The meteoric rise of fantasy sports betting has brought with it a number of concerns about its legality in the United States. In the text of the Unlawful Internet Gambling Enforcement Act (UIGEA), enacted in 2006, an exception for what would become known as fantasy sports betting was made, stating that the ban on Internet gambling did not include the following activities:
“any participation in a fantasy or simulation sports game, an educational game, or a contest, that – (I) is not dependent solely on the outcome of any single sporting event; (II) has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participants individual performances in such sporting events; and (III) offers a prize or award to a participant that is established in advance of the game or contest and is not determined by the number of participants or the amount of any fees paid by those participants.”
Essentially, a player who assembles a dream team for weekend contests on DraftHero or a similar site is not gambling according to existing US legislation. Instead, they are engaging in a game of skill, using statistics, historical information and the latest sports news to make informed decisions about which athletes to put on their team for a specific contest, which does not (and legally cannot) rely on the outcome of any one game. Instead, the player’s performance in the contest rests on the ability of their chosen athletes to do well in a number of different games over the course of one day, a few days or a weekend.
As of fall 2015, fantasy sports betting is legal in most US and Canadian jurisdictions, though no explicit federal regulation exists. When online poker and gaming sites were shut down in the US due to the UIGEA and later the â€œBlack Fridayâ€ site seizures of 2011, fantasy sports betting suddenly had room to grow and even flourish.
However, some states have enacted specific laws prohibiting residents from signing up to fantasy sports betting sites. For example, DraftKings currently does not accept players from Arizona, Iowa, Louisiana, Montana, Nevada or Washington State, all of whom have enacted specific laws against playing in such contests for cash rewards and have legally classified them as gambling. Other fantasy betting sites have similar exclusion policies in line with the laws of these states. Apart from those exceptions, most people who want to join in on the fantasy betting fun simply need to be 18 years old (or 19 if they live in Alabama or Nebraska).
Daily fantasy sports betting will soon be available in the UK as well, as DraftKings received a UK gaming licence in 2015 with the expectation that a British version of the site will launch in 2016.
The runaway success of the industry has recently attracted the attention of US lawmakers, who have demonstrated a keen interest in regulating sites like FanDuel and DraftKings. Inquiries into how fantasy sports betting sites operate have opened in several US states, including New York and Florida, which could lead to the introduction of legislation in the future. For the moment, players living in authorized states and jurisdictions can still enjoy the thrill of fantasy betting on their favorite major sports.