fantasysportsLast week while watching my hometown Bears pull a rabbit out of a hat and defeat the Chiefs, I got a text from a buddy asking, “Have you ever played one of those same day fantasy sports sites?” If you’re a sports fan like me, or you spend time with sports fans, you’ve probably seen or heard the commercials claiming that “you too” can make millions of dollars each week playing same day fantasy sports. FanDuel, DraftKings, and countless other sites have appeared out of nowhere claiming to make us all rich. These commercials are ubiquitous, making even casual observers likely to wonder where these websites came from.

Is it Legal?

Back in 2006 the Federal Government passed the Unlawful Internet Gambling Enforcement Act that effectively prohibited online gambling in the US. Included in that law was language that defined fantasy sports as a skill game, and therefore exempt from federal prohibition. This small yet significant legal nuance created the space for what has become a $2.6 billion dollar industry with projections to reach $14.4 billion by 2020. So unless you live in a state that specifically prohibits online fantasy sports, these sites are legal.

Is it Gambling?

Gambling is commonly defined as risking something of value on an activity or event in which the outcome is uncertain in hopes of winning something of material value. So if we evaluate same day fantasy sports against this definition we find:

  • Are players risking something of value? Yes. Real money is wagered on same day fantasy sports.
  • Is the outcome uncertain? Yes. Despite the relative skill involved with picking players, the ultimate performance is uncertain.
  • Do same day fantasy sports players play to win something of material value? Yes. The commercials for these sites specifically mention large jackpots, so it is safe to assume that most same day fantasy sports players play to win big. So according to our definition, same day fantasy sports is in fact gambling.

Regulations Matter

Commercial gaming operators, from casinos to lotteries to sports books in Vegas, are heavily regulated to ensure that each game is free from corruption. Given that same day fantasy sports are not legally considered gambling, they are also exempt from the stringent regulations that accompany operating a gambling business. With news of possible insider trading involving a DraftKings employee under investigation from the DOJ & FBI, the legal status of same day fantasy sports sites is finally beginning to receive significant attention. Until these sites are legally regulated as commercial gambling businesses, their ethical standards and business practices deserve to be questioned.

 

Matt McCreary

VP, Special Programs & Operations