It’s fall. And in the professional sports world, that means the National Football League is back and Major League Baseball is gearing up for its playoffs.
But there are other leagues garnering increased attention as the crisp air rolls in. These are the leagues where no one faces career-ending hits or 100 mile-per-hour fastballs, yet the leagues’ players have the potential to earn professional athlete paychecks. Yes, we’re talking about fantasy sports. And yes, the potential for a big payout is real.
As of late, it is fair to say the fantasy sports industry is both hot and in the hot seat. Hot because an estimated 57 million people in the United States and Canada play, with several million paying entry fees in hopes of winning cash prizes. In the hot seat because some think it is time for regulators to bring fantasy sports leagues—where cash prizes are the objective—back to reality.
Specifically, critics of fantasy sports leagues are concerned that the game has devolved into one of chance, not knowledge and skill; a criticism that strikes at the very core of the law governing online fantasy sports. If these critics are in fact correct, under the Unlawful Internet Gambling Enforcement Act (“UIGEA”) fantasy sports players are simply ‘betting’ or ‘wagering’ on the outcome of a sporting event, which is unlawful.
The renewed scrutiny is not without base. Traditional fantasy sports leagues, for instance one based on the NFL, require season-long time commitments, statistical analysis, and knowledge of positions, players, coaches, and teams. Winning takes skill, which is why the UIGEA exempted “participation in any fantasy or simulation sports game” from falling under the umbrella of unlawful Internet betting or wagering.
Now, with the advent of Daily Fantasy Sports (“DFS”) leagues—short term, easy entry and play games—some say no such knowledge and skill are necessary to win cash prizes. Indeed, in a letter dated September 14, 2015, United States Representative Frank Pallone (D-NJ) asked the House Energy and Commerce Committee to ”review the legal status of fantasy sports and sports betting.” Fred Upton (R-Mich.), the chairman of the committee, says a hearing is likely.
Fantasy sports leagues are facing similar scrutiny from state legislators and regulators. While California proposed a bill that included new regulations for fantasy sites, such as licensure and fee requirements, Massachusetts Attorney General, Maura Healey, announced her office will investigate whether DraftKings, a DFS operator, is running a business in violation of state gambling laws.
Can fantasy sports hold the line against its critics or has the luck run out? Check back with AdLaw By Request for an update on this important topic.