Legality of daily fantasy sports to be studied

The booming and billion dollar development of the daily fantasy sports phenomenon in the United States was bound to attract official attention at some point, and according to ESPN it has done just that.

The usually reliable publication reports that Nevada Gaming Control Board chairman AG Burnett has triggered a legal analysis of the vertical, welcoming input from interested parties.

A growing number of new operators are entering the DFS sector, which is currently dominated by DraftKings and FanDuel, each signing partnerships with major sporting bodies and generating billions of dollars in marketing and prizes.

Under existing federal legislation, fantasy sports enjoy a carve-out – a loophole which operators have been quick to exploit in recent times. But those who argue that DFS is nothing short of gambling – and there are a growing number of this view – point out that the development of daily fantasy sports has produced a new medium somewhat different from the traditional and more leisurely fantasy sports pastime protected by federal exemption, and one that encourages and constitutes gambling.

Proponents of DFS argue that the vertical satisfies all the requirements of the law: Prizes are publicised in advance and are not influenced by the buy-in or number of entrants; there is a definite and predominant element of skill involved; and wins are not based on point spreads or real teams.

So far, the DFS argument has held strong, and the pastime is legal in all but a handful of US states, which jealously guard the right under the constitution to make their own laws when it comes to matters such as gambling.

The Nevada decision to conduct an independent review of the legality of the current DFS product in state rather than federal terms could represent an important milestone for the sector, and perhaps the beginning of a more formalised regulatory system. As such it will be watched with interest.

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