Cigar Aficionado

Everything being equal, Assani Fisher would much rather be in Las Vegas. But, like all professional gamblers, he follows the action. And, as of this past October 15, the world capital of wagering provides no action for anyone who makes a living betting on daily fantasy sports. Nevada's Gaming Control Board decided that unlicensed daily fantasy sports would be banned. With no sites licensed in the state, Fisher and others of his ilk fled Sin City for places that are less sinful but more accepting of what those vested in the fantasy world insist is a game of skill.

That's how Fisher wound up in a nicely appointed apartment in San Diego, near the beach and around the corner from Petco Park, home of the Padres. There are floor-to-ceiling windows, a snazzy kitchen and a terrace where 33-year-old Fisher repairs for hits of marijuana. Most importantly, though, there is cable, Wi-Fi, and a flat-screen TV hanging on the wall. These simple things are all that he needs. 

Before April 15, 2011, when online poker became illegal in the United States, Fisher made his living by playing cards. "I was the best heads-up pot-limit Omaha high/low player," he says. "Then, in September of 2014, I first played daily fantasy football. Once NBA came around, I started taking it real seriously. I ran an initial deposit of $600 up to $25,000, lost it all, and then ran it up again—past $500,000, past $750,000. A few days ago, I was a millionaire for like 24 hours."

Daily fantasy sports betting (DFS) is particularly well-suited for online poker players. It involves strategizing within a very specific framework, understanding statistics, reading between the lines, outsmarting opponents and finding the so-called fish. Unlike the season-long fantasy football leagues that so many people participate in with co-workers, friends and patrons of their local bar, DFS resolves itself each day or so. Participants receive 50,000 to 60,000 theoretical dollars and buy players at prices commensurate with their skill levels.

As the afternoon sun blazes outside his window, Fisher has his laptop open and his focus on the NBA roster. He's looking for outliers, players whose expected performances today have not been baked into their offering prices. He seeks value in much the same way that poker players do when contemplating whether to call or raise. "For example," he says, "I chose Isaiah Thomas because he's starting today and usually doesn't. Typically, Thomas comes off the bench to shoot. Because he's starting he'll be playing for more minutes than his price represents and he'll be doing lots of shooting throughout the game."

Over the course of this afternoon, Fisher will methodically select players for each of four slates of games on FanDuel and DraftKings. His decisions are guided by statistical information, matchups and breaking reports about games. It's a far cry from the approaches employed by casual competitors with day jobs who will simply select their favorite players. If Fisher's picks do better than those of the people he is betting against, Fisher will win money. He enters all the multiplayer tournaments he can get into and, with a few exceptions, will play one-on-one against anybody who's willing to take him on. Considering that he'll participate in some 2,500 events today, wagering sums of money that range from 25 cents to $10,000, his result can be meaningful. On his best day, Fisher says he won $170,000. His worst loss totaled close to $90,000. By the last tip-off of today, Fisher will have some $200,000 in play.

Assani Fisher is a lifelong lover of all things sport. But his preoccupation with fantasy—he bets everything from football to basketball to baseball to golf to NASCAR—has changed the way he watches games. His fan's perspective has been replaced with statistical analysis. "You don't care if a team wins," he says. "You care about a ball going to a guy. I can't root for my favorite team when I am rooting for myself to make money. It's actually made me into less of a sports fan. I grew up in Maryland, played college basketball and was a Washington Wizards fan. But now? I don't give a shit."

Anyone who fails to see Fisher's actions as gambling is delusional—or an employee of DraftKings.

Daily fantasy sports is a strange beast. In a nation where online poker is all but prohibited, where most sports bettors must wager illegally, where professional sports teams and leagues are vocal opponents of sports betting, daily fantasy sports seems to get a . At least until recently. While the Unlawful Internet Gambling Enforcement Act made online poker illegal almost five years ago, it also included a carve-out for fantasy sports as well as such enterprises as the lottery. It didn't declare that fantasy wasn't gambling—that notion comes from spokespeople at FanDuel and DraftKings, who emphasize the element of skill and downplay luck—just that it would be allowed. Of course, at that point, fantasy sports was a backwater enterprise where the action ran slow and steady.

Besides, back in 2011, the daily version of fantasy sports almost didn't exist. For the most part fantasy sports was a season-long activity. Those who played fantasy football chose players in August and spent the football season rooting on their cobbled-together teams, hoping for quarterbacks to throw touchdowns and for running backs to rush for lots of yardage. Commercial leagues existed and enough players made impressive livings from season-long fantasy that it was covered in the November 2010 issue of this magazine. At the time, it was low profile and on the fringe.

Far more obscure was the brainchild of Kevin Bonnett. The computer engineer had already had, in the words of journalist Bill Ordine, his "St. Paul moment," when he figured out that if you could bet fantasy sports for a season, you could also bet it for a day and achieve a lot more velocity. In 2007, Bonnett launched FantasySportsLive, but the site failed to capture the public's imagination. Two years later, according to Ordine, author of Fantasy Sports, Real Money, a Scotsman by the name of Nigel Eccles launched a website called Hubdub. It allowed people to predict outcomes in entertainment (which movie would win an Oscar), politics (who would win an election) and sports (which team would win a game).

