There are investigations going on all over the country. You cant have unregulated gambling without running into problems. Bogdanich how much do you estimate you lost . Between 60,000 and 65,000. Narrator tonight on frontline, the Fantasy Sports gamble. Bogdanich so you dont view what you do here as gambling. No. Frontlinis made possible by contributions to your pbs station from viewers like you. Thank you. And by the corporation for public broadcasting. Major support for frontliis provided by the john d. And catherine t. Macarthur foundation, committed to building a more just, verdant and peaceful world. More information is available at macfound. Org. Additional support is provided by the park foundation, dedicated to heightening Public Awareness of critical issues. The john and Helen Glessner family trust, supporting trustworthy journalism that informs and inspires. The ford foundation, working with visionaries on the front lines of social change worldwide, at fordfoundation. Org. The wyncote foundation. And by the frontline journalism fund, with major support from jon and jo ann hagler, and Additional Support from Laura Debonis and chris and lisa kaneb. baseball commentary playing i found out about fanduel when i was in high school. I had played fantasy football for years and whatnot. I never played daily fantasy. Now i play probably 450, 500 different games a day. A typical morning, its pretty much just me hanging out, poring over baseball stats. Ill spend between four and five hours a day on it. So after that, im just hanging out doing whatever, just living life as a normal College Student as best i can. Narrator we met bryce mauro on the last day of his junior year at indianas depauw university. Hes one of the nations best players on fanduel, a popular daily Fantasy Sports site. There are many ways to play, but basically, you create your own fantasy team made of real professional players, and earn points based on how they do in reallife games that day. Fantasy sports has been around for decades, but not like this. I wagered about 12,000 this morning. Walt bogdanich thats a lot of money. Yeah, it is. Bogdanich you confident . Im very confident. I wouldnt be wagering money on this scale if i wasnt very confident in my abilities. I mean, i lost about 18,000 last night, so it offsets it. It fluctuates. Ive made hundreds of thousands of dollars doing this over the past almost two years now. You can see all the games and whatnot. Ive played 249 games. Narrator on this day, bryce won 11,000 on the afternoon baseball games. The guy has bases loaded, i got the guy that plays as a leadoff hitter. Narrator that night, he lost 6,000. Over the past year, with reporters from the New York Times, weve been investigating what was behind the explosion in daily Fantasy Sports and the wider world of Online Sports betting, which is illegal in most of the country. Daily Fantasy Sports doesnt consider itself gambling, and had been booming. Fantasy sports was traditionally a seasonlong contest that was something common among coworkers, friends, and family. Narrator for years, players would gather at the beginning of the season, assemble their teams and compete against each other. In the seasonlong contests, sometime you have to wait three months, four months. Youre devoting hours upon hours a week, and you have to wait until the end of the season to find out who won. Narrator then the internet came along. Today, you can play thousands of opponents at once. And rather than months, you get results right away. The gratification doesnt get any more instant than in daily Fantasy Sports. You have an outcome every single day. And if you dont like your lineup today and you lost, you get to start over again tomorrow. Bogdanich Fantasy Sports used to be seasonal. Now its being offered on a daily basis. Who came up with that idea . I never want to claim credit for anything that, you know, im sure many people will claim credit for. Clearly, we were one of the first out there. Fantasy was a market that was stagnant. Bogdanich and fanduel played a big role in changing that. Exactly. Bogdanich and how did that happen . Despite fantasy being a large market, the younger sports fans werent engaging with fantasy. And so the insight was, what if we take these mechanics around research and picking players and competing with your friends and put it in a format thats geared towards a very hard toreach but very important demographic of kind of millennial 18 to 35yearolds. Lets make it mobile first, lets make it faster, and see how that goes. Narrator with that, a new industry was born. Soon, dozens of Companies Began offering daily fantasy games, most making their money by taking a cut of the players bets. Fanduel and its main rival, draftkings, are the biggest names in the business, with about 90 of the market. Both are now valued at over a billion dollars. We have several million paid players, and thats growing every day. So right now, were signing up, you know, 20,000 to 30,000 players every day. Bogdanich 20,000 to 30,000 every day . Yep. Bogdanich what percentage of your daily fantasy players would you say are under the age of 30 . Probably about 50 to 60 are under the age of 30. Narrator its a demographic that appealed to venture capitalists and private equity firms. Theyve pumped hundreds of millions of dollars into the industry. Tv networks wanted that audience as well. Full disclosure, 21st century fox, our Parent Company, owns roughly an 11 stake in draftkings. We should note Nbc Sports Group and nbcs Parent Company comcast are among the investors in