The Changing Legal Landscape of Daily Fantasy Sports

In mid-October, the Nevada Gaming Control Board ruled that pay-to-play daily fantasy sports (DFS) constitute gambling under Nevada law. And just this week, New York followed suit. State Attorney General Eric Schneiderman sent cease-and-desist letters to operators of DFS games ordering them to stop accepting wagers in the state. In Nevada, companies like FanDuel and DraftKings that operate DFS games online must now obtain a license from the Gaming Board in order to operate legally. In New York, operating DFS games is now illegal. In DFS, players compete against other by building a team of professional athletes from a particular league and earn points based on the actual statistical performance of the players. As of September 2015, both FanDuel and DraftKings have an estimated value of over $1 billion. In total, an estimated 57 million people in the United States and Canada played a DFS game this year, and companies hosting DFS games are expected to collect $14.4 billion dollars in entry fees by 2020.  Federally, the Wire Act and the Unlawful Gambling Enforcement Act (UIGEA) govern DFS games. The UIGEA prohibits gambling businesses from accepting payments in connection with bets or wagers that involve the use of the Internet, but it specifically excludes certain fantasy sports and skill-games. Meanwhile, the Federal Wire Act prohibits the wire transmission in interstate commerce of wagers on any sporting event or contest. So far, though, DFS games have not been prosecuted as sports wagering under the Wire Act. A sports wager, in general, must involve a game subject to chance. Many argue that DFS games involve more skill than chance, as participants must...

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