Are fantasy sports payouts legal? CEO says it's a game of skill like the stock market
Corrected: The CEO of the fantasy sports league DraftKings says payouts to players are permitted because it is a game of skill rather than a game of chance.
The Unlawful Internet Gambling Enforcement Act of 2006 seeks to cut off funds for illegal Internet gaming while carving out an exception for fantasy sports that meet certain requirements. Those requirements include that winning outcomes be determined by statistical results and reflect the skill of the players.
Robins said fantasy sports is like chess or the stock market. The players become more skilled as they play, and the game is analytical, he said.
Fantasy sports websites don’t operate in at least five states—Arizona, Iowa, Louisiana, Montana and Washington. Those states have banned fantasy sports payouts or the laws there are unfriendly, according to the Arizona Republic.
A New York Times op-ed says players pay entry fees ranging from 25 cents to several thousand dollars to win awards ranging from a few dollars to more than $1 million. The newspaper raises questions about whether fantasy sports can be addictive and says the exemption should not be used as an argument in favor of legalized sports betting.
The issue is being raised amid a looming scandal in the fantasy sports industry. An employee of DraftKings admitted inadvertently releasing data and then winning $350,000 at the sports fantasy website FanDuel the same week, the New York Times reports.
DraftKings released a statement saying employees of both websites have won money from other fantasy sports websites. Both companies say they temporarily won’t let their employees play the games at other websites; already the employees are banned from play at their own companies. The companies also say access to data by employees is rigorously monitored.
According to the Times, “The episode has raised questions about who at daily fantasy companies has access to valuable data, such as which players a majority of the money is being bet on; how it is protected; and whether the industry can—or wants—to police itself.”
Story corrected on Oct. 6 to state that the Unlawful Internet Gambling Enforcement Act of 2006 seeks to cut off funds for illegal Internet gaming while carving out an exception for fantasy sports that meet certain requirements.