If you are like millions of Americans who watch sports on a weekly or even daily basis, you have no doubt seen commercials for some sort of fantasy sports league. Yet two controversial questions surround all online fantasy sports betting – should it be regulated, and if so, should it be regulated at the state or federal level?
With new websites popping up seemingly every year, including new ones such as Draftkings.com and Fanduel.com, casual and serious sports betters are getting a greater variety of online fantasy leagues. Of course there are plenty of older sites as well. ESPN and Yahoo both have had fantasy sports for many years, the main difference being that the newer sites have much larger payouts to offer to customers.
Fantasy sports betting almost always consists of drafting and building a team to play with every week against other players in a weekly or even season-long league. These leagues aren’t limited to the most popular sport in America, the National Football League, but they also include other sports such as the National Hockey League, Major League Baseball and the National Basketball Association, among others.
The fantasy sports business is a multibillion dollar industry bringing in around $70 billion dollars a year, according to Forbes.com. As of June of this year, over 57 million individual users play in fantasy sports leagues. This is a 20% rise from 2014 and it is most likely attributed to the introduction of newer and more diverse gaming sites.
Another major contributing factor is of course media attention. Almost every network airs multiple commercials per game – I recently watched an NFL game and it seemed like every other commercial was for some sort of fantasy betting website, which serves to increase their already exploding popularity among fans.
When it comes to rules and regulations, fantasy sports gaming is a touchy subject. Many people wonder if the federal government should step in and regulate these sites, especially considering that some winnings can be well over $100,000. Personally, I think that the states should make their own decisions, which has been the case so far.
That being said, there are still some federal regulations that must be followed by every state. The Unlawful Internet Gambling Enforcement Act (UIGEA) was introduced in 2006 by Congress to fight transfer payments within the U.S. This of course has changed quite a bit with PayPal recently being reintroduced for limited gambling funds in Nevada and New Jersey. This will quickly spread from state to state and from sport to sport.
The existing regulations are often clouded and taken advantage of due to numerous loopholes, yet some are strictly enforced. For instance, all fantasy sports websites must disclose league prizes before the contests and the value of the prizes cannot be influenced by the number of players competing. Additionally, winning outcomes must use statistical information of performing athletes and no winning outcomes can come from individual athletes – they must be from the entire team.
The Interstate Wire Act states that communication facilities using wires to transmit wagers is illegal. This law also states that one cannot be engaged in betting while working in a wire
communication facility and/or transmitting interstate information. Basically, this is an effort to cut down on insider trading within the fantasy sports business. As I mentioned before, many states prefer to regulate their own fantasy sports gaming. State residents must comply with the individual states rules or face fines.
As of September 2015, Kansas and Maryland allowed fantasy sports contestants to play, but have to follow specific language within the UIGEA rules. The one state as of now to prohibit online fantasy sports with entry fees and prizes is Montana, but Maryland and Washington are currently trying to pass their own bans. Several states including Arizona, Louisiana, and Washington, among others, have a clause dubbed the “Strict Chance”, which states that any contest with slight elements of uncertainties, such weather and individual player injuries, cannot dictate the outcome of fantasy games.
Individual states and the federal government will have to keep pumping out new rules and regulations while facing fierce opposition from sports attorneys. Recently however, New Jersey congressmen Frank Palone Jr. delivered a letter to the House commerce community asking for them to consider how daily sports betting sites are different from other sports betting sites and even gambling sites. This is uncharted territory when it comes to rules and regulations but I feel that with time we will find compromise and hopefully states can establish their own taxes and fees to cash in on this billion dollar industry.