Recently, a new type of sports betting is catching fire around the country, and the operations taking place within the industry are being deemed perfectly legal. This specific category of sports betting is daily fantasy sports, currently being dominated by DraftKings and FanDuel. Valued at 1.2 and 1.3 billion according to the Wall Street Journal, DraftKings and Fanduel are revolutionizing the fantasy sports industry. However, some states are arguing that DraftKings and Fanduel are illegal under state gambling laws. This is not the case. Fantasy sports websites like DraftKings and Fanduel are not a game of chance, however the websites are a game of skill. Therefore, according to gambling laws, DraftKings and Fanduel are legal.
In 2006, the federal government passed a law called the Unlawful Internet Gambling Enforcement Act (UIGEA) that establishes fantasy sports as a game of skill and not a game of chance (Kim). The law states that a gambling website is legal if it “is not dependent solely on the outcome of any single sporting event or non-participant's singular individual performance in any single sporting event; 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-participant's individual performances in such sports events (Kim).” In fantasy sports, users put together their own teams using real life players. The outcome of the game is based on how each player performs in real life, accumulating a certain amount of points for each player based on their performance. The law is classifying this as a form of game in which actual skills matter to win. Though this idea of fantasy sports requiring skill is debatable, daily fantasy sports sites are legal under today's law.
The government also argues that online fantasy-sports betting violates statue 849.14. The statute states that “Whoever stakes, bets or wagers any money or other thing of value upon the result of any trial or contest of skill, speed or power or endurance of human or beast, or whoever receives in any manner whatsoever any money or other thing of value staked, bet or wagered, or offered for the purpose of being staked, bet or wagered, by or for any other person upon any such result, or whoever knowingly becomes the custodian or depository of any money or other thing of value so staked, bet or wagered upon any such result, or whoever aids, or assists, or abets in any manner in any such acts all of which are hereby forbidden, shall be guilty of a misdemeanor of the second degree… (Heitner)” Since the websites start the players off with a budget, the websites do not violate statute 849.14 which prohibits the operation and participation in a fantasy sports league whereby contestants pay an entry fee for the opportunity to select actual professional sports players to make up a fantasy team whose actual performance statistics result in cash payments from the contestants’ entry fees to the contestant with the best fantasy team.
The sites have attracted the scrutiny of regulators, especially state attorneys. The state attorney's argument is that the sites are just rebranded forms of illegal gambling. Some states including New York have banned the site from their states. These states claim that each DraftKings and FanDuel’s wager represents a wager on a contest of chance, where winning or losing depends on numerous elements of chance to a material degree (Heitner). The states thinking is all wrong. Rather than being a game of chance, the websites are a game of skill. The websites give the player a budget and the player must figure out how to fit the best players into that budget. There is not a way to buy more points for the budget unless the player earns the points through winning the games. Therefore, the websites are a game of skill, not a game of chance.
Several states have stopped allowing DraftKings and Fanduel to operate within their states for no apparent reason. If the websites do not break the law in any way, why discontinue the successful businesses? The states refuse to acknowledge the fact that the websites do not violate any law. The websites require skill and strategizing to earn the most points. Simply, the player that earns the most points through balancing his/her budget wins the money. Personally, I believe that DraftKings and FanDuel should be legal not just because the law prohibits it, but more so because it really does require skill to a certain extent.
Kim, Eugene. "Billion-dollar Sports-gambling Startups Draftkings and FanDuel Are Legal Because of a Loophole in the Law." Business Insider. Business Insider, Inc, 11 Sept. 2015. Web. 12 Mar. 2016.
Heitner, Darren. "DraftKings And FanDuel Are Playing With Fire In Florida." Forbes 22 Feb. 16. Print.