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// PUBLIC GAMING INTERNATIONAL // November/December 2015
CURRENT REGULATORY
STATUS OF FANTASY SPORTS
AND DAILY FANTASY SPORTS
IN THE U.S.
Fantasy Sports has exploded onto the
scene so quickly that most jurisdictions
have not had time to consider the im-
plications and how, or whether, to regu-
late it. The fact that it is not classified
as “gambling” by the U.S. federal gov-
ernment means only that is not illegal
from the federal government point of
view. It does not mean that states can’t
or should not classify, regulate, and tax
Fantasy Sports (FS) and/or Daily Fan-
tasy Sports (DFS) as gambling. It just
means that it remains legal until and
unless a state acts to regulate it, or pro-
hibit it for that matter. Conversely, in-
sofar as the federal government chooses
to classify a game as “gambling,” that
means that it is illegal until and unless
a state acts to regulate it. Either way,
the authority to classify a game like FS
or DFS as gambling and regulate it ac-
cordingly lies within the jurisdictional
authority of the states. Even as this is
being written, many states are actively
investigating the issue to decide how or
whether to regulate FS and DFS.
States that have already determined
that FS and DFS are to be classified as
gambling (and therefore illegal until and
unless the state installs licensing proce-
dures and regulatory actions) include:
Arizona, Iowa, Louisiana, Montana,
Nevada, New York, Washington
However, with each passing week,
more states are taking action to classify
FS and DFS as “gambling” and regulate
(or prohibit) it as such.
The DraftKings website states “We
are a U.S.-based skill games com-
pany and all of our contests are oper-
ated 100 percent legally under United
States and Canadian law.” On Novem-
ber 9, DraftKings and FanDuel each
filed suit to prevent the New York
Attorney General Eric Schneiderman
from executing the ban of DFS in New
York. Further, they are petitioning the
NY State Supreme Court to allow the
operation of DFS to continue while
the issue is being litigated.
There is certainly some dispute as to
whether the UIGEA does in fact render
DFS and FS legal under federal law. “It
is sheer chutzpah for a fantasy sports
company to cite the law as a legal ba-
sis for existing,” said former Rep. Jim
Leach, R-Iowa. “Quite precisely, UI-
GEA does not exempt fantasy sports
companies from any other obligation
to any other law.” For example, he said
fantasy sports businesses must comply
with a 1992 law that bans gambling
on “one or more competitive games in
which amateur or professional athletes
participate, or are intended to partici-
pate, or on one or more performances
of such athletes in such games.” Fan-
Duel and DraftKings argue they’re ex-
empt from such gambling legislation
because DFS is a skill game not subject
to chance.
Regardless of the intention or word-
ing of the UIGEA and the federal clas-
sification of DFS and FS, U.S. states
still can take action and exercise their
responsibility to regulate games like
i-poker, FS, DFS, and other online
games as they see fit. States can choose
to classify DFS as gambling even if the
federal government chooses not to. The
reason why RAWA (Restoration of the
Wire Act) and its Trojan Horse cousin
Online Gambling Moratorium must
be defeated is that it would completely
reverse this model that gives states the
authority to decide what is best for its
citizens when it comes to the regula-
tion and taxation of games-of-chance.
RAWA effectively takes away the rights
of states to regulate gambling.
PGRI Introduction: There has been so
much written about Fantasy Sports (FS)
and Daily Fantasy Sports (DFS) over
the past few months, so many new
issues unfolding every week. Many of
them raise concerns about how FS
and DFS fit into the overall environment
of recreational gaming. Clearly, there
are issues that need to be addressed.
To my mind, that should be expected.
We should expect that completely
new forms of betting that have grown
so quickly may have some fault lines
that need to be addressed. I would
respectfully submit, though, that does
not mean that FS and DFS should be
banned or prohibited. It just means that
the shapers of public policy and leaders
in the gaming industry should under-
stand those fault lines. That is the first
step, and a necessary step, towards
the process of creating solutions that
ensure that new betting games uphold
standards that protect the consumer
and otherwise comply with the high-
est standards of integrity. It is not our
intention to pass a negative judgment
on FS and DFS. In fact, as a general
rule, PGRI’s position is that it is almost
always better to regulate (and channel
economic benefit back to good causes)
betting games and games-of-chance
than it is to prohibit them.
FANTASY
SPORTS
AND DAILY
FANTASY
SPORTS