CLELAND: The North Carolina Lottery Commission just can’t pick ‘em

Player matchups are shown on the screen of a computer laptop in Atlantic City N.J. on Monday July 17, 2017 shortly after Resorts Casino Hotel became the first New Jersey casino to launch a daily fantasy sports site. The casino hopes to attract new customers who otherwise wouldn't patronize a casino. (AP Photo/Wayne Parry)

Nearly two decades ago Congress passed the Unlawful Internet Gambling Enforcement Act to regulate online gambling. The Act made clear that fantasy sports meeting certain requirements, games of skill, and legal intrastate and intertribal gaming were all excluded.

The reason that fantasy sports was excluded from gambling is fairly obvious. Fantasy sports require skill, insight, assessment, research ability, knowledge and strategy on the part of the player. The ability of the player directly affects the outcome.  Spotting factors that others do not is the thrill of this game.

Gambling is a whole other matter. These games of chance depend predominantly on randomness and luck. The gamblers have little to do with the outcome. That uncertainty is the thrill and appeal.

Since the passage of the Gambling Enforcement Act nearly thirty states have also made clear that fantasy sports are not part of gambling, that games of skill are in fact something different, by updating and aligning their laws. The North Carolina legislature decided in June to join the crowd and make a similar differentiation in an effort to demonstrate, again, the state’s commitment to promoting innovation, competition, and consumer protection.

When the lawmakers legalized mobile sports betting in the state this summer they decided to hand regulation of gambling to the North Carolina Education Lottery Commission. Almost immediately the Commission decided to try to expand its authority by rewriting the intent of the legislature.

The Commission has issued draft rules that ignore the plain language letter of the law and has proposed greater restrictions single player fantasy sports, including vastly narrowing what fantasy sports even means. The state legislators could not have been clearer in protecting and defining fantasy sports, “Fantasy or simulated games or contests in which one or more fantasy contest players compete and winning outcomes reflect the relative knowledge and skill of the fantasy contest players and are determined predominantly by accumulated statistical results of the performance of individuals, including athletes in the case of sporting events.”

The Commission’s desired changes would effectively end the innovation that is pushing this sector of entertainment forward. As gaming has innovated and responded to marketplace demand, players have been made able to pick whether a real-world athlete will meet certain statistical benchmarks during a game. Take several at a time and it’s a “fantasy pick ‘em.” In this way the player is competing against the house.

That innovation, in all industries, is the lifeblood of the U.S. economy. Our economy and the lifestyle we enjoy because of it depends on a healthy and pervasive innovation ecology. So, when government gets in the way, directly or indirectly, citizens should be concerned. When government intends to limit innovation, citizens should be alarmed.

Newer, smaller innovators in North Carolina have been growing in this space of skill, strictly adhering to fantasy laws and guidelines. They have been offering fantasy content in the state for years with thousands of Carolinians joining in on the fun. The legislature sought to guarantee that those enjoying the games could continue to do so, where the commission seems determined to end that freedom –the unelected bureaucracy restricting citizen’s rights.

The citizens of North Carolina and the state legislature should look into why the Education Lottery Commission would overtly attempt to do such damage to the legislature’s intent. A cynical explanation might be that they are buckling under pressure from large, entrenched gambling businesses afraid of gaming taking away time and attention from their industry. Another might simply be regulatory hubris.

Either way, North Carolina deserves better. Innovation has served the state, economy and the people well. That spirit should continue.

Bartlett Cleland, the Executive Director with the Innovation Economy Institute.