The fantasy of funding HOPE
One of Georgia’s greatest policy successes is undoubtedly the HOPE Scholarship. First enacted in the early 1990s, the program has helped over 2 million youths receive some degree of higher education thanks to funds generated from the lottery. However, as Georgia continues to grow in size and education becomes more expensive, lawmakers should consider ways to keep HOPE fully funded in perpetuity.
This was an issue in the 2024 legislative session, and one of the ideas floated was regulating and taxing fantasy sports, although the measure—HB 1329—failed to reach Gov. Brian Kemp’s desk. While the topic seems to have confused some lawmakers, it is an intriguing proposal, but if legislators take it up again, it needs to be done right.
For those who aren’t familiar, fantasy sports have nothing to do with cosplay or live action role playing. Instead, it is an online competition based on real-world athletes’ on-the-field production. According to CNN, “Fans choose from real players in an online selection process, or a draft, to assemble a fantasy team. The players’ real-game statistics are compiled and compared to see whose fantasy team has done the best.” In this form, fans sometimes pay an entry fee to join a league, and the victor wins a cash prize.
There are other variants to fantasy sports, including what’s known as pick’em. As CBS Sports noted, “For each daily Fantasy pick’em contest, you’re presented with a series of individual player [propositions] and simply pick whether you think the total for that particular statistic will go over or under the given number.” If you choose correctly after paying a fee, then you can also win a cash prize. There are also free versions of fantasy sports that do not provide any reward of intrinsic value, other than bragging rights.
The question that bogs down many debates is whether or not these fantasy contests constitute a form of illegal gambling. According to the federal Unlawful Internet Gambling Enforcement Act of 2006 and various legal opinions, fantasy sports are not forms of illegal gambling because they require more skill than chance. As proponents note, serious fantasy sports aficionados—of which I am not—understand that an amazing level of knowledge is required to be successful, including mulling matchups, weather, injuries and likely outcomes based on past experiences.
There’s truth in this too. Believe it or not, sports fans love statistics, and nowhere will you find more statistics nerds than among baseball fans. Ask a diehard Braves fan how many home runs Hank Aaron hit (755) or in what year did Mark Wohlers strike out 4 batters in a single inning due to a quirky rule (1995). Many sports fans live for these numbers, and so do real-life team managers. There is an entire field of statistical science—called sabermetrics—that drives baseball decisions, which was the topic of the movie Moneyball, and there are similar variants in other sports too.
One of the issues facing states is that the Unlawful Internet Gambling Enforcement Act doesn’t have the final say on regulating fantasy sports. States are empowered to regulate them however they want. In Georgia, lawmakers haven’t addressed the issue or regulated or levied special taxes on fantasy sports. So they aren’t illegal, have operated for years and can continue doing so.
While fantasy sports aren’t for everyone, people should absolutely continue to enjoy the freedom to participate in them. It’s their money and their time, but regulating them could provide serious benefits to the HOPE Scholarship. Saturday Down South reported that under HB 1329, “licensing fees [for fantasy sports operators] would have generated $8 million in the first year and an additional $40 million in annual revenue. Tax revenue from daily fantasy sports contests were earmarked for the Georgia Lottery to fund HOPE scholarships and pre-kindergarten programs.” That would go a long way.
If lawmakers decide to revive the fantasy sports debate next legislative session, then they need to be mindful over how they define it. As has been seen in other states, there is a kind of guerilla warfare happening within the industry. Market participants seem to be attempting to prevent innovative upstarts from competing with them by getting the government involved. They use a pretty simple tactic, essentially claiming, “Our version of fantasy sports is legal, but theirs isn’t.”
Using the government as a strong arm to muscle out competition isn’t a new approach, but it is an unfortunate reality. To avoid this possibility, fantasy sports needs to be clearly defined and inclusive of all forms of fantasy sports, and the regulatory structure shouldn’t impede healthy competition. If lawmakers do so properly, then it will be a boon to the HOPE scholarship and help ensure that students can enjoy its benefits for years to come.