Distinguishing Fantasy Sports from Sports Betting

It’s A Game of Skill

Fantasy sports leagues are games of skill.  Managers must take into account a myriad of statistics, facts and game theory in order to be competitive.  There are thousands of websites, magazines and other such publications that seek to synthesize the vast amounts of available fantasy sports information to keep their readers informed and competitive.  A manager must know more than simple depth charts and statistics to win; they also must to take into account injuries, coaching styles, weather patterns, prospects, home and away statistics, and many other pieces of information in order to be a successful fantasy sports manager.

The highest level competition of fantasy sports games (such as the National Fantasy Baseball Championship at https://nfc.shgn.com/baseball) routinely sees top players win games more frequently than if the contests were random or highly based on chance[1]. It’s a pattern that has been repeated with many fantasy sports contests and competitions: the highly skilled fantasy player wins more frequently. A study from the Massachusetts Institute of Technology in 2018 found that based on the win/loss records of thousands of fantasy players over multiple seasons, that the game of fantasy football is inherently a contest that rewards skill.[2]

State and Federal Law Does Not Define Fantasy Sports As Gambling.

In the U.S., the determination of whether a contest is a game of skill or gambling has been left to individual states in most cases. In 45 states, generally speaking, the determination is whether there is more skill than luck in a contest.

As of April 2020, 21 states have enacted laws to confirm that fantasy sports are legal games of skill. (More information at https://thefsga.org/current-u-s-state-by-state-regulations/ ). Among the other 29 states, several attorneys generals have issued opinions on the legality of fantasy sports and four states have laws not conducive to paid fantasy sports contests, where the determination is whether there is any chance in a contest (More information at https://thefsga.org/current-u-s-state-by-state-regulations/ ). No state has passed a law making fantasy sports illegal.

In addition, the Federal government has also weighed in on the legality of fantasy sports. The Unlawful Internet Gambling Enforcement Act of 2006 included “carve out” language that clarified the legality of fantasy sports. It was passed by Congress and signed into law on October 13, 2006 by President George W. Bush.  The act makes transactions from banks or similar institutions to online gambling sites illegal, with the notable exceptions of fantasy sports, online lotteries and horse/harness racing.

The bill specifically exempts fantasy sports games, educational games or any online contest that “has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participant’s individual performances in such sporting events…”

While this Federal law covers only banking transactions and defers to state laws, it shows that the Federal government has determined that fantasy sports structured as games of skill are not classified as gambling.

[1]    https://www.nytimes.com/2011/10/25/sports/baseball/pig-farmers-true-prizewinner-his-fantasy-baseball-team.html

[2]    http://news.mit.edu/2018/hosoi-study-skill-fantasy-sports-1107