Mar 13th, 2013 by Dan Masi
Fantasy sports have grown in popularity over the past two decades, evolving into a $1.6 Billion industry. However, the legality of such games, especially with governments cracking down on online poker and sports betting worldwide, has come into question. The traditional format of fantasy games, a season-long endeavor where a player builds a “team” of their favorite professional stars and gain points based on their real on-field performance, has escaped government sanctions. In 2006, the Unlawful Internet Gambling Enforcement Act (hereinafter UIGEA) established the legality of fantasy games because its winners are “not determined by the outcome of a single game or the performance of a single player.”
The newest phenomenon in this emerging market is the daily fantasy game, run through websites such as FanDuel, where fantasy players get instant gratification rather than waiting an entire season. Yet, the brevity of the challenge has led many to believe it is more similarly associated with illegal sports betting. In daily formats, whether a player wins or loses is more up to chance and is comparable to “handicapping horse racing.”
In most daily games, such as baseball, a user could take advantage of advantageous matchups between pitchers and hitters and use their knowledge to win obscene amounts of money. One such player, Peter Jennings, took advantage of the daily format fantasy games when online sports betting and poker websites were shut down by the government. Jennings would routinely win “tens of thousands of dollars” in a weekend, and once won $150,000 after only betting $20.
Daily fantasy format games seemingly have found a loophole in the UIGEA by way of their similarity to their season-long format cousins. Because of the prevalence and growing popularity of fantasy sports not only in the United States, but internationally as well, the determination about whether daily format fantasy games equate to sports betting is an important one. My question is whether the daily format game is really one that is based on luck (i.e. gambling) or a game that involves enough skill where it will not be considered sports gambling? What are the problems with allowing sports betting over the internet in general? Finally, if the courts declare that daily format fantasy games are legal; will the industry be monopolized by large sports websites such as ESPN or CBS Sports?
Source: NY Times