Eccles was scheduled to do a presentation at the 2009 South by Southwest conference, a film, music and interactive media gathering. But he had nothing to present and decided to bluff by telling the audience about his latest innovation: a thing called FanDuel in which people could bet against each other on daily fantasy sports. Never mind that the thing did not yet really exist. "They wound up using a little bit of startup money to get FanDuel going," says Ordine. "Eccles went on round after round of venture-capital raising and managed to keep the lights on. Then, in 2012, three sharp kids from Boston launched DraftKings. Both sites took off and Kevin Bonnett goes down in history as the guy with the great idea who never cashed in."

As daily fantasy sports betting has captured the imagination of American gamblers, the powers that be in professional sports—franchise owners, league executives and broadcasters—began to recognize it as the perfect sticky for keeping fans engaged. They already knew that betting can draw fans into games, even when they aren't otherwise interested. But it also creates opportunities for corruption that sports executives are extremely uncomfortable with. After all, bribing a star quarterback to manage his offense so that his team wins by, say, fewer than seven points, could be worth millions. That temptation explains why professional sports teams don't make their homes in Las Vegas.

But DFS was different: it presented no downside and increased upside for the powers that be. Nobody could make money by bribing a single player and participants are even more engaged in the games than they would be with a straightforward wager. DFS fanatics watch blowouts until the bitter end, desperate to see how their players are doing and not really caring about the actual winner of the game. Fantasy sports, as Ordine puts it, "allows the leagues to have their cake and eat it too." No wonder then that major investors include Fox Sports, NBA, MLB, Madison Square Garden, and team owners Jerry Jones and Robert Kraft. Thirty out of the 32 NFL teams have advertising deals with the sites.

The teams justify this arrangement by putting traditional sports betting in one basket and fantasy sports in another. The NFL views sports betting as outcome-based (you bet on a particular team to beat another team) while fantasy is performance-based (money rides on how well particular players do, independent of their teams).

"The NFL sees a huge distinction, and now they have a horse in this race," says Ordine. "They understand the profit to be realized from the game within the game. But now the question centers around whether they will cut and run on daily fantasy or double down and say that the people arguing against it are wrong."

Until September 27, daily fantasy sports seemed to be tooling along with limitless open road in front of it. TV viewers were inundated with commercials that depicted nobodies striking it rich. Commentators discussed it on ESPN. DFS had permeated mainstream culture in much the same way that online poker had during the earlier part of this century. In fact, DraftKings was a chief sponsor of the World Series of Poker to the degree that a tournament was named for the fantasy site. Even people who did not participate in daily fantasy sports enjoyed talking about it. Then the other shoe dropped. It came out that Ethan Haskell, an employee of DraftKings, had early access to player lineups on September 27. That happens to be the day when he played in a tournament on competing site FanDuel (which is a fairly common practice since employees are not allowed to play on the sites for which they work) and took down the first prize of $350,000.

It's unclear whether or not Haskell had access to this information before his tournaments locked. But the perception—which is not helped by a widely circulated photo that shows him smirking and looking very cocky, wearing a backwards DraftKings baseball hat—is not good. Quickly, he became accused of insider trading (probably a misnomer) and politicians began stepping up and threatening to shut down the sites. An oft-quoted number pointed out that the top one percent of DFS players win 90 percent of the money. It's a compelling statistic but a skewed one. Those top participants play in hundreds of contests per day, so it makes sense for them to win the lion's share of money. That one percent of winners puts up 40 percent of the sites' entry fees.

But daily fantasy's detractors have been vocal. Joe Asher, CEO of the legal sports book William Hill USA, has called for regulation. A federal grand jury in Florida began investigating the industry. Eric Schneiderman, the attorney general for New York, has demanded that fantasy be shut down in the state. A temporary ruling was scheduled to be announced as Cigar Aficionado went to press. Lawmakers in Florida and Illinois are floating licensing bills with $500,000 entry fees. Payment processors in New York have stopped taking deposits and making payments-tantamount to cutting off the industry's lifeblood. In Massachusetts, there is talk of the lottery commission regulating DFS. Sports columnist Bill Simmons dismissed fantasy as something that only the sharpest players can beat and HBO's John Oliver did a devastatingly funny 19-minute-long takedown. His conclusion? "If you love gambling, you'll love DraftKings!" Football legend Joe Namath also chimed in succinctly: "Do they have to pay anything to play? And do they win something? It's gambling." More seriously, in the wake of the Haskell scandal, issues of consumer protection keep coming up. "Daily fantasy is at a turning point," says Chris Grove, editor of LegalSportsReport.com, a digital publication that covers the online gambling industry. "We are seeing the first test of the legal foundation that daily fantasy is built on. The early results of the test do not look promising."

