The explosion in popularity of fantasy sports has been awesome, but one unfortunate effect is the accompanying emergence of frauds trying to make a buck (or a million) by leveraging the “fantasy” label to front a concept it clearly doesn’t fit.

Washington state officials charge that is just what has been going on with the man behind FantasyThunder.com.

David B. Watkins was arrested Thursday in Spokane, Wash., after police raided his home. The raid resulted from an investigation triggered by complaints from Fantasy Thunder users about not getting paid their winnings.

Authorities say Watkins may have operated his site for as long as 10 years, but both reports linked to above seem to highlight the wrong factor in describing the gambling charges . The accusation that Watkins kept 50 percent of the fees paid by his users doesn’t make for an attractive game setup, but it also doesn’t constitute gambling on its own.

To avoid being classified as gambling, any online pay-to-play game must clearly define its prize amounts before the contest start and guarantee those amounts. That’s according to the federal Unlawful Internet Gambling Enforcement Act, whose Section 132.2(c)(5)(ix) specifically states:

Participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in 28 U.S.C. 3701) and that meets the following conditions:

(A) All Prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.

(B) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.

(C) No winning outcome is based-

(1) On the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams, or

(2) Solely on any single performance of an individual athlete in any single real-world sporting or other event.

“Consumers need to be very careful,” said Jeff Thomas, CEO of World Fantasy Games and former president of the FSTA. “In my 18 years in the fantasy sports industry, I’ve seen many fly-by-night companies come and go and they hurt the entire industry with their actions. Consumers and companies considering operating a fantasy game should learn an important lesson from this situation: Work with experienced operators and never use or quote percentage payouts — it’s just the wrong message.”

Thomas points out that FantasyThunder.com is not a member of the Fantasy Sports Trade Association, an organization that tries to look out for the integrity of fantasy games and provide guidance for new game operators that might be unfamiliar with gaming regulations.

“The FSTA supports the UIGEA and encourages our companies to follow it,” Thomas said. “Experienced game operators know how to structure games to follow all federal and state laws.”

The Fantasy Thunder site has been shut down (hence the tiny images toward the top of this story being the best we could retrieve), and Watkins reportedly could face five years in prison if convicted.

(Note: World Fantasy Games owns and operates FantasySportsBusiness.com.)

If you are even the most casual of sports fans, work in an office or live somewhere in the United States, you know what March means on the sporting calendar.

It’s “madness” time in college basketball, when brackets abound and pools are plentiful. Xerox Monday — after Selection Sunday — takes many of us to the copy machine so that we can take way too many cracks at building that impossible perfect bracket.

RapidDraft.com, however, wants you to consider a different way to pick your teams: via fantasy draft.

“Innovation is the key to growth in the world of fantasy sports,” said Jeff Thomas, CEO of World Fantasy Games. “Most fantasy companies offer a bracket contest. Nobody has a draft. Applying our patent-pending social gaming model to the NCAA Tournament was a natural, with on-demand live drafts inside our virtual-world draft room. RapidDraft is true differentiation in the marketplace and can complement a bracket game on any fantasy site.”

RapidDraft Hoops Madness pits a consumer against three avatars backed by expert opinion and strategy. The four teams tip off with a 16-round draft in which every NCAA tournament team is selected. (The two play-in participants act as one team here. And yes, NCAA, that is a play-in game.) The “Fantasy Pros” draft according to specifications set forth by this site, SportsBuff.com and Sara Holladay — best known as the FF Librarian.

“I’ve never had the chance to combine fantasy sports with March Madness, so I’m excited to see that RapidDraft has stepped up to the plate and taken it to the next level,” Holladay told FSB.com. “Everything is better with a touch of fantasy.”

Once the four fantasy squads are drafted, you score points for every victory by one of your NCAA teams. Points are awarded in a seed-times-round format — meaning a second-round win by a No. 4 seed, for example, would garner 8 points. Another 1.5 bonus points are available each time your total score for a round beats that of a Fantasy Pro team in your league, up to 4.5 bonus points per round.

“I love the unique concept that RapidDraft has come up with,” said Jim Day, an avid fantasy gamer, founder of FantasyFootballWhiz.com and host of multiple shows on BlogTalkRadio’s The Fantasy Sports Channel. “The draft is something you just don’t see on any other March madness contest and will provide another exciting way to play one of the most enjoyable and exciting tournaments in sports.”

