Legal Battles against DFS Sites Reveals Unknown UIGEA Facts

December 15, 2015
Legal Battles against DFS Sites Reveals Unknown UIGEA Facts January 7, 2016 Fantasy Sport

GamblingComplianceA GamblingCompliance report says that Nevada’s Richard Bryan, the US former senator, doesn’t remember the fact that it was he who introduced language that would remove fantasy sports from the list of gambling games in the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. He now declares the need to regulate the US daily fantasy sports industry.

Tony Batt of GamblingCompliance recently interviewed Bryan, who had amended the Internet Gambling Act (IGA) of 1998. Although the IGA of 1998 was never passed into law, its language survived into the UIGEA of 2006.

According to that language, placing money on the results of a fantasy sports contest cannot be considered as a “bet or wager.” It was this language that made it possible for daily fantasy sports sites to develop into a multibillion dollar industry.

It was Ryan Rodenberg of ESPN who first pointed out in October that the fantasy sports carve out in the UIGEA of 2006 can be traced back to the IGA of 1998. He said:

A month-long investigation of archived public records by Chalk reveals that Congress’ addition of a fantasy sports exemption wasn’t the result of any last-minute inclusion by a legislator working at the behest of the NFL or another sports league, as has often been reported and speculated the past several weeks with the DFS industry under scrutiny.

Richard Bryan had proposed an amendment to a bill that would exempt fantasy sports from the definition of illegal online gambling. Although that bill was never passed, this amendment found its way into the UIGEA, which the Congress passed eight years later.

Early in 2015, Jim Leach, the sponsor of the UIGEA and former representative, said that “no one ever conceived” of the daily fantasy sports industry when the UIGEA was passed. These facts were pulled out into the open when legislators intensified their scrutiny of the daily fantasy sports industry.

According to an ex federal prosecutor who had worked on the court cases pertaining to online poker rooms in 2011, there is a huge difference between the online poker industry of 2011 and the DFS industry of today. It may be recalled that the UIGEA was responsible for the federal crackdown on online poker rooms in 2011.

The language of the UIGEA is still being used to create state laws although it is not necessarily an effective way to legalize daily fantasy sports at state levels.

Simultaneously, there is evidence to prove that the daily fantasy sports industry is not taking compliance with the UIGEA as seriously as the fact that most state laws do not consider games of skill as gambling games. The UIGEA makes it legal for payment processors and DFS websites to operate as long as US state laws continue to hold daily fantasy games as skill based. DraftKings had also removed the language of the UIGEA from its website.

The New York court is now considering evidence presented by the office of the attorney general, which shows that the Fantasy Sports Trade Association (FSTA) had brought up for discussion the subject of DraftKings’ refusal to comply with the UIGEA.

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