If you are reading this on RotoGrinders.com, you have probably already realized the huge potential to earn money grinding Daily Fantasy Sports contests. Some Daily Fantasy Grinders are already grossing more than six figures ($US) annually 3 ! With this much money moving around an online sports industry, one is sure to have concerns over the legality of the situation. Don’t worry though; RotoGrinders is here to look out for you. We will always keep you posted on the current legal state of Daily Fantasy Sports and update you on any changes to legislation that are applicable to Daily Fantasy Sports. As of right now though, except for a few situations unique to specific states, Daily Fantasy Sports is 100% legal and has a bright future. Here is a breakdown of the current legislation involving Daily Fantasy Sports:
UIGEA and the History of Internet Gambling
UIGEA stands for: The Unlawful Internet Gambling Enforcement Act of 2006. This is the grand-daddy of online gambling laws. Essentially, the UIGEA seeks to regulate the financial intermediaries (banks and other financial institutions) that act as the monetary link between Internet gambling consumers and Internet casinos. The UIGEA was passed in September of 2006 after Congress purported to use 3 other Federal laws to regulate Internet gambling unsuccessfully. The UIGEA’s passing was controversial, being that it was tacked onto the SAFE Port Act which was a very important non-partisan bill that was unlikely to be voted down. The passing of the UIGEA dealt a serious blow to the Internet gambling industry, causing 3 of the industry leaders to immediately pull out of the US market, with some losing up to half of their total market value. Still, many companies held strong and remain in business to this day. Most are confident in their interpretation that the UIGEA is targeted at prohibiting online gambling or that it is illegal, and instead on the business end of enforcing online gambling. The future of online Internet gambling, is at the moment uncertain 1, but currently congressman Barney Frank of Massachusetts is actively pushing to legalize and regulate Internet gambling with congress.
According to a Journal article by Anne Von Lehman, as of 2008 the UIGEA federal law blanketed all 50 States’ laws 1. However, some states have state legislation that some lawyers could interpret as questionable or unclear. That has led to sites such as Fan Duel restricting offer of any paid games to the states of Arizona, Iowa, Louisiana, Maryland, Montana or Vermont (where FanDuel’s lawyers found the state legislation unclear or questionable) 3.
Application to Daily Fantasy Sports
So, the big question here is: Does Daily Fantasy Sports count as Internet Gambling? The short answer is “No.” The UIGEA specifically states that:
[The UIGEA does not include] participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:
(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple real-world sporting or other events.
(III) No winning outcome is based
(aa) on the score, pointspread, or any performance or performances of any single real world team or any combination of such teams; or
(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event. 3
What Does This Mean???
Based on my interpretation, I have constructed a list of ‘Dos’ and ‘Don’ts’ that Daily Fantasy Sites should be abiding by in order to remain in accordance with the UIGEA. [Now is the time to re-read the disclaimer at the top of the page if you haven’t already]. As long as a site is in accordance with the terms above, and isn’t a state that specifically bans online Fantasy Sports (as mentioned in the section above), then Daily Fantasy sports is entirely legal. If for some reason the site you are playing on isn’t following one or more of these stipulations, you may want to contact them directly for an explanation, or you can make a post about it in our Forum :
(ix) A Daily Fantasy Roster can not allow users to select, or make part of a roster spot, an entire team that is a member of an amateur or professional sports organization. (Ex: You shouldn’t be able to draft the San Diego Chargers to one of your roster spots)
(I) – The prize(s) of a Daily Fantasy contest need to be made known to all participants in advance of the contest (Ex: Whatever the contest, how many spots are paid and what each of those spots is paid should be made available before you register.)
(I) – The value of any prize(s) awarded in Daily Fantasy can not be determined by the number of participants or the ‘amount of fees’ paid by those participants. .
(II) – The scoring should be for individual players/athletes only, and that scoring should be calculated based on the individuals performance in multiple real-world sporting events or other events. (Ex: The Superbowl isn’t a legal option for Daily Fantasy sports, since all of the stats in your game would come from just 1 real-world game. This also reiterates that you can’t draft an entire team.)
(III) (a) – No aspect of scoring or how a team wins is based on the score, pointspread, or any performance of any real team or teams. (Ex: Whether or not the Patriots win should not effect Tom Brady Scoring. A tie-breaker shouldn’t be decided on how many runs the New York Yankees score.)
(III) ( c ) – No aspect of scoring or how a team wins is based solely on 1 performance or 1 athlete/player in any 1 event. (Ex: Your Daily Fantasy roster has to have at least 2 roster spots.)
RotoGrinders will continue to monitor the legality of Daily Fantasy Sports for you, and if there are any changes or updates we will be sure to update our users right away! In the meantime if you have any questions, comments, or concerns start a discussion on them in our Forums !
Good Luck Grinding!
1 – Von Lehman, Anne. American Entrepreneurs and Internet Gambling: Are the Odds Stacked Against Them? 2008, Entrepreneurial Business Law Journal. Vol 3:1. p. 135
2 – http://www.fanduel.com/public/pp_legal
And yes, this should probably lead to stronger regulations (which, again, I am definitely behind). At the end of the day, you need to make the customer feel safe and that they're not getting swindled out of their money. They haven't done a good job with that.