Regulating Fantasy Sports: A Practical Guide to State Gambling Laws, and a Proposed Framework for Future State Legislation

Abstract

In recent months, the legal status of fantasy sports has undergone intense scrutiny, with the attorneys general of many states contending that certain formats of “daily fantasy sports” violate state gambling laws. In an effort to save the burgeoning “daily fantasy sports” industry, legislators in these states have proposed bills to affirmatively legalize and regulate “daily fantasy sports.” However, these bills often fail to adequately address the underlying consumer protection concerns pertaining to the industry.

This article analyzes how U.S. states currently regulate the fantasy sports marketplace, and proposes a framework for future state laws to effectively regulate both traditional fantasy sports and “daily fantasy sports.” Part I of this article explores the history of fantasy sports contests in the United States – analyzing separately the origins of traditional fantasy sports and “daily fantasy sports.” Part II applies state gambling laws to the fantasy sports marketplace, analyzing past court decisions, gaming commission rulings, and attorneys general opinions. Part III analyzes current state laws that specifically regulate the behavior of companies in the fantasy sports industry. Part IV discusses recent bills proposed by state legislators in the 2015 and 2016 sessions that seek to affirmatively legalize and regulate fantasy sports. Finally, Part V proposes a comprehensive framework that would allow for states to effectively regulate both traditional fantasy sports and “daily fantasy sports” in a meaningful way, in conjunction with existing state gambling laws.

Keywords: fantasy sports, fantasy sports law, gaming, gambling, gaming law, gambling law, sports law, game of skill, Marc Edelman, FanDuel, DraftKings, regulating fantasy sports, sports gambling, sports betting, poker, UIGEA, PASPA

JEL Classification: Z1, L5, L83, G60, D43, D60, G38, H25, H70, I30, K1, K2, K20, L3, K30, K40, K42