By Jonathan Griffin
Update: Nevada regulators announced Thursday that daily fantasy sports sites are gambling, not skill, and that they had to be shut down until their operators receive state gambling licenses.
"It is perhaps the most significant setback yet for a booming, unregulated industry that has spent the past two weeks in the midst of allegations that have prompted federal and state investigations into whether its employees, armed with inside information, exploited paying customers," reported The New York Times.
Original post
Tennessee Titans rookie quarterback Marcus Mariota broke into the National Football League with a flourish last Sunday, throwing for 209 yards and four touchdown passes in a 42-14 torching of the Tampa Bay Buccaneers.
Yet whether their rooting interest is Nashville or Nantucket, prescient pickers of the nation's fantasy football leagues recognized Mariota's most important stat was the 24 points he represented for their teams—and, perhaps, their bank accounts.
Fantasy sports, where team "owners" pick the players they expect to put up the most fantasy points, are exploding in popularity, with an estimated 15 million new players this year.
So, you're asking, can this be legal?
The answer is pretty much yes.
Fantasy sports are specifically exempted from the Unlawful Internet Gambling Enforcement Act (UIGEA), which outlawed Internet poker and other Internet gambling in 2006. Despite this exemption, states are still able to regulate gaming within their borders and two states have laws regarding fantasy sports. Maryland specifically exempts fantasy sports from their gaming laws and Montana legalized fantasy sports, but explicitly prohibited people from “conduct[ing] [I]nternet or telephone wagering on fantasy sports leagues.”
The latest incarnation, which is no secret to anyone who has watched ESPN or any major sporting event over the last six months, is daily fantasy sports (DFS), whose existence has become an inescapable part of the sports landscape via a barrage of commercials for DraftKings and FanDuel.
Rather than picking a team over the course of a season, players now can pay an entry fee to select a team for a day or week and win cash prizes based on their performance.
Because of the fantasy sports exemption in UIGEA, DFS is allowed in the majority of states. Currently, the major websites steer clear of five states—Arizona, Iowa, Louisiana, Montana and Washington. Outside of Montana, which has a clear prohibition, the other four have so much uncertainty that the DFS sites have chosen to avoid them, so as not to invite a lawsuit. In turn, legislators in all five states have worked to clarify or change their laws to allow for fantasy play. So far, none of the bills has passed.
However, Congress may be at least reaching for a penalty flag against the daily games. Representative Frank Pallone (D-NJ) wants to scrutinize the difference in gambling on sports and playing fantasy sports
Jonathan Griffin is a senior policy specialist who covers gambling issues for NCSL.
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