18 November 2015
Gambling is fun!
In my pursuit to find a suitable topic for this blog post, I may have gotten a bit side side-tracked and started watching “Last Week Tonight” with John Oliver instead. Among the more recent topics was a piece on “Daily Fantasy Sports”.
To join in you have to pay, though there are potential monetary benefits should you beat your opponents. Like the video argues, this sounds a bit like gambling, which is not necessary wrong – gambling is fun! However, not being labelled as gambling provides them with more freedom, both in terms of operating within the market and in terms of how they are allowed to advertise themselves. Hence they have an advantage against other firms operating within the gambling sector.
In this particular piece it is also mentioned that “Daily Fantasy Sports” supporters had staged a protest in support of the game and that they called it a “skill based game”. “Last Week Tonight” also claimed that many of these were employees at one of these fantasy sports companies. To certain extent it may very well be a “skill based game”, however then so is poker and it wouldn't exactly be a radical step to say poker is gambling.
What I would like to take from this is how the case of “Daily Fantasy Sports” is an example of public choice theory and rent seeking. It is a display of a particular gambling “sector” which is attempting to protect and maintain a legal framework which benefits them by providing certain advantages relative to other forms of gambling and a situation in which it is the government's fault for favouring this particular form of gambling.
Bottom Line: Rent-seeking firms will take advantage of government failure to make profits.
* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.