fanduel. Espn has an exclusive twoyear Marketing Agreement with draftkings worth a reported 250 million. Narrator maybe the most surprising support came from professional sports leagues and teams. Theyve long opposed sports gam, which is illegal in most of they saying it fosters corruption. The sports leagues have always been of the view that sports gambling will lead to match fixing. And even if it doesnt lead to match fixing, it will create a negative perception in the minds of fans that the games are not on the level. Narrator but that didnt discourage them from embracing daily Fantasy Sports. The nba developed a partnership with fanduel. Major League Baseball and the nhl struck deals with draftkings. New England Patriots owner robert kraft and Dallas Cowboys owner jerry jones both own stakes in draftkings, and 28 professional football teams have made deals with one site or the other. The sports teams and the leagues want to make sure that sports is as relevant for todays millennial generation as it was for the generation that is now in their 40s or 50s. And what they see in fanduel is an opportunity to engage a Younger Generation of fans, get people to watch more sports, and then also get them to play more on fanduel. Fanduels oneweek fantasy football leagues are paying 75 million a week. Narrator all that investment money fueled an advertising blitz worth hundreds of millions of dollars in the runup to this years football season. Turning a game you love into a lifetime of cash. Use promo code kick to play and get free entry into the millionaire grand final. Narrator on some weeks, fanduel or draftkings was the number one advertiser on television. This isnt fantasy as usual. This is draftkings. They were everywhere. Im not sure that weve ever seen that level of spend for any kind of gaming product, or frankly, any product. Its very rare that a Marketing Campaign achieves a spot in the cultural consciousness, that it becomes a meme, that it becomes the subject of jokes for Late Night Television hosts. These days, it feels like you cant turn on the tv without seeing one of three things a zombie, a kardashian, or a fantasy football ad. I cant think of another Marketing Campaign at least in my lifetime that achieved that kind of cultural status through sheer force of repetition. Over and over and over again. Its not making you want to play . No. Narrator all that advertising also brought some unwanted attention. As the daily Fantasy Sports industry became more ubiquitous, the questions were inevitable. Is this something that is legal . Is this something that should be regulated . How is this not gambling . Lets be clear, were talking about millions of people spending billions of dollars to bet on things they cant control. The big question is, is it even legal, and should it be . This comes dangerously close to Online Gambling. Do they have to pay anything to play, and do they win something . They do. Thats gambling. What that advertising spend at the beginning of the nfl season really did was create not only a lack of sympathy, but a vulnerability that didnt exist a year ago. bleep you, its gambling bogdanich is what you do gambling . No, its not gambling at all. I mean, its. I consider it more of investing. You know, i have a portfolio. Im trying to diversify the portfolio by picking players every day. Im trying to maximize returns. Im trying to optimize my lineup each day. I mean, its like youre given 1,000 to bet on the stock market in a day. Its no different than that. Bogdanich you told me that fanduel doesnt like the word gambling associated with its brand, and you told the story of they contacted you and asked you not to use that word. Tell me what happened. I prefer not to answer that. Bogdanich okay, okay. Because you dont want to get them angry, or. . Because i dont want to do anything to upset the industry. I mean, thats my job at stake, pretty much. Theres a lot of commercials out there, its not just during the games, its everything. You see these daily fantasy commercials. The core of our game is not about the money. When you ask people why they play, they play because it makes the games more exciting. When you ask us what we as a company are about, were about making sports more exciting. Bogdanich so you dont view what you do here at fanduel as gambling. No. Bogdanich thats a word that isnt used very much around here, i take it. Nope, because we are. Every time that you talk to our users, what comes through loud and clear is the fact that were an entertainment product. Bogdanich so you see no reason, then, for Fantasy Sports to be regulated by some Government Agency . Our product is all about entertainment value. The word gambling, or the association with gambling, will have immediate negative repercussions for the industry. They want their product to be as deregulated, as noninterfered with as possible by state and federal government, and the moment the gambling door opens, all that ends. Narrator the fight over the legality of Fantasy Sports traces back a decade ago to washington, d. C. Ironically, the daily Fantasy Sports industry owes its existence to an antigambling law the unlawful internet gambling enforcement act of 2006. It was supposed to stop Credit Card Companies and other payment processors from facilitating bets online. Mr. Speaker, i yield three minutes to the gentleman from iowa, mr. Leach. Narrator the bills sponsor, Iowa Republican jim leach, saw Online Gambling as a threat to young people and gambling addicts. Never has it been so easy to lose so much so quickly at such a young age. Internet gambling