Fantasy Sports and the State of Nevada Go Head-to-Head

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Monopoly and Competition

Fantasy Sports and the State of Nevada Go Head-to-Head

  • Las Vegas casinos at night

October 16, 2015

Nevada has ruled that online fantasy sports are subject to gambling laws and licensure in the state. The two largest firms, FanDuel and DraftKings, have halted all business in the state while the legal fog clears.

The reason for the ruling in Nevada is painfully clear: to suppress any competition with the current licensed gambling firms in Las Vegas and elsewhere in the state. The casinos are legally prevented from online gambling, and so the new fantasy sports venues create “unfair competition” for the licensed firms.

It seems the only unfair part is the prohibition of online gambling for the licensed firms in the first place.

Cases like these highlight the absurdity, corruption, and hypocrisy of government licensing requirements.

Nevadans (at least those that don’t own the licensed casinos) aren’t hurt by the presence of online fantasy sports in their state. If they don’t like it for some reason, they could choose not to play fantasy sports. If enough Nevadans didn’t like fantasy sports, firms like FanDuel and DraftKings would leave the state on their own, looking elsewhere for willing customers. So the ruling by the Nevadan government obviously does not reflect the will of Nevadans, if the unlicensed firms must be forced out of the state.

Licensure is corrupt because it represents competition by force, instead of peacefully producing goods and services consumers prefer to those offered by other firms. Requiring a license says, “I can’t compete with you, so I’m going to force you to pay up and follow my rules so I can stay in business.”

It’s hypocritical, too, because the government also purportedly enforces antitrust and anti-collusion laws. Firms working together to shut down outside competition is collusion. The text of the antitrust Sherman Act prohibits “every contract, in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.”

The alleged benefits of business licenses, like keeping industry standards, quality assurance, or consumer protection are provided in industries without licensing. Mises, Rothbard, and countless other economists in and outside the Austrian school have pointed out that licensure is simply government-granted monopoly privilege, and nothing more. And I wouldn't bet against that kind of consensus.

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