. Green Bay’s Oneida Nation Casino abuts the hotel that houses the Packers the night before home games, and the Lions recently inked a major sponsorship with MGM Grand. And the NFL’s London series is now played in Wembley Park, home of several betting parlors, with betting kiosks (closed during NFL games) inside the park’s main attraction, Wembley Stadium. (Sports gambling is legal in the U.K.; seven of the 20 Premier League soccer clubs this season are sponsored by online betting sites.)

So this is where we are in the NFL regarding gambling…

Gambling is bad, but DFS—and its abundant revenue streams—is OK. Casinos are bad, but teams practicing in their shadows or receiving sponsorship dollars from them is OK. States’ efforts at legalized sports gambling are bad, but a state lottery patch on players’ training camp jerseys is OK. Teams investing in DFS companies is bad, but individual owners investing in DFS, or teams accepting advertising and sponsorship money from them, is OK.

• GENERATION DFS: How daily fantasy plays out on a college campus, and why administrators and parents are concerned about it

More Enlightened

I get it; the NFL wants to avoid the dark shadows of gambling. However, in doing so, the league risks alienation for the hypocrisy of allowing, encouraging and monetizing fantasy football. So what then? It is time, as NBA commissioner Adam Silver has said, to bring gambling into the light, to embrace it in an open and honest manner with a clear and articulate policy that accepts the realities of the present? Give the public some credit; we get it that some gambling is bad, but the days of hiding behind integrity with all things gambling are long gone.

Despite Goodell’s overarching presence in the area of player conduct, he has hired experienced lieutenants including former sex crimes prosecutor Lisa Friel and former Bureau of Alcohol, Tobacco and Firearms chief Todd Jones. He has also recently hired a Chief Medical Officer in Betsy Nabel. It is now time for the NFL to hire a credentialed leader (head count and money have never been an issue) to navigate this changing space. The NFL should hire a truly independent “gambling czar,” making it the first league to do so. Then, it will be the NFL—rather than the other leagues—that will look progressive and enlightened.

This is not your father’s fantasy football. Welcome to the future.

Brandt’s Week in Tweets

A new feature…

* * *

* * *

* * *

* * *


THE MMQB PODCAST: KLEMKO AND BENOIT ON WEEK 9