Could this all be about the states and casinos wanting to get their monetary end of the business? After all, people have only so much money to gamble with. If they lose money at fantasy sports, they have less available for buying lottery tickets and wagering in casinos or at the track. "That's part of the conversation, but, really there is not much for the government to take," says Grove. "Right now none of the major sites are profitable. They are in a land-rush state, spending a lot of money on marketing in order to bring in players. And there are questions about the long-term viability of this industry. Unlike with an online casino, [fantasy players] cannot be in action all day and night. That presents a problem in of recouping revenue." Furthermore, he adds, the high-profile investments were not always what they sounded like: "The NBA didn't put up cash. It was basically a swap of status for being the official fantasy game of the NBA. DraftKings got $150 million from Fox Sports [for an 11 percent stake] but committed to purchasing $250 million in advertising. That's very aggressive and sounds like a pretty good deal for Fox Sports."

For all of the negative attention that has recently swirled around daily fantasy sports, players themselves seem unfazed. "From the beginning of the NFL season, the fantasy trajectory was going straight up," says David Copeland, CEO of SuperLobby.com, a company that aggregates DFS-related data. "After the scandal it kept going up... I don't think anyone has stopped playing because of what is going on [with Ethan Haskell]. Instead, maybe, they're not playing because their states won't allow it. The scandal was the big chance for handle to go down. But it didn't. It actually went up."

Back in San Diego, the day's NBA matches are in full swing and Assani Fisher is channel surfing between games, paying particular attention to the Houston Rockets as they play the Sacramento Kings. Fisher's fantasy picks are heavily weighted toward players on the Rockets. "I have them because of injuries," he says, illustrating the kind of thinking that goes into being a winning player. "The starting center is hurt, which means that his backup, Clint Capela, will be on the court a lot more than usual but the sites have him priced as a backup. The Rockets are also missing a backup point guard and a starting power forward. As a result, everybody will be expected to take more shots than usual."

The day shapes up to be less than great for Fisher. One pick, Rodney Stuckey, gets injured after scoring just 8.5 fantasy points. Anthony Davis, a player with a lot of promise, burned Fisher once (contributing to a loss of $70,000 in a single day) and has left him feeling a little gun-shy. So Fisher went light on Davis, who happens to be having the banner day that
everyone predicted. On one of his big bets, for $15,000, Fisher has three players in the Miami Heat v. Indiana Pacers game. With 6.8 seconds left to play, he trails his opponent by 4.6 points. The score of the game is 89-86. "I need overtime," says Fisher, explaining that it will allow his three players to log more fantasy points and potentially put him ahead. "That's the only way I can win. But the worst will be if it goes into OT and none of my guys score."

Fisher will not live out that misery. The game finishes on the regulation clock and his loss contributes to an overall beating that at one point looks as if it could be as much as $120,000. By day's end, worst-case scenarios aren't realized and Fisher drops only $87,000. "I had bad variance and a lot of things didn't go my way," he says with the stoicism of a professional poker player who's used to the brutal swings of his profession. "I lost as much as $75,000 to just one player who I usually beat." He repairs to the deck for a smoke. "This is just one day," he says. "I lose 40 percent of the time and know better than to sit here and feel sorry for myself."

A bigger, more looming concern centers on how much longer DFS will exist in its current form. Like Fisher, Max Steinberg is a former online poker pro who made the leap to DFS. He managed to win a seat for World Series of Poker Main Event by performing well in a tournament on DraftKings. He participated in the entire poker tournament patched-up with the DraftKings logo and played well enough to make the final table. But, in the wake of the Haskell debacle, DraftKings had pulled all of its WSOP advertising (including logos around the TV table) and asked Steinberg to play the last round without the patches. "DraftKings didn't want to be associated with gambling," Steinberg says, who believes that the industry has been a victim of its high profile. "I was a little surprised. They were being cautious but I don't think [gaining distance from poker] changes anything."

Steinberg can't love his timing: DraftKings was guaranteeing $10 million in their big tournaments at the start of the football season, now it's $6 million. "It's depressing that I keep getting good at things that the government shuts down," groans Steinberg. "In four years, it's been online poker and now, possibly, daily fantasy. I don't know how many people experience this kind of thing with their work."

The good news for Steinberg is that daily fantasy sports—unlike online poker—will probably not become completely moribund. Still signs indicate that its best, softest, most freewheeling days are ticking down. "On the one side you have a product ed by sports leagues, teams, and investors—with the potential to make a lot of money for everybody," says Chris Grove. "But on the other side, you have states asking questions about the legality of it all. If it does get regulated, there will be additional costs putting pressure on an already stretched business model."

How does Grove think it will all shake out? "Nobody can say for sure," he replies. "But I think we can all agree that, one year from today, daily fantasy sports will look dramatically different from what it is right now.

Michael Kaplan is a Cigar Aficionado contributing editor.