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Daily fantasy sports and compulsive gamblers may not mix

The surging popularity of daily fantasy sports (DFS) sites such as FanDuel and DraftKings is raising concerns among organizations that work with compulsive gamblers.

Unlike traditional fantasy games that last for a season, DFS games provide weekly and sometimes daily payouts, which make them enticing to many players. Though exact figures aren't available, the self-help groups say they've been in touch with individuals who have overextended themselves from wagering on FanDuel and DraftKings.

Experts worry that the problem will get worse if these games keep gaining popularity. The DFS industry will collect $3.7 billion in entry fees this year, skyrocketing to $17.7 billion by 2020, according to Adam Krejcik, an analyst with Eilers Research.

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DFS sites aren't required to provide information about where players who might have a problem controlling their behavior can get help. Industry critics have also argued that the sites need to provide better consumer protections.

The fantasy sports industry has argued that DFS games are based on skill not chance, and therefore shouldn't be regulated like casinos or lotteries. However, Father Richard McGowan, a priest who is an adjunct associate professor at Boston College and an expert on gambling, considers that argument to be "stupid."

"Let's just say it's a game, and it's a game of skill, which is what they claim," said McGowen, who is on the board of directors of the Massachusetts' Compulsive Gambling Council, in an interview. "It's still a game, and games can be addictive. Right now, they're not facing up to that whatsoever."

Gamblers Anonymous advises its members to avoid the games because in the self-help group's view, they are gambling. The organization's board recently discussed whether to include DFS on its formal list of activities that addicts ought to avoid. Those activities are part of the Gamblers Anonymous Combo Book, which members are encouraged to carry at all times.

"It takes a couple of meetings to get something into our literature, and this was the first time this came up for discussion," said Chuck, a Gambler's Anonymous spokesman who gave only his first name, in an interview.

DraftKings and FanDuel are among the biggest spenders on TV commercials, shelling out $147 million and $84.9 million, respectively, so far this year, according to iSpot.tv. Their presence is also huge on new forms of media such as webcasts and podcasts.

Further complicating the issue is that the companies' ads are targeted at millennial-aged males, who are reluctant to seek help even when they need it, according to Matt McCreary, a vice president at Bensinger, DuPont and Associates, which operates state hotlines for problem gamblers.

The DFS industry's reputation has been tarnished by revelations that DraftKings employee Ethan Haskell accidentally disclosed sensitive information. Haskell also won $350,000 on FanDuel. Both companies have denied that Haskell improperly profited from inside information, though they have forbidden their employees from playing their games.

FanDuel and DraftKings account for 95 percent of the DFS market. FanDuel didn't respond to an email request for comment on this story. A spokesperson for Boston-based DraftKings told CBS MoneyWatch that the company is aware of the potential for compulsive gambling on its site. "We place strict limits on deposits per day, week, and month; we monitor and evaluate spending patterns for irresponsible game play or overspending; and we restrict accounts if overspending is suspected," he wrote in an an email.

Attorneys general in New York and Massachusetts are investigating the industry, which is illegal in a handful of states and whose status in other states is murky. Officials in Nevada have outlawed the games. Some teams such as the NFL's Miami Dolphins, which has a relationship with DraftKings, are taking note of the controversy.

"Like any other company we do business with, we would need to consider all of our options, including termination, if their business model is deemed to be unlawful," wrote Jason Jenkins, a spokesman for the Dolphins, in an email to CBS MoneyWatch.

The NFL and individual teams are prohibited from investing in DFS sites though they're permitted to accept advertising in their stadiums and on their "controlled media." No team or league logos can be used, according to NFL spokesman Brian McCarthy.

Editor's note: CBS has an investment in FanDuel of less than 1 percent of that company's value.

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