Congress investigation asks: are daily fantasy sports legal?

By: david

Posted: May 12, 2016

Updated: May 12, 2016

Are daily fantasy sports legal? Congress asked that question yesterday. We reveal what they discussed.

Daily fantasy sports are big business in the USA, but is DFS legal? Different states have different answers. Now Congress has decided to investigate. Not often does the house subcommittee on Commerce, Manufacturing and Trade makes gambling news headlines, but the two hours they spent debating begins a process that could impact the many Americans who love DFS.

While DFS franchises promote themselves as entertainment rather than gambling, there are some who see this a rouse to bypass strict US gambling laws prohibiting sports betting. There’s not question as to the profitability of the genre: the Washington Post suggests that more than 16 millions players spent in excess of $4billion on DFS in 2015.

Asking “are daily fantasy sports legal” requires comparison with sports betting

The success and popularity has prompted many politicians to seek the legalisation of online sportsbooks. If DFS is legal, they argue, then sports betting in the US is legal too. While “are daily fantasy sports legal?” is a question generally supposed to belong at state level, some argue for federal legislation.

Many see it as unfair that companies such as Draft Kings and Fanduel are free to operate in some states, yet banned from others. Representatives from these companies were not in attendance at Wednesday’s hearing, despite their combined 95% market share; they declined to attend despite invitation. A Draft King’s released a statement:

“We appreciate the thoughtful conversation today… DraftKings is a company founded by sports fans for sports fans, and we look forward to the continued evolution of common sense legislation aimed at protecting fantasy sports consumers.”

Similarly, FanDuel commented:

“What came through clearly was fantasy sports should be available to all Americans and fantasy games should be regulated with common-sense measures to ensure games are fair and players are protected.”

Comparison with UK arises in question of are daily fantasy sports legal

It was noted in questioning that in the United Kingdom DFS companies are required to apply for a gambling license and are thus considered sports betting. However, the Chair of the Fantasy Sports Trade Association, Peter Schoenke, declared that this comparison was spurious. Unlike the USA, the British definition of gambling includes pursuits that include skill. However, in the United States games of skill are not considered to be gambling.

Schonenke was, though, forced to agree that Daily Fantasy Sports comprised of the same activities in both the US and the UK. Further discussion will be required to establish any clear ruling on the legality of daily fantasy sports.