Fantasy Sports – Is it Gambling?

December 1, 2015
Fantasy Sports – Is it Gambling? December 3, 2015 Fantasy Sport

Fantasy Sport - Is it GamblingViewers of professional sports events are literally bombarded with television ads for fantasy sports offerings.

The biggest advertisers are Fanduel and DraftKings, but major sports media houses such as ESPN and professional sports leagues also offer fantasy sports contests.

Fantasy sports has been popularized to such an extent that the number of people taking part in one-day or one-week fantasy sports contests is on the rise. Fantasy sports players win or lose a lot of money depending on how well the players in their fantasy teams perform in real life.

The Law

The law, surprisingly, is very lenient towards fantasy sports, which is legal in most US states and in Canada. Federal laws consider fantasy sports to be games of skills and therefore not gambling. The Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006 clearly exempts fantasy sports from its list of gambling games. Since fantasy sports contests are considered to be contests of skills, fantasy sports websites are free to offer them for real money without having to obtain a gambling license.

However, even the US has certain grey areas concerning fantasy sports. While fantasy sports have not been proved to be illegal in states such as Louisiana, Nevada, Washington, Montana, and Arizona, the legal situation is uncertain. Major fantasy sports sites, therefore, steer clear from these states and refuse to accept players who reside there. Yahoo goes one step further and prevents residents of Florida too from signing up. Fantasy sports websites also refuse to operate in other grey markets such as Puerto Rico.

Before playing at a fantasy sports website, you must check out its terms and conditions page properly to make sure that it operates in your locality. You can even get in touch with the fantasy sports site’s customer care service to find out more about legality issues. Even if you reside in a grey market, the fantasy sports website may allow you to play fantasy games for free.

The Debate

A number of experts refuse to accept the argument that fantasy sports are not gambling games. The UIGEA exemption is the only reason fantasy sports websites say that they “safe and legal.” While online sports betting and online casino gaming is definitely illegal all over the US, except in states that have legalized them, fantasy sports just do not fit into the “gambling” category as they are considered to be games of skill.

But critics say that the exemption wasn’t meant for fantasy sports contests as they are played today. According to an editorial on The New York Times, most fantasy contests were low-stakes, season-long games played with friends and family members when the UIGEA was passed in 2006. But today, large companies are marketing daily and weekly fantasy games with enormous cash prizes. The editorial stated:

Giving people more ways to bet on the outcomes of sports is sure to threaten the integrity of sports and create more gambling addicts, especially among young people who are already more likely to engage in risky behaviors.

Representative Frank Pallone had also expressed concern over daily fantasy sports games. He said that they have to be considered “gambling” as they give players the opportunity to risk their money on the real performance of the players in their lineup.

But operators of fantasy sports websites do not want to accept these arguments. They argue that fantasy games are not like chance-based games, where losing or winning is is always dependent on luck irrespective of how skillful a player is.

Since there are large companies behind fantasy sports and lots of money involved, there is no chance of fantasy sports being labeled as “gambling” and banned anytime soon. Some analysts have shown that total daily fantasy sports entry fees will touch the $18 billion mark within the next five years.