The modern interpretation of fantasy sports has been in existence around for more than 50 years.[1]  However, it has not been until the last ten that a person in a sports bar could turn to the patron next to them and ask whom they were starting as their tight end and receive an answer that was not a left hook. 

Internet gambling is legal in less than a hundred nations around the world.  Although Internet gambling has been an engaging field of study when applied to the United States Law; Internet Gaming is currently only legalized in three states.  Due to federal law, the transmission of gambling information in interstate or foreign commerce is an illegal practice.[2]

The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is the controlling federal law as to the regulation of things that qualify as internet gambling which was passed as an addition to the Security and Accountability for Every Port Act of 2006.  Internet gambling as defined by 31 U.S.C. § 5362 as:

“(1) Bet or wager.— The term “bet or wager”— (A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome; (B) includes the purchase of a chance or opportunity to win …  (which opportunity to win is predominantly subject to chance)…  (10) Unlawful internet gambling.— (A) In general.— The term “unlawful Internet gambling” means to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is … made.;”

The central focus of the bill was not to criminalize and punish individual gamblers, but to instead be used as a tool to cut off gambling funds by prohibiting wager transactions.  The act prohibited gambling business from knowingly accepting payments in connection with the participation of another person in a bet or wager that involves the use of the internet.[3]  However, while the aforementioned UIGEA is controlling, there was a specific section that provided a carve out for the conceptual adoption of Fantasy Sports. 

The UIGEA contained an exception in section 5362 (1)(E)(ix)(II) that clarified this legality regarding fantasy sports as an explicit consideration.  The bill exempts educational games or any online contest that has an outcome that reflects the relative knowledge of the participants, or winning outcomes, which reflect the relative knowledge and skill of the participants that are determined predominantly by statistical results of the performance of individuals in real-world sport(s).[4]

Additionally, in order to comply with this act, all prizes must be predetermined in advance of the competition, and all games must be reflective on multiple, real-world sporting events. Fantasy sports fulfill all of these requirements since the game theory and application necessary coincide with the performance of the referenced statistical performances of the real world individual sports players.