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An ad blitz for fantasy sports games, but some see plain old gambling

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The average amount of actual game action over the course of a three-hour broadcast of an NFL game is about 11 minutes. Fans watching the first week of this season’s games might have been struck by how much of the rest of the broadcast was filled by advertisements for the hottest product in the sports industry: daily fantasy sports games.

The two biggest players, DraftKings and FanDuel, have unleashed ferocious promotional campaigns in recent weeks, costing millions of dollars, in hopes of gaining supremacy in a surging pastime that, so far, stands on the permissible side of sports gambling.

So high are the potential financial rewards that the companies have found the NFL, normally a staunch opponent of sports betting, to be an eager partner. This week, DraftKings.com announced wide-ranging sponsorships with 12 NFL teams, matching the efforts of its fiercest competitor, FanDuel.com, which already had deals with 16 of the league’s 32 teams.

Both companies are valued at more than $1 billion and together spent more than $27 million for more than 8,000 television spots in the opening week of the NFL season, according to data from iSpot.tv, which measures national TV ads.

Officially, executives at the NFL have a long-held position against sports gambling and have kept a distance from the daily fantasy sites, even preventing Dallas Cowboys quarterback Tony Romo and other current players from participating in a fantasy-sports convention this summer at a casino in Las Vegas.

The league leadership, however, has done nothing to stop individual teams from diving in, and two powerful NFL owners — Jerry Jones of the Cowboys and Robert K. Kraft of the New England Patriots — have stakes in DraftKings.

There are two kinds of fantasy leagues, both operating under an exemption to a 2006 federal law that outlawed games like online poker but permitted fantasy play under lobbying from professional sports leagues. The games are legal in all but five states.

Season-long fantasy games, in which fans pick players and track them over an entire year, have passed muster with the NFL because they were usually set up among friends who administered their own prize money, much like an office pool.

But daily fantasy games may be pushing the boundaries of the exemption. Fans pay an entry fee to a website — anywhere from 25 cents to $1,000 — to assemble rosters of real football players, with multimillion-dollar prize pools that can pay $2 million to the winner.

FanDuel says it pays out $75 million a week and $2 billion in a year.

Daily fantasy games, with their promise of big payouts — some commercials show fans accepting million-dollar checks — have led critics to call it de facto gambling and the NFL’s stance hypocritical. The avalanche of advertisements this week also drew scrutiny from lawmakers.

On Monday, Rep. Frank Pallone Jr., D-N.J., asked Congress to investigate whether the sites have evaded restrictions on online gambling. Last month, a federal appeals court held, in a two-to-one decision, that New Jersey’s efforts to allow its casinos and racetracks to take bets violated the federal Professional and Amateur Sports Protection Act, or PASPA, which was passed in 1992.

"Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the NFL season," Pallone said in a statement. "These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result. Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed."

Lawmakers looking to raise revenue have been examining online gaming and sports wagering as a potential source.

Most of the daily fantasy money has come from an enormous amount of investment by some of the biggest hedge funds and media companies, including some that broadcast NFL games. FanDuel, the market leader, has raised hundreds of millions of dollars from investors like Comcast, NBC and KKR, among others. DraftKings has tapped similar amounts from Fox Sports and several investment funds. Yahoo is going at it with its vast reach and ability to entice tens of millions of young men, a coveted audience, to bet on the performance of their favorite players.

Media companies envision a day when sports betting is legal nationally and they can provide its online home.

The daily fantasy sports sites have been around since 2009, with the NBA and Major League Baseball early proponents and investors. The NFL, however, has moved slower: It has not prohibited teams from striking sponsorship deals with daily fantasy companies, but they cannot use club logos or the NFL shield in any advertisements.

"The marketplace is in its infancy and we’re continuing to study it," said Brian McCarthy, a spokesman for the NFL.

But the NFL has long embraced season-long fantasy football games because they help fans stay engaged in games they might not otherwise follow. On NFL.com, the league has a section devoted to this kind of fantasy sports, including player rankings, expert analysis, weekly "pick ’em" games and a fantasy "master class." The site is free.

