Fantasy Sports Insurance

An article on CNN.com today was about the booming fantasy football industry and how different companies are cashing in. One example, is FSI FantasySportsInsurance.com. Their motto is "Armor for your fantasy investment". You can buy an insurance policy such that the company will reimburse your league entry fees if your key player(s) gets injured. On their website, You pick how many players you want to insure (1 to 3), which specific players you are insuring, how many games they need to miss combined in order for your policy to pay, and finally how much $$$ your policy will payout if your players do miss that many games. After selecting these 4 inputs, the website then gives you a quote and you can continue onward to enter your billing information if you wish to purchase the policy.

My first thought is that this has nothing to do with insurance... FSI does not administer fantasy sports league, they cannot confirm that you are a fantasy owner of a specific player, and they cannot confirm how much (if any) your league entry fees actually are. You don't even need a fantasy sports team to buy one of these insurance policies.

I just went to FSI's website, and typed in some inputs so that i was offered a policy that would cost me $12.88 and payout $100 if Tom Brady misses 10 games this season. This seems like gambling / sports betting to me. How is this legal? FSI is based out of New York state. You don't even have to be 21 to buy a policy (make a bet)

My second thought is that no one should buy any policies from them. FSI is likely in business to make money. This implies that if people buy policies from them, in the long run, FSI will make money (not the people buying policies). So why should anyone buy a policy if their expected return on that policy is to lose money?

But people buy insurance policies all the time, such as extended warranties on their washing machine, travel insurance when going on vacation, jewelry insurance on engagement rings, and health insurance. So why do people buy insurance if in the long run it makes insurance companies money and costs them money? Well, it's important to buy policies to insure against things you cannot afford to have happen, like getting very sick or becoming disabled and not being able to work anymore. Your washing machine breaking and having to buy a new one may or may not fall into the category of events you cannot afford to have happen. However, I really hope that for everyone playing fantasy sports, not winning their league and losing their entry fee (if there was one) does not fall into the category of catastrophic events you cannot afford to have happen. If it does, you have a gambling problem.