In the end, of course, you’re really competing against all of the other human players, with 50 guaranteed cash prizes and a $2,500 grand prize. That’s not a bad return on a free entry. Consumers can draft up to twelve times each, three times per draft position.

The different format might scare off a bracket traditionalist at the start, but the system still awards you for properly projecting which higher seeds will stick around longer and grabbing a Cinderella or two. Just imagine how many points George Mason would have gotten you back in 2006, or Davidson just two years ago.

It’s a new twist with different layers of strategy for experienced bracket fillers, yet Hoops Madness is still easy enough for the beginner or casual player. At its base, this is still just a game in which you pick the teams you think will win.

As more and more people grow familiar and comfortable with fantasy games, though, it might just prove a format that catches on big-time.

“Consumers will play both,” Thomas said. “If you follow college basketball and you love the excitement of a fantasy draft, RapidDraft Hoops Madness is for you.”

Should you decide to play along, here’s a bit of unsolicited advice: Don’t wait too long to take a shot on Xavier. A top-15 team in KenPom.com’s rankings for adjusted offensive efficiency, the Musketeers have a decent-looking draw. As a 6-seed, they could score 36 Hoops Madness points by winning just three games. A No. 1 seed, by comparison, would tally just 21 by winning the title.

(Note: FantasySportsBusiness.com is owned and operated by World Fantasy Games.)

This weekend, the Fantasy Football Open Championship will send its top 15 title contenders to Las Vegas for the second year in a row to see how the final week plays out. On the line, of course, $1 million — just like Shane Schroeder won last season.

But wait, who’s that in sixth place and making his way to Vegas on someone else’s dime? Yep, it’s none other than our own Jeff Thomas.

I guess the guy does know what he’s talking about after all with this fantasy stuff.

Good luck to all competing for the seven-figure payout (and the chance to finally replace that photo of Schroeder on the FFOC homepage).

Of course, I’ll be rooting for the guy who signs my paychecks.

Jeffrey Thomas, CEO of World Fantasy Games (owner of FantasySportsBusiness.com), is a 17-year veteran of the fantasy sports industry. Here’s what he had to say about Fidelity firing four employees for running fantasy football leagues:

This situation and decision by Fidelity is ridiculous on many levels. I think the executives that made the call should be personally terminated for creating a huge future lawsuit risk for Fidelity itself, for very poor research and very poor decision-making.

First, playing in a fantasy sports league is not gambling. Most of the time there is no money involved at all, so it can’t be gambling. And other times, leagues only pay a fee for software services to operate the league.

Second, if they had a fun $20 side pool between league members, this is personal and not managed by a fantasy company. Fantasy football is not gambling when it is managed by experienced, compliant companies in our industry. Could these individuals have been gambling by wagering $20 between friends? What’s your call? I hope nobody, in this company of thousands of employees, filled out a March Madness pool last year and I hope nobody ever made a copy of a March Madness bracket on a company copy machine … and I hope nobody sent an email with a bracket attached to it or a link imbedded. And did they buy any squares at Super Bowl time? I’m sure e-mail archives from last February or March could shed light on this. For clarification to Fidelity and others … the Unlawful Internet Gambling Enforcement Act of 2006 states that money spent on fantasy sports is not a bet or a wager.

Third, the information published to date states that the individuals involved did not receive e-mails at work. A league member sent him an instant message? Did he read this while taking a restroom break, or was it during a strategic planning meeting? Does it matter? Reading a message from a friend is not playing fantasy football. Was he managing his team at work? Playing fantasy football is managing your team — starting players, benching players, watching live scoring, negotiating trades, studying free agent moves, etc. Sending an instant message is not playing fantasy football. He was communicating with a friend.

Fourth, on a similar note, did other employees receive texts that day from friends or family members? Did they use the phone for personal phone calls? What is the real issue here? Communication occurs every day between employees and friends while at the work place. It should be limited, but it’s not grounds for termination.

Fifth, the individual involved stated that several other company employees play in fantasy leagues. Why single out these four? For an instant message? Corporate hypocrisy at its best can get corporate decision-makers and their employer in a lot of trouble.

That’s my top five, but there are plenty of other issues with the terminations. Based on the incredibly ignorant termination decision, I hope the employees will be filing a significant lawsuit in the coming weeks.