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Bull Session

Fantasy Sports and Big Data

November 5, 2015          

Episode Summary

This week on The Digital Life we chat about fantasy sports, big data, and the user experience.

It’s an interesting time for fantasy sports, to say the least. With 57 million players in the US and Canada, the industry is seeing booming growth. However, both the Justice Department and the FBI are investigating two of its biggest players, FanDuel and DraftKings. In particular, the Justice Department is looking at whether fantasy sports fall outside of a Federal prohibition on Internet gambling, the Unlawful Internet Gambling Enforcement Act of 2006, which outlawed online poker and sports betting. Is it a game of skill or gambling, pure and simple?

And, on the digital side, we ask, what are the implications for fantasy sports, when your big data product is derived from the activities of athletes whose personal licensing is, at least for the time being, entirely controlled by larger interests, the sports leagues and players associations themselves?

Resources
DraftKings
FanDuel
Betting on the Fantasy World
Pierre Garcon files lawsuit against FanDuel on behalf of NFL players
Michael Jordan, Mark Cuban, Ted Leonsis Betting $44 Million on Sportradar’s Data

Jon:
Welcome to episode 128 of The Digital Life, the show about our adventures in the world of design and technology. I’m your host Jon Follett and with me is founder and co-host Dirk Knemeyer.

Dirk:
Greetings and salutations, Jon.

Jon:
For our topic this week, Dirk, I think I’d like to chat about fantasy sports, big data, and the user experience that goes along with that virtual entertainment that’s really tethered to real life events. It’s an interesting time for that industry, to say the least. The daily fantasy sports market has been shaken up a little bit because both FanDuel and Draft Kings are getting investigated. The Justice Department is looking at whether or not they are actually gambling sites or if this is the “game of skill” that the sites say that they are. They’ve got millions and millions of players. There’s millions of dollars at stake. The industry is just getting off the ground but everybody’s saying, “Hey, this is really gambling.”

Dirk, I know you did some fantasy football leagues and have a lot of experience with sports data on the soccer side. What’s your perspective on this today?

Dirk:
I think it’s a mess. You’ve got poker, which people say is gambling and you can’t bet real money online playing poker. You’ve got horse racing and you can place horse bets online that are okay. But then you have these sites, the daily fantasy sports sites that were okay and now they’re coming under the magnifying glass of gambling. I mean, it all, unfortunately like everything in American politics, it all comes down to relationships and people with agendas. One thing is going to be called illegal and under a certain classification while another thing is not just based on advocacy, just based things other than sort of an objective attempt at a truthful look at what things are.

Are daily fantasy sports gambling? Yes. Are they also skill-based? Yes. Both things are true. Instead, those things are used in sort of an oppositional way to figure out what the legal … Legally should people be allowed to do it or not allowed to do it? Those things are just manipulated and twisted based on the agendas of the people involved. I find the whole thing odorous.

Jon:
I’ve seen the daily fantasy footballs games likened to day trading, which in and of itself has fundamentals for all the stocks that you’re trading but in essence you are also gambling because you’re placing a bet as to whether that stock is going to rise or fall in the next 12 hours or so, or whatever that day trade, wherever that takes you. It does sort of have both of those elements to it. From that perspective, day trading is perfectly legal and you are surfing on this data wave depending how well you can analyze it determines, at least in part, how well you do.

In a similar way, the amount of data being generated for these fantasy sports is nothing short of astounding. I think there might be as much in the big data as there is in the gambling sites themselves.

Dirk:
I mean, before we, and I think big data’s an interesting part of it, but going back to some of your comments on day trading, I think that’s a great example to use. A friend of mine, he is a professional player of these daily fantasy sports things. He’s also a business owner. His business makes him an amount of money but is play of daily fantasy sports makes him more money. Most of life is running his business but what he said is the key to winning the daily fantasy sports … He plays basketball specifically for reasons I think are too granular to go into, but he thinks the opportunity to make money is in basketball. He plays basketball, despite not really caring about basketball, which is also very common in these situations.

Jon:
Interesting.

Dirk:
What he identified is he said, “The only thing that matters is,” and I’ll get the detail wrong so this is my bad memory but he said, “At this time everyday the final injury reports come out and I’ve got to make sure that I’m doing nothing but focusing on this around that moment, because I’ll win or lose based on how I arbitrage guys who are injured by surprise or guys who are healthy by surprise.” The success and failure, at the end of the day, in his opinion, a really wicked bright guy, it is … He just has to pay attention during that small window, there’s work at other times, but he’ll win or lose based on taking advantage of market inefficiencies around whether people are playing or not and what their physical condition is.

Very similar to day trading. It’s based around a schedule, it’s based around a clock. You have events such as here’s the quarterly meeting, where they’re talking about profits and losses. Making really smart decisions around those moments is how you’re making your money in day trading. It’s very event-based and very similar to this.

Jon:
We’ve seen the movies where it’s every day traders to fantasy to start with basically pocket change and turn that into millions of dollars. I think the movie Limitless featured this guy who could access all his brain … Right, that makes you a super genius if you can access your entire brain at once. Turned a micro amount of money into a fortune. That is the … That fantasy as we describe it there really is the part of the attraction for players who want to live out that fantasy. I can tell you for me that’s attractive as well. Although, I’m perhaps more attracted to the market than I am to fantasy sports. It’s interesting to see this overlay of risk-taking, which in some ways is very much tied to …

It may not be specific to the US, but it’s very much part of the American dream which is you can use your smarts and your guts to do better than everybody else because you’re smarter and braver and are willing to stick your nose out. Daily fantasy sports betting or sports and day trading fall into that category. The risk-taking, the seeking monetary reward in a very get rich quick kind of scenario. I wonder if America has a particular affliction where fantasy sports is part and parcel of something in our culture that we want to live out.

