Home I Daily Fantasy Sports I Daily Fantasy Legal Status
In the first part of our DFS Advanced Strategy Guide we will be focusing on an unconventional, yet very important topic: The Daily Fantasy Legal Status. Make sure to stay tuned, because there will be three more parts to this guide published this week. Have fun!
Before you spit out your coffee in shock, don’t be worried by the title of this article. The answer is yes, playing DFS games is legal in most places.
As we will discover in this article, Daily Fantasy Sports remains outlawed in some states of America, while in Europe the rules are different from country to country. In the UK, the industry’s three biggest platforms are all legal and doing excellent business.
So what are the legal issues surrounding DFS?
This is the central argument that has governed the industry since its inception. In most countries, if DFS is considered gambling then its providers would need an appropriate license. If it is merely a game of skill, then any company could provide paid Daily Fantasy contests; that would be great news for DFS markets across the globe.
The difference between Daily Fantasy and a longer format fantasy sports is, according to politicians arguing against DFS, that managers are essentially placing prop bets on their players, rather than ‘managing’ the performance of their selections on a weekly basis. Those defending DFS have stated that it contains skill elements like managing a salary cap and spotting value players, and therefore the managers that win contests are those who have drafted most skillfully.
Further scrutiny came in October 2015 when it was alleged that a DraftKings employee used inside information to profit to the tune of $350,000 from a FanDuel contest. There were also rumors that workers from both firms were cashing in based on insider info. The state authorities terminated the investigations, although employees of both firms may not enter DFS contests.
In truth, the watershed moment came way back in 2007. Back then, a federal lawsuit in the US was brought against Viacom. In that instance, presiding judge Dennis Cavanaugh ruled that the payment of an entry fee to a contest is exactly that, rather than a wager, and that contests with guaranteed prizes are competitions, rather than the profits from a bet.
Daily Fantasy Sports is widely enjoyed across most of the United States. Under the terms of the Unlawful Internet Gambling Enforcement Act of 2006, DFS is considered a game of skill rather than outright gambling. It is legal in 44 of the 50 states.
Daily Fantasy is illegal to inhabitants of Washington, Arizona, Montana, Iowa, and Alabama, plus bizarrely Nevada – the home of the gambling capital of the world in Las Vegas. The State there has judged that DFS is gambling, rather a game of skill. And gambling activities require a license in the U.S. DraftKings, FanDuel nor any of the other Daily Fantasy sites own such a gambling license in the US.
Recently, DraftKings has acquired a online gaming license for its Daily Fantasy product. DFS fans from Germany will be able to enjoy the biggest Daily Fantasy Sports website and we are also expecting DraftKings to offer their services to many other European countries this year.
Daily Fantasy Sports are legal in the UK as long as the provider has a ‘pool betting’ license. For their UK markets, DraftKings, FanDuel, and now Yahoo Sports are all legitimate platforms for DFS gamers there. It is perhaps why the market is so small in the UK. Extra hoops are needed to jump through in order to obtain a license. That is a shame for players as they lack a competitive market, but at least three of the biggest names in the business are doing good business there.
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