NCAA Bans TV Ads for Sports Fantasy Leagues from March Madness
4 Nov, 2015By: Mary Helen Sprecher
Lawsuits, Investigations Also Show Daily Fantasty League Industry is Under Fire from Legislators, Players
When next March’s big NCAA Men’s Basketball Tournament airs on CBS and Turner Broadcasting cable networks, don’t expect to see the barrage of ads for sports fantasy leagues that have dominated the NFL broadcasts this season.
The NCAA has banned all sponsorship and advertising activity in televised college sports championships for DraftKings and FanDuel. It also will not display advertising from the two groups on its site.
And while it isn’t intended to stop anyone from making a bracket, it does make a point.
According to an article in MediaPost, the NCAA wrote a letter to DraftKings and FanDuel, stating, “As we have communicated to you previously, since your games meet the definition of sports wagering within our bylaws, the NCAA will not allow advertising of your products in connection with NCAA championships, including television broadcasts.”
NCAA also added that advertising activity is “inconsistent with our values, bylaws, rules and interpretations regarding sports wagering” and could violate “various state laws.”
The letter also asked DraftKings and FanDuel to stop offering fantasy contests based on college sports. It is unclear whether they will do so.
The IndyStar noted that Mark Lewis, the NCAA’s executive vice president of championships, has said the NCAA is informing referees and other game officials that they are prohibited from participating in paid fantasy sports games.
The question of whether or not fantasy sports constitute gambling has long been discussed, with well-stocked populations of proponents and opponents. The NCAA has obviously decided that it does, in fact, constitute gambling. In the pro arena, it seems to be a gray area. NHL, NBA, MLB and NFL officials say there is no conflict of interest for them, and that fantasy sports leagues do not conflict with their philosophies.
The lack of advertising on NCAA platforms, however, is only one salvo of many to hit the industry, according to an article in The Washington Post. Late last week, the Washington Redskins' Pierre Garcon sued FanDuel on behalf of all players for using his name and likeness without his permission.
In September, Rep. Frank Pallone (D-N.J.) requested a congressional hearing to examine whether the contests constitute gambling. The FBI launched a criminal probe into accusations that DraftKings and FanDuel employees won money by benefiting from private information shared between employees of the rival companies.
Across the country, states have held hearings and proposed legislation to label the contests gambling. Nevada recently joined five other states in outlawing the daily games. The fact that NFL players are now objecting to the leagues is a significant development, since the athletes themselves are the reason the daily leagues, and all their online profits, exist.
“This is a major development in a growing scandal,” said McLean, Virginia-based lawyer Seth Berenzweig, who specializes in sports and business. “And it’s not a case that’s going to be going away anytime soon.”
And no matter how you look at it, fantasy sports have moved into the realm of being their own industry. In fact, notes an article in the online Pittsburgh Tribune Review, Draft Kings, which was projected to give away $1 billion in prizes in 2015, last year signed a three-year deal with ESPN, owned with ABC by Disney. FanDuel already has a presence with the NBA, having signed a four-year deal with the league last November.
The Washington Post article also noted that daily fantasy’s popularity skyrocketed late last year, and a flood of venture capital investment triggered an advertising blitz this fall as the NFL season began. Sensing an opportunity for profit and fan engagement, professional leagues jumped aboard. Major League Baseball has equity stake in DraftKings, and the National Basketball Association owns part of FanDuel. Almost every major professional sports team has a sponsorship deal with one of the companies.
According to the Fantasy Sports Trade Association, Americans spend about $15 billion annually on fantasy sports. Most of that -- $11 billion -- is spent on the NFL. To put that in perspective, the NFL's annual revenue is about $10 billion, according to Forbes. Popular pay-to-play sites take a cut of every payout; in 2010, FanDuel’s CEO said it was about $35 per player each month.
For many, though (***coughcough employers! coughcough***), fantasy sports aren’t objectionable because of the gambling, assuming the person is of age to participate; they are a problem because they waste time.
Forbes noted that the Chicago-based firm, Challenger, Gray & Christmas, which helps with company restructuring, downsizing and executive departures, attempted to do the math on how much time it costs to draft a team and keep up with individual stats:
According to the study by Challenger, an estimated 18.3 million employees played, for example, fantasy football on the job for two hours each week. The firm then multiplied that by the Bureau of Labor Statistic’s $24.45 hourly wage average. The result: $895 million lost each week.
Of course, Jack Shafer, Slate’s editor at large, believes that these figures are all “bogus” because people would be slacking off anyway —taking extended coffee runs to Starbucks, trolling the Internet, looking at social media and more. Also, John Challenger, CEO of Challenger, said that banning fantasy sports causes a decreases in moral, productivity and employee retention.