There are a lot of similarities between daily fantasy sports and sports betting, but only one is actually legal. DFS can be played just about anywhere, by anyone and everyone, but what exactly makes it different than regular sports betting and why is it legal?
LEGAL DISCLAIMER
While daily fantasy sports are legal on a federal platform, we don’t pretend to know everything and we certainly are not lawyers. If you have extensive questions about the legality of DFS in general or how it specifically applies to where you live, feel free to contact a lawyer.
Legality of Daily Fantasy Sports & Sports Betting
Building daily fantasy lineups and competing for cash sounds like fun, but anytime someone talks about sports and money, questions come up. A case can be made that betting on sports and playing poker are skills and that they should be completely legal. Unfortunately they’re not, so when people start considering playing DFS games, they pause and wonder – is DFS legal, and if so, why is it looked at differently in comparison to regular sports betting?
The laws for sports betting are complicated, but luckily that’s not really the case with daily fantasy sports. Instead, DFS is 100% completely legal from a
federal law perspective, and only a select few states have enforced laws against it (6, to be exact). That, or the language and perceptions are just dicey
enough that the leading DFS sites won’t allow residents of those states to play their games.
These states are:
DFS is completely legal everywhere else, however, as it’s classified differently than sports betting. Unlike sports betting, daily fantasy sports are seen
legally as a “game of skill” and allows anyone and everyone to bet money on teams they draft on a daily, weekly and season long basis.
Unlawful Internet Gambling Enforcement Act
This law provides us with all the legal lingo we need. Passed in September of 2006, this law seeks to regulate banks and other financial institutions that act as monetary links between sports bettors and online casinos/betting sites. This led to some of your favorite online sports betting sites getting shut down.
Why wasn’t DFS involved with this act?
Well, the UIGEA actually goes into solid detail, acknowledging that daily fantasy sports do not apply to any one specific player or team, there
is no betting on the score, point spread or who wins a game. Instead, all winning outcomes reflect the relative “knowledge and skill” of the
participants.
What is or isn’t skill is totally subjective and in a sense so is this entire debate, but legally speaking, it’s in written word that you can play daily fantasy sports and win money in the process.
Here is a quick simplified rundown of the UIGEA:
- You can’t draft one team only (must be individual players that come together to form a lineup)
- All cash prizes need to be known to everyone ahead of the contest
- All scoring is attributed to individual players only (not entire teams)
- No part of DFS can be based on team scoring, point spread or final winner of a contest
- DFS contests cannot be won by one player/individual (no prop bets)
Even aside from the legality and popularity of daily fantasy sports, there’s a lot that we can see rather simply that shows us we can do it as much as we
want.The top DFS sites, DraftKings and FanDuel, aren’t trying to be sneaky. They’re not hiding in caves and keeping things secret about how they run
things. In fact, they’ve been pasted all over your television screen in commercials for years now and are based in the United States. They’re even
accepted by PayPal and major credit cards, which is something those trying to conduct sports betting can quickly say isn’t the type of freedom they
regularly enjoy.
Better yet are the direct relationships the big sites like DraftKings and FanDuel have. Both are tied tightly with the top professional sports organizations
and the Worldwide Leader (ESPN), while FanDuel specifically has people on their board who are affiliated with NBC Sports, the NBA and Comcast
Ventures, just to name a few.
So you tell me:
Would this many reputable organizations be tying their name to DFS and helping promote a product that was illegal?
The obvious answer, if you couldn’t have already guessed, is NO.
What the DFS Sites Say:
One of the most popular Daily Fantasy sites available today has this to say:
“The legality of daily fantasy sports is the same as that of season long fantasy sports. Federal Law and 45 of 50 U.S. states allow skill based gaming. Daily fantasy sports IS A SKILL and is not considered gambling.
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Perhaps taking a DFS site’s word isn’t all that easy. What about a sports and entertainment lawyer?