serves no social purpose. Internet gambling is crack cocaine for gamblers. You can gamble in the bedroom, in the living room, on a treadmill. You can get over your head quite quickly. I yield back the balance of my time. The gentleman yields back the balance of his time. I was one of the leading lobbyists for the opponents of the legislation. Bogdanich you were against it why . Well, the companies i represented felt that the appropriate path for the u. S. Was to license and regulate internet gaming, not to prohibit it, and preserve the freedom of adults to entertain themselves as they choose. Bogdanich how important was the National Football league in securing passage of this bill . Instrumental. I think its universally recognized that their advocates were the main strategists for getting it done. Narrator the bill they helped pass targeted Online Gambling, including websites that had moved offshore. But it exempted Fantasy Sports as long as they involved more skill than chance. And ultimately, it left the fight over the legality of Fantasy Sports up to individual states. This is a 15minute vote. Bogdanich if the point of the 2006 law was to stop internet gaming involving offshore websites, what role did Fantasy Sports play in this . There was a big grassroots uprising. Fantasy sports players dont consider themselves gamblers, and i think the sponsors decided it would be easier to enact the law if they did not prohibit Fantasy Sports. gavel pounds the yeas are 409, the nays are two. The daily idea of Fantasy Sports was not conceived of when the bill was passed, partly under the assumption Fantasy Sports are kind of a fun activity that were a very modest proportion in size. But i certainly didnt foresee this sort of activity. Narrator the 2006 law had paved the way for daily Fantasy Sports to flourish. As for the laws primary target, the multibilliondollar Online Sports gambling industry, our reporting showed it flourished too, but underground. Its a shadowy world that, for many years, Curtis Coburn called home. Bogdanich were you a successful bettor . They probably beat me on football. Baseball, i did pretty good on baseball. Narrator by the time the law passed, he had been playing with a gambling ring in plano, texas, for about five years. They had a large amount of bettors all over the United States. They had bookies in vegas, new york, you name it. And it looks like gregg is gonna bump it up, makes it 600 to go. Narrator coburns bookie, the guy who handled all his money, was gregg merkow, a bigtime poker player with over a million and a half dollars in winnings. After a while, after talking to him, he asked me if i was a cop, and i told him no, and he said, well, ill hook you up, and i was betting that night. Narrator but in fact, coburn was a cop, an undercover detective for the plano pd. Where are you at now . Our target just showed up. Narrator he was wired with a hidden camera that recorded hours of betting transactions. How you doing . Good, how are you . I had a fake name. I went by carl cannon. I had a checking account, credit cards, different address. I had a completely different cover. Thank you, sir. I may just give it back to you next week just like it is right here. It was a lot of chasing the money, following the money. Narrator although the money was handled in person, much of the actual betting took place online. On an array of two dozen websites based not in texas, but offshore, on the tiny caribbean island of curacao, which the bookies used to process bets around the clock. They were taking in about a billion dollars worth of wagers a year. Bogdanich a billion dollars a year. Federal agents and the Plano Police Department have shut down what they say was a five billiondollar illegal sport gambling ring. Narrator when they finally broke up the ring, they confiscated over 10 million. Though the plano ring had been stopped, reporters at the times were seeing gambling rings proliferating. We began Digging Deeper into how these Online Gambling operations work. James glanz is an Investigative Reporter with a phd in physics. Augie armendariz works in the computerassisted reporting unit. Though many gambling websites refuse to take bets from american customers, we managed to set up an account with a panamanian website called betonline. Its motto is because you can, and that turns out to be absolutely true. Thats my credit card information right there. You can see my available balance up here, its 139. Got a pending wager, ten bucks on chelsea. All right, lets bet on the allstar game. Im an American League guy. Lets put ten bucks on the American League. Sure. Do a straight bet. Okay. Then i can place my bet, confirm it. And watch out for the tweet button. So we just sat in the middle of manhattan and made an online bet with a company in panama. Panama. After i set up the account, i couldnt quite figure out how to deposit money when i got a phone call on my cellphone, and a guy walked me right through how to put money on the book using my credit card. You didnt ask for help. No, just got the call. You just got a call. Yeah, and he just assured me that there wouldnt be anything on my credit card statement that said betonline. And sure enough, this is the company that eventually showed up on my credit card statement. A company that sells safety goggles and gloves and hard hats . Thats the one. Narrator so we tried to order some work boots. Bogdanich is this moser safety . Narrator but the woman who answered there said it was actually a thirdparty Payment Support Service for gaming and betting sites. Bogdanich is your