Several teams have gotten in on the daily fantasy action.

The Patriots, whose owners, the Kraft family, were early investors in DraftKings, have built the DraftKings Fantasy Sports Zone in Gillette Stadium, the team’s home in Foxborough, Massachusetts. The lounge on the main concourse looks like a Nevada sportsbook with its high-tech sports bar and 37 high-definition televisions tuned to out-of-town games so fans can track their fantasy teams.

The Jacksonville Jaguars have taken the concept further in their alliance with FanDuel. This season at EverBank Field, the team opened FanDuelVille, a space where up to 3,000 fans can watch games, check fantasy football statistics, sip signature cocktails and dance to music spun by a DJ. Fans can win "premium hospitality experiences" and be voted "the mayor of FanDuelVille," which entitles them to use one of the spa cabanas at the stadium. At the end of each Jaguars home game, FanDuelVille is turned into the FanDuel 5th Quarter, a postgame party.

"As I see it, fantasy sports didn’t have its version of Las Vegas, its ultimate destination, until FanDuelVille" opened Sunday during the Jaguars’ first home game, said Shad Khan, the owner of the team. "Fantasy football is a huge part of how fans enjoy the NFL, and that’s not going to change. And they want that experience at the stadium. In Jacksonville, we’re answering the call." This daily fantasy gold rush has helped teams draw fans when they are struggling at the box office, and it has had an immediate impact on the cultural landscape at a time when the appetite for sports wagering is at a peak.

Beyond the commercials and continuous scroll of updated statistics for individual players during broadcasts of game, ESPN — which has an exclusive marketing deal with DraftKings — has added programming directed at fantasy players. Its personalities promote the games and their lineups on social media, and the network’s senior fantasy analyst, Matthew Berry, has appeared in DraftKings advertising.

For the most part, casinos have stayed on the sideline, unwilling to risk billions in revenues that come with their highly regulated casino resorts. The American Gaming Association, which represents the industry, has set up a task force to tap into the market, but it remains uncomfortable with its legality.

"Many of our members would like to leverage their brands and years of gaming expertise to provide this product to their customers," said Geoff Freeman, president and chief executive of the American Gaming Association: "But the current lack of legal clarity is an obstacle."

Johnny Avello, director of the sportsbook at Wynn Las Vegas, says he does not understand how putting together a roster is any more skillful than betting on games outright. In fact, for the first time, Wynn is offering a proposition wager in which he handpicks two fantasy rosters each week and allows bettors to pick which one will win.

"I’ve been in this business all my life, and when you put up money on an event and you get a return on whatever the outcome of that event, it — to me — that is gambling," Avello said. "There’s money changing hands."

Trade groups for fantasy and organized gambling often dispute the semantics.

With 57 million people in the United States and Canada participating in fantasy sports this year, according to research conducted by Ipsos, the Fantasy Sports Trade Association and its members have been careful not to use the word "gambling."

"These are skill-based games that match sports fans against each other in a contest of sports knowledge and strategy that is fundamentally different from wagering on the performance of an individual player or the outcome of a particular game," said Peter Schoenke, chairman of the Fantasy Sports Trade Association.

But when DraftKings, for example, wanted to expand its business into England, it had to apply to the United Kingdom’s gambling commission for a license, which was granted last month.

New Jersey’s three-year battle to expand gambling to sports events has been followed closely by lawmakers across the nation who see legalized sports betting as an opportunity to shore up sagging state budgets. Among its fiercest opponents are the national sports organizations that have argued that expanded sports wagering would compromise the integrity of their games. This wish to have it both ways is not lost on Pallone.

"Team involvement in daily fantasy sports also raises questions of whether players or league personnel, who may be able to affect the outcome of a game, should be allowed to participate in daily fantasy sports," he said in a letter to the House Energy and Commerce Committee, asking for hearings. "Given the professional sports leagues professional players (sic) deep involvement with fantasy sports, this Committee, as the committee with jurisdiction over professional sports and gambling, should examine the relationship between fantasy sports and gambling and the relationships between professional sports leagues, teams, players and fantasy sports operators."

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