Daily Fantasy Sports (DFS) is a form of online gaming that has become increasingly popular in recent years. It allows sports fans to pay small fees, create virtual player lineups, and then potentially win big prizes if the chosen players perform statistically well. But why is DFS legal?DraftKings and FanDuel, the two largest DFS sites, claim that since fantasy sports are based on the skill of the competing player, they are not games of chance and general state gambling laws do not apply to them. Federal law specifically exempts fantasy sports contests from the prohibitions of the Illegal Enforcement of Internet Gambling Act (UIGEA).
At the state level, legislation and regulation vary from state to state. In recent years, many state legislatures have passed laws that confirm and clarify the legality of Daily Fantasy Sports contests. DraftKings monitors new developments and acts quickly to ensure that it complies with the laws of any jurisdiction in which it operates. As laws change or regulations are implemented, DraftKings will take steps to ensure their continued compliance. This distinction is at the heart of what legalizes fantasy sports, while online casino games and online lotteries are not. To operate a legal Fantasy Sports gambling league, prizes awarded through the league must be disclosed to participants before each contest begins. Previously, I wrote Why playing fantasy sports is legal (for the most part), about the legality of gambling in fantasy sports leagues.
This means that, even if your Fantasy Sports gaming league is comprised entirely of local pee-wee soccer teams competing for the Pigskin Cup, it would still be subject to UIGEA requirements. While online casino games, such as poker, are considered games of luck, fantasy sports, including everyday fantasy, are declared games of skill. Instead of recent events affecting daily fantasy sports, DFS sites have been more conservative in the states in which they operate, and most sites have different policies with respect to each state. In other words, daily fantasy sports games (and seasonal fantasy leagues) are considered a “skill game” and are determined not by chance but by compliance with statistical analysis.However, it also left an exemption that covered fantasy sports games and games of an educational or skill-based nature. With this rejection will surely come new developments and, hopefully, some clarification as to how far one can go before the proposed Fantasy Sports prize structure becomes illegal. In conclusion, Daily Fantasy Sports is legal in many jurisdictions because it is considered a game of skill.
DraftKings is a global sports and entertainment technology company whose daily fantasy sports contests are governed by federal and state law. DraftKings monitors new developments and acts quickly to ensure that it complies with the laws of any jurisdiction in which it operates.
