FANTASY SPORTS
While the passage of the UIGEA was popularly
viewed as a Congressional attempt to squash Internet gambling and sports betting in the United States, as a result of successful lobbying efforts by the professional sports leagues, the UIGEA explicitly protected fantasy sports. Specifically, the UIGEA exempted fantasy sports games from the definition of “bets or wagers” under the UIGEA if:
The fantasy team is not based on the current membership of an actual amateur or professional sports team; All prizes and awards are established and made
known before the start of the contest, and their value is not determined by the number of participants or the amount of any fees paid by those participants; and
All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of individual performances of athletes in multiple real- world sporting events, and not on the score, point- spread, or performance of any single sports team (or combination of such teams), or any single performance of an individual athlete in any single real-world sporting event.
This so-called “fantasy sports exemption” of the UIGEA does not make fantasy sports legal. Rather, it looks to other federal and state laws to define “unlawful Internet gambling,” and does not otherwise alter, limit, or extend any federal or state law prohibiting, permitting, or regulating gambling within the United States, including gambling in connection with fantasy sports. Even though the UIGEA did not legalize fantasy
sports, its “fantasy sports exemption” appears to have spawned a new business model and form of sports
wagering – daily league fantasy sports. These daily games did not exist when the UIGEA was debated or enacted. According to the Fantasy Sports Trade Association (“FSTA”), the first daily league fantasy site was launched by Fantasy Day Sports Corporation at
FantasySportsLive.com in mid-2007, nearly a year after the passage of the UIGEA. And with the birth of daily fantasy sports games has come exponential growth of fantasy sports, from 12.6 million U.S. participants in 2005 to nearly 35 million in 2014.
adopted the same language or analysis for determining what constitutes a game of chance as opposed to a game of skill”
“Not all states have Regardless of whether a website offers traditional
fantasy sports or daily leagues, it is only legal if it falls within the exemption of the UIGEA and complies with all other applicable federal and state laws. Most states have laws prohibiting paid-entry games of chance, as well as betting on the outcome of future contingent events outside the player’s control. In addition, most states prohibit “gambling,” which is generally defined as a scheme involving the payment of consideration (e.g., cash) for an opportunity to win a prize in a game of chance. Based on this common definition, games of skill are generally legal in most states, but not all states have adopted the same language or analysis for determining what constitutes a game of chance as opposed to a game of skill. Notwithstanding the UIGEA carve-out for fantasy
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