At last week’s IMG World Congress of Sports, Commissioner of Baseball Rob Manfred announced that Major League Baseball (“MLB” or the “League”) and the Major League Baseball Players Association (“MLBPA” or the “Union”) have agreed to prohibit League players from participating in daily fantasy baseball competitions involving prizes.

How does this development measure up to other pro leagues’ initiatives to avoid conflicts of interest in connection with fantasy sports?

Rule 21 and MLB’s Daily Fantasy Sports Agreement with the MLBPA

According to Commissioner Manfred’s announcement, the deal between MLB and the MLBPA prohibits players from participating in daily fantasy baseball competitions for prizes. This restriction is in line with similar rules enforced by other pro leagues, such as the National Basketball Association (NBA) and National Hockey League (NHL).

Most jurisdictions consider fantasy sports to be a game of skill (rather than mere chance) that falls outside of state and federal gambling and betting regulations. That line is less delineated, however, for daily fantasy sports competitions, which are much shorter in duration than season-long contests.

Major League Rule 21 prohibits MLB players from (among other things) placing bets in connection with baseball.  Although Commissioner Manfred has repeatedly stated that fantasy sports do not amount to gambling, reports indicate that MLB will apply Major League Rule 21’s umbrella of betting restrictions and disciplinary measures to daily fantasy baseball when prizes are on the line.  According to early reports, it does not appear that season-long fantasy baseball, or daily fantasy baseball competitions without prizes, will be off-limits to MLB players.  The fact that season-long fantasy baseball will be acceptable under Rule 21 for MLB players seems surprising to us.  Fantasy football, basketball and other sports appear to be fair game for League players, as well as endorsements and marketing opportunities with daily fantasy companies.

The agreement purportedly addresses the League’s concerns that allowing professional athletes to put money on the line in a daily fantasy sports competition might create a conflict of interest – a concern that this firm shared with Bloomberg Business earlier this month.

Fantasy Sports Continue to Have Real-World Legal Implications

The League and Union’s expansion of Rule 21 to encompass daily fantasy baseball for prizes is the latest example of constantly evolving regulations affecting fantasy sports. If you operate a daily fantasy sports website, work closely with others that do, or would like to ensure that your venture or business concept complies with applicable regulations in the fantasy sports space, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.