Daily fantasy sports sites under review in Michigan

Chad Livengood
Detroit News Lansing Bureau
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  • The rapid rise of daily fantasy sports websites has caught eye of gambling regulators in Michigan
  • Enforcement of Michigan’s criminal gambling laws rests with the state Attorney General’s Office
  • State Sen. Curtis Hertel has introduced legislation to decriminalize fantasy sports wagering
  • A Michigan daily fantasy sports site player would like to see government regulation of the websites

After more than a decade of making casual wagers on fantasy football teams with friends, Bret Cobus stepped it up a notch this fall by placing bets on the popular DraftKings daily fantasy sports website.

“I don’t know how it’s not considered gambling. It’s easy to get addicted to,” said Cobus, 27, of Sterling Heights. “Money can go as fast as if you’re sitting down at a casino.”

The rapid rise of daily fantasy sports websites such as DraftKings.com and FanDuel.com, offering large cash prizes to players who pick professional athletes who perform the best in games, has caught the eye of gambling regulators in Michigan and across the country.

Officials at the Michigan Gaming Control Board are studying whether the websites violate state laws that prohibit gambling outside of licensed casinos, horse tracks and charity gaming events.

“Any gambling not specifically authorized is an issue,” said Richard Kalm, executive director of the gaming control board.

“We’re trying to make a determination if, in fact, it’s gambling in the purest sense, and I think it’s pretty close to that.”

“Right now, there’s no legalized form of Internet gambling in Michigan.”

New York Attorney General Eric Schneiderman is seeking an injunction to shut down the two websites — or at least prohibit them from accepting entry fees from residents of his state.

The two sites are banned in six states, according to the Legal Sports Report.

Michigan Attorney General Bill Schuette has not weighed in on whether he thinks the plethora of fantasy sports websites are legal.

“Because of our mission, we cannot offer general legal advice or answer hypotheticals about legal situations, so we have no comment on fantasy sports,” Schuette spokeswoman Andrea Bitely said in an email.

“I will say the Attorney General’s Office devotes its limited resources to priorities like violent crime, consumer protection, and victims’ rights.”

Enforcement of Michigan’s criminal gambling laws rests with Schuette’s office, Kalm said.

“I know they’re looking at that,” Kalm said of the Attorney General’s Office.

‘Gray area of the law’

The legal uncertainty of fantasy sports wagering prompted state Sen. Curtis Hertel Jr. to introduce legislation to decriminalize the games.

“If it’s not defined as a game of skill and not specifically mentioned in the code, it is therefore gambling and illegal,” said Hertel, D-East Lansing. “It’s a very gray area of the law.”

The gaming control board is looking for guidance from the Legislature, Kalm said.

“If it’s not authorized, we’re kind of handcuffed to do any kind of consumer protection or demand any information until the Legislature decides what it wants to do,” he said.

Before FanDuel came on the scene under a different name in 2009 and DraftKings in 2012, sports fans played fantasy games on the websites of Yahoo, CBS Sports and ESPN. Outside of the sites, where statistics are kept and roster changes as well as other team moves are done, fans made under-the-table wagers among friends for season-long contests.

Yahoo recently made the payments among friends easier to process digitally by allowing users to deposit money into their “Fantasy Wallet,” using the online purchasing service PayPal.

Hertel said he has played online fantasy sports for 15 years, often wagering about $50 on a lineup of players from different teams.

“It’s good, clean fun,” Hertel said. “People aren’t gambling their house away playing fantasy football.”

Southgate man quits job

Some people are, however, making large sums of cash playing fantasy sports.

Jason Lauterbach, 36, of Southgate said over the summer he quit his job as a teacher and athletics director at a charter school in Detroit to pursue a full-time career playing daily fantasy sports games.

Lauterbach said he had been betting off and on for several years on FanDuel and “took some lumps.” Then he devised a system of tracking player injuries, statistics and other factors that can be useful intelligence when picking a lineup of athletes with money on the line.

Over a three-day period in June, Lauterbach said he raked in $200,000 in winnings from fantasy sports tournaments.

“I’m a realist,” he said. “I know any time you put up money to win a prize or game money, it’s a form of gambling.”

Lauterbach works from a home office all day, studying players and building multiple lineups for daily contests on DraftKings.

His only complaint with the fantasy sports websites is some players have developed computer programs allowing them to create hundreds of teams each day, increasing their chances of scoring a big cash prize.

“It’s very hard for those people to compete with the people who are making 100 or 200 entries,” Lauterbach said.

He said has he resisted using computers, but the computer program trend forces him sometimes to create 80 to 90 daily baseball line-ups.

“That is only to keep up with the Joneses,” Lauterbach said. “It’s just my personal preference that I hand-touch every lineup.”

The former teacher said he’d like to see government regulation limit the use of computers and set a maximum daily entry limit of 10 teams for each user.

Cobus, who works in building security, said he is convinced the only way to win big on DraftKings is to keep playing more often.

“The more entries, the better your odds,” Cobus said. “It’s almost like the Lotto.”

Tribes’ reaction an issue

Hertel said there would be “a pretty large public outcry” if fantasy sports websites were ruled illegal gambling operations and forced to shut down in the absence of a state law permitting them.

“I’m in the playoff hunt in all three of my leagues,” Hertel said. “I think we should move these bills quickly, get them to the governor’s desk and make sure the people are protected.”

Hertel’s legislation has been assigned to the Senate Judiciary Committee.

Sen. Rick Jones, the Grand Ledge Republican who chairs the committee, said he won’t act on the bills until Hertel gets assurances that legalizing online fantasy sports gambling won’t upset Native-American tribes.

Earlier this year, the tribe that operates the Gun Lake Casino in Allegan County suspended its $7 million payments to the state after Gov. Rick Snyder’s administration introduced Internet lottery sales using the existing lottery law.

The loss of revenue was blamed partly on the layoff of 65 employees at the Michigan Economic Development Corp., which is partially funded by payments the 23 federally governed tribal casinos make to the state in lieu of paying taxes.

“I’m not taking the bill until I can be assured that we’re not going to have more problems with the casino compacts,” Jones said. “I don’t like the fact the MEDC got handcuffed by this situation.”

clivengood@detroitnews.com

(517) 371-3660

Twitter.com/ChadLivengood

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