In an interview with the Huffington Post, sports and entertainment lawyer Jaia Thomas explained that courts claim the use of stats and knowledge
constitutes as “skill” that sets DFS apart from other types of sports betting. More specifically, the courts have made games of chance illegal, in that per
the court, they do not take enough knowledge, research and skill. Daily fantasy sports, however, takes a unique skill-set to piece together winning teams
on a consistent basis.
While the daily fantasy sites and a reputable attorney point out the federal law, there are still some people that either don’t understand what DFS is or
why it’s legal. That leads to odd questions and some shaky logic.
Bad Logic Against DFS
There are definitely some people out there that don’t agree with daily fantasy sports and file it right along with any other type of betting that is illegal.
However, people not listening to the argument of DFS being a game of skill just, well, aren’t listening.
Lottery/Raffle Same As DFS?
Unlike pure chance like a raffle or lottery, DFS can actually be controlled by knowledge and decision-making. Sure, anyone can create a team that
randomly takes first place in a giant contest, but that’s the only spot where luck truly comes in.
DFS requires:
- Time
- Research
- Analytics
- Knowledge
- Tough Decisions
- Skill
There is a reason why the “sharks” of the industry are responsible for a good chunk of the winnings on DFS sites. It’s because they’re good at what
they do.
No different than an actor/singer becoming famous?
There is no difference. The same way that actors put in the time and effort and working his/her way up the ladder into blockbuster movies, or a singer pushing hard until they finally get discovered, the elite DFS player has to grind, build their bankroll, manage said bankroll and take the right risks at just the right time to profit on a consistent basis, both for the short-term and the long-term.
The only argument against the top DFS players or the fact that a small percentage of them make up for most of the success in the industry is that
everyone wants to be them. But everyone wants to be famous, an actor, a singer, the president - you name it.
However, without these very important aspects:
It really just is not possible.
Of course, none of that makes DFS illegal. If anything, it paints a clear picture that anyone can make it big in the industry if they work hard, but that it does take hard work to make it big. Luck doesn’t cut it alone, but the top DFS players have to be diligent and smart.
Comparing DFS and Sports Betting
There are definitely some people out there that don’t agree with daily fantasy sports and file it right along with any other type of betting that is illegal.
However, people not listening to the argument of DFS being a game of skill just, well, aren’t listening.
| SIMILARITIES |
DIFFERENCES |
| Risk |
Skill Based |
| Rush/Excitement |
Stats and Data |
| Cash Prizes |
Build a team of Players |
| Large Contents |
|
| Satellite Contests |
|
| Competitive |
|
Find the right sight
There is one huge similarity that DFS has with sports betting, though, and it cannot be denied. There is real risk when it comes to how much money
you put down on a fantasy team and when you do it.
Bankroll Management
Bankroll management is still key in DFS. You can’t just throw caution to the wind and hope you’re going to win. Just like with poker or sports betting, betting all of your money - or even a large amount of it - is just reckless. A good rule of thumb is never betting more than 10% of your bankroll on any given night, and to even use some of that percentage at times to hedge your bets. It only turns into a problem if a DFS player makes it one, as there are countless amounts of low stakes games and unless you can afford it, there is never a need or reason to bet more than you can handle.
Numbers Game
Calculations, odds and statistics also are in play. Owner usage helps map the playing field every day and every week, depending on the sport. Projecting which players will be owned by roughly how many competitors can help you gauge which under the radar options could carry your team to the top of huge contest pools. Noting trends in regular sports betting also can help you in the DFS world. It’s just one piece of the puzzle, however. While totals and spreads can help you get closer to the perfect roster, you’re not using them individually to make money.
SUMMARY
There are some clear similarities between daily fantasy sports and sports betting, but none of them are bad. The best of which,
is the huge rush you can experience when your team is climbing the standings nearing the end of a contest or at the very end,
you either win first place or place high in the money. Nothing beats the feeling of your time, effort and skill paying off - except
the fact that it’s completely legal and you can put that money in the bank as soon as the DFS site awards you it.
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