The NCSL Blog

16

By Jake Lestock

Each summer, millions of people gather in basements, living rooms, and local restaurants to draft professional football players they hope will lead their cleverly named team to victory.

Draft Kings logoThis is fantasy football—and it is likely that you or someone you know spends too much time meticulously picking the best athletes and setting weekly lineups in an effort to win a hunk of cash and league bragging rights.

And now, with the emergence of daily fantasy sports, people can enjoy the same thrills of season-long contests in a single day. But, as the nascent industry has still yet to be fully defined, is it possible that DFS players could soon be cashing out of contests on 11-year-old Little Leaguers?

Much like traditional fantasy sports, daily fantasy sports (DFS) are games where players compete against others by paying an entry fee to build a team of athletes from a particular sports league to earn points based on the statistical performance of the players in real-world competitions. The main difference is that the games are played in a single day or week, as opposed to an entire season, which gives players a chance to win—or lose—money more frequently.

The DFS industry has been around for over five years, but it wasn’t until a $200 million advertising blitz last fall that DraftKings and FanDuel became household names across the country, amplifying the industry’s prominence. And given their recent popularity, it is safe to assume that a large number of the 56.8 million people that played fantasy contests in the USA and Canada in 2015 tapped into Daily Fantasy Sports.

And when they did, they played often. Last year alone, DFS players spent an average of $257, which explains how DraftKings and FanDuel collected nearly $3 billion in entry fees. And while the industry seeks to solidify itself in the fantasy market, its emergence has caught the attention of lawmakers and attorneys general in the states.

Legislatures across the country have started to examine the legality of this young and thriving industry, debating whether it's a skill-based game or if it's chance-based gambling. Each state appears to be tackling the issue in its own way. So far in 2016, 34 state legislatures have introduced bills addressing DFS, many of which seek to legalize and regulate the industry. In some other states, attorneys general have issued opinions asserting that it is illegal gambling and have halted the business in its tracks.

But is the legality of the daily fantasy sports the only hurdle it faces?

One issue that hasn’t been at the forefront of discussion is DFS’s interaction between student athletes and college or youth sports. While most DFS contests revolve around professional sports, DFS gaming opportunities can apply to any type of competitive contest.

Chris Grove, editor of the Legal Sports Report, a Nevada-based publication, says the definition of "fantasy contests" used in some of the legislation doesn't specifically limit competitions to sports. Fantasy contests based on award shows, political debates, even spelling bees could theoretically be permissible, he says.

Currently, DFS patrons are able to play in contests that include collegiate and other nonprofessional sports players on a number of DFS platforms. But does it end there, or could a DFS market emerge that caters to students’ playing high school basketball or kids playing in Little League tournaments?

While this is not yet a common occurrence, the possibility has raised concerns from a number of parties who fear that it could lead to problems that threaten the protection and welfare of young athletes, proliferate teen susceptibility to addictive or problem gambling, and challenge the integrity of youth, high school, and college athletic events.

Organizations like the National Collegiate Athletic Association (NCAA) prohibit student athletes from engaging in any sort of gambling, from fantasy sports leagues to March Madness brackets.

While a number of state lawmakers have written legislation that sets a minimum age of 18 to play DFS, some are going a step further to protect students. So far, there are bills in two states with provisions to exclude student sports from DFS contests. The Indiana General Assembly introduced a bill a few weeks ago that incorporates protections for student athletes in a DFS regulatory bill, and the New York Legislature also recently introduced a bill with similar protections. The Massachusetts attorney general also has proposed protective regulations.

As DFS companies continues to flood the public with advertising and multiply their consumer bases, it doesn’t look like this industry is going anywhere soon. Just last week, Virginia became the first state in 2016 to formally legalize DFS as a skill-based game.

While the battle over DFS legality continues, it is likely that the NCAA and other student sports organizations will raise concerns over possible negative impacts on youth and student athletes. As this multibillion dollar industry continues to grow and the dust of its legality begins to settle, one thing is for sure: Daily Fantasy Sports will continue to be a very real issue in state legislatures.

Jake Lesock is a policy associate in NCSL’s Washington, D.C., office.

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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.