Legislation is beginning to creep into the once safeguard-devoid sphere of the daily fantasy sports industry. Daily fantasy sports are a subset of traditional season-long fantasy sports and are immensely lucrative, yet there are hardly any standard regulations. Ironically, the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, which was used to outlaw online poker gambling, paved the way for daily fantasy sports, because it federally exempted fantasy sports from being classified as illegal sports gambling. The UIGEA further protects daily fantasy sports from the Professional and Amateur Sports Prohibition Act (PASPA) of 1992 which prohibits states from sponsoring sports gambling activities. The razor thin line that separates daily fantasy sports from illegal gambling is its current definition as a game of skill rather than a game of chance as defined by the UIGEA. Two of the largest operators, DraftKings and FanDuel, had more than three million separate entries apiece on NFL Sundays in 2015 and are valued at more than $1 billion. In response, some states have taken some regulatory action. Daily fantasy sports are currently not operating in ten states, and twelve states are proposing legislation on the matter. Many states with pending legislation are introducing licensing schemes or ways to tax it, but there is a high chance that states proposing legislation will need to address the wording of PASPA which prohibits sponsoring, licensing, or authorization of gambling. Daily fantasy sports have simply become too successful to fly under the regulatory radar any longer. A wholesale federally mandated regulatory scheme is unlikely to occur; however, it may suffer death by a thousand cuts as each state could potentially craft a different regulatory hoop for it to jump through.
St. Mary's University School of Law
When Fantasy Becomes Reality: Attempts to Regulate the Highly Unregulated Daily Fantasy Sports Industry.,
St. Mary's L.J.
Available at: https://commons.stmarytx.edu/thestmaryslawjournal/vol47/iss4/2
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