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10 / 20 - Are Fantasy Sports Illegal Gambling?

Updated: Jan 15

10 / 20 - Are Fantasy Sports Illegal Gambling?


Introduction

According to Stats Inc, 56 million people play fantasy sports, which out of those 56, 10 million of those players are teenagers in North America. Fantasy sports went from being a game played among friends to multi-billion business industry. Some well known examples of this are Draftkings and FanDuel, which is owned by Time Warner. Fantasy sports have entered into the legal system, where the New York Supreme Court’s Appellate Division upheld a lower court ruling that fantasy sports contests violate that state’s constitutional ban on gambling. To understand the fuss of Fantasy sports, we have to understand what is fantasy sports?


What is Fantasy Sports?

Fantasy sports is a type of game where fans choose from real plays in an online draft, where they could assemble a team. Fantasy sports are good for competing with friends or only people they know. How do fantasy teams win? Fantasy sports apps use real-life statistics to determine whose fantasy team is good. In other words, luck and skill determine one’s team winning chances. And fans could track how their fantasy team is doing using apps. However, people can lose money in these games, which is why there were several individuals in NY who filed a lawsuit known as the White v. Andrew Cuomo.


What is the fuss about Fantasy Sports in NY?

According to the New York State Constitution, Article 1 Section 9(1) outlaws “lottery or the sale of lottery tickets, pool-selling, book-making, or any other kind of gambling.” In order words, Gambling is illegal in the state of New York. And it continues by stating that “. . . the legislature shall pass appropriate laws to prevent offenses against any of the provisions of this section.” Using this last part of that article, several New York assembly members voted in favor of amending article 14 of the New York constitution in 2016, which signified that fantasy sports are not gambling. However this year, a group of individuals filed a lawsuit against the governor of New York, Andrew Cuomo. This was known as the White vs. Cuomo. The New York Appellate Division ruled in favor of the plaintiffs, which meant that the 2016 provision was unconstitutional. However, this ruling could still be appealed, which makes it uncertain whether fantasy sports are legal or not.


Are Fantasy Sports legal?

Technically, yes it is legal by Federal law. In 2006, Congress passed the Unlawful Internet Gambling Enforcement. It clearly states that fantasy sports are not gambling because it is considered a game of skill rather than a game of chance. However, players cannot bet on the outcome of a single game or the performance of a single player. But that does not mean that Fantasy Sports are enforced, as there are five states that ban fantasy sports. Those states include Alabama, Arizona, Hawaii, Iowa, Louisiana, Nevada, Montana, and Washington. But because there was a betting scandal within Fanduel and Draftkings, where employees were cheating by using insider information to win prizes five years ago. It is uncertain that Fantasy sports would continue to be legal because there have been talks to regulate fantasy sports within congress. As of right now, the future is cloudy for the Fantasy Sports industry but the industry will continue to fight.


Sources:

  1. https://www.nytimes.com/2015/10/06/sports/fanduel-draftkings-fantasy-employees-bet-rivals.html?_r=0

  2. https://www.cnbc.com/2016/02/05/fantasy-sports-the-lucrative-market-that-may-be-legal.html

  3. https://www.techradar.com/news/is-daily-fantasy-legal-in-what-states-and-is-it-really-gambling

  4. https://www.americanbar.org/groups/litigation/publications/litigation-news/top-stories/2020/are-fantasy-sports-illegal-gambling/

  5. http://decisions.courts.state.ny.us/ad3/Decisions/2020/528026.pdf

Written by Brandon Blanco, Political Chair. The views expressed in the journal are their own and not the view of The La Raza Pre Law.

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