Dirk:
We’re certainly taught that we will have the opportunity to be successful from the time we’re very little; in the country and then for people all around the world who aren’t in the country, this is the land of opportunity and place where you go for success. Traditionally, historically, where that developed from was from people who risked life and limb to take a journey that put their very existence at risk and then required them to brave an undiscovered country. To brave a situation that they were going into that was very dangerous.

Initially dangerous because you literally had native cultures and people who weren’t necessarily happy to see you there as well nature and wildlife and unsettled things, and later became dangerous because you were a later immigrant who was seen as a negative by the people who were already there and had made their way. Your path to success took a great deal of effort and fortitude and risk and courage. Gambling paths to success, these are easy paths. It’s tapping into the same vein of the land of opportunity but in what I consider a very perverted or distorted way. It’s trying to get to it in a lazy way.

Jon:
I want to shift focus now a little bit to the player perspective on this, meaning the actual sports player perspective and talk a little about the data that is coming from these players who are essentially earning their living in a very short amount of time on the field. At this point, pretty much all of their actions are being tracked. I don’t know how the NFL in particular is doing that, but their speed, the nature of their plays, all these next generation statistics are being now piped into a million homes via instantaneous data feeds. In some ways it must be very flattering to be this … Sort of at the core of the nation’s Sunday entertainment. But in another way, we’re taking this player output and creating this huge virtual economy with it and Lord knows I’m not sure how much the players are being compensated for that.

It’s almost as if the virtual ghost of their actions is being monetized in ways that I’m sure they could never imagine. On one hand you have the “gladiator” type worship, where saying these guys are sort of the pinnacle of physical fitness and skill and we watch them every Sunday. On the other hand you’ve got all of their data, which is in some ways being abused. It should almost be licensed if you want these players’ data as part of your team, but I’m sure it will take a little bit of time to get there. It’s just this difference between the virtual and physical realms. What’s your take on that, Dirk?

Dirk:
I mean, the players are not, as you implied, the players are not directly compensated. Their compensation that they receive is through an organization called the NFL Player’s Association and it’s specific of football. It’s pretty meager. It’s pretty … If you think about it philosophically, who owns the data? Who owns the observational representation of my effort in the world? I would think I have some stake in that, but it’s not set up, it’s not set up to do so. The way that athletes typically will monetize something like this is they become spokespeople. They see a fantasy sports thing or outlet that they like or they’re approached by and they sign the contract for N million dollars or hundreds of thousands dollars depending on the scale of the operation, whatever that might be. To be the spokesperson, to have a big picture of them crossing their arms and smiling on the front page of the website or something of that nature.

I think there’s a lot of philosophical around big data in general and social questions around the exploitation of athletes. Athletes tend to come from lower socio-economic classes, athletes tend to be disproportionate minorities, particularly African American, which is a community that has been oppressed and mistreated in our society ever since they were first dragged here in chains, basically. Under the surface of this are a lot of sticky questions about whose effort is being taken from. Who’s profiting from it? How are the different actors being exploited? It’s so naughty.

Jon:
I think that there’s this virtual world that is really being staked out piece by piece and it’s not all that clear where the ownership is, where the money’s going to be coming from, who owns the different pieces of it. As we build this virtual world one piece at a time, I feel like the laborer gets left out in a lot of scenarios where their work, rather than being licensed, is sort of sucked up into this great data cloud and distributed maybe with their tacit consent but not really their complete sign-off. We see this happening in the musical world as well. There’s Taylor Swift, for instance, telling Apple that, “Hey, you need to pay us for any time you use our music, not just when you feel like it.” Apple eventually giving in and saying, “Yeah, well if we offer a free three month subscription to Apple Music we’re still going to pay the guys whose songs are being streamed via that service.” There’s all sorts of very peculiar behavior around data, which is driven by business advantage clearly.

I can say that as we create these data worlds we really need to be careful about not replicating the sort of ferocious Wild West capitalism that we certainly saw at the turn of the last century here. I feel like we’re stepping in the same kind of holes again, making the same kinds of mistakes and we really need to pay more attention to that.

Dirk:
There’s some other technology trends that really go right into that as well. The evolution of robotics and artificial intelligence, increasingly, those can take up human jobs. They can replace humans. While in the past, technologies have obsoleted certain jobs, other jobs have come to replace it, the technology’s moving so quickly and congealing in such a amazing way around explicitly robotics and artificial intelligence. The point is in the near future where machines could be created to result in the inevitable increased unemployment of our society. The question is will that happen and if it does happen will that be used to uplift and enrich the common person by turning that lack of employment into something that is more holistically valuable for them, or will it be used to oppress them by pushing them into the same broken unemployment system that we have today or something similar. I think the jury’s very much still out on that and, as usual, it will be the people, or billionaires, who will make those calls. We can only hope the calls they make are the more humane ones.

Jon:
Listeners, remember that, while you’re listening to the show, you can follow along with the things that we’re mentioning here in real time. Just head over to thedigitalife.com, that’s just one “L” in the digital life, and go to the page for this episode. We’ve included links to pretty much everything mentioned by everybody, so it’s a rich information resource to take advantage of while you’re listening or afterward if you’re trying to remember something that you liked. If you want to follow us outside the show, you can follow me on Twitter @jonfollett. That’s J-O-N F-O-L-L-E-T-T. Of course the whole show is brought to you by Involution Studios, which you check out at goinvo.com. That’s G-O-I-N-V-O.com. Dirk?

Dirk:
You can follow me on Twitter @dknemeyer. That’s @D-K-N-E-M-E-Y-E-R or e-mail me, dirk@goinvo.com.

Jon:
That’s it for episode 128 of The Digital Life. For Dirk Knemeyer, I’m Jon Follett and we’ll see you next time.

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