Navigating the Legal Risks of Daily Fantasy Sports

A Detailed Primer in Federal and State Gambling Law

Over the past two years, there has been a monumental shift in how U.S. professional sports leagues have perceived “daily fantasy sports.” Back in March 2013, the chief executive of Major League Baseball Advanced Media, Robert Bowman, told the New York Times that he saw “daily fantasy sports” as “akin to a flip of the coin, which is the definition of gambling.” Today, however, Major League Baseball promotes a play-for-cash “daily fantasy sports” contest on its website. Similarly, the National Basketball Association once purported to oppose all forms of fantasy sports gaming; it now owns an equity stake in FanDuel Inc.—the marketplace leader in “daily fantasy sports.” Today’s more favorable relationship between professional sports leagues and the “daily fantasy sports” industry has led many in the media to speculate that the legal issues surrounding the industry, “although a concern, are relatively minor.” Nevertheless, such generalizations about the legal status of “daily fantasy sports” are grossly oversimplified. Indeed, there is no blanket immunity under federal or state law for “daily fantasy sports.” Rather, in all likelihood, the legal status of “daily fantasy sports” varies based on the nature of any specific contest’s game rules and where that particular contest operates. This Article explores the legal status of “daily fantasy sports” in light of both federal and state gambling laws. Part II of this Article discusses the history of “daily fantasy sports,” beginning with its dimorphic roots in both full-season fantasy sports contests and illegal online sportsbooks. Part III introduces the different formats of “daily fantasy sports” that exist in today’s online marketplace. Part IV explores the legal risks of “daily fantasy sports” under state gambling laws. Part V analyzes these same risks under federal law. Finally, Part VI proposes eight best practices to enable “daily fantasy sports” companies to minimize their legal risks under both federal and state gambling laws.

The full text of this Article is available to download as a PDF.