How Do Fantasy Sports Websites Avoid Gambling Laws?

According to Massachusetts law, using the internet for “illegal gambling” is specifically forbidden. It is interesting, then, that Massachusetts has not joined other states in banning fantasy sports websites. The key word in the law is “illegal.” Technically, fantasy sports websites are not illegal, but they have also not been “legalized.” These websites have been operating freely in most states because of the UIGEA.

The UIGEA

In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA). This law cracked down on internet gambling. Before then, there was no centralized law on the issue, and internet gambling happened without repercussions.

Within this act, there was an exception for playing online fantasy sports. Some have interpreted this exemption to mean that online fantasy sports have been legalized. This is not the case. The exemption protects fantasy sports websites from UIGEA shutdowns. Another act could be passed that makes them illegal. Under the UIGEA, individual states are also free to create their own standards and ban online fantasy sports.

Illegal gambling has three components. First, players must risk something valuable. Second, the winners and losers are determined by pure chance. Finally, the winner gains something valuable. It is that second category, pure chance, that becomes debatable in fantasy sports websites.

Considering fantasy sports to be a “skill-based” activity, Congress felt it was not classified as gambling. Gambling, according to their definition, must involve chance, not skill. This is where the topic of fantasy sports websites becomes very interesting.

If you join a fantasy league that lasts an entire season, there is a strong argument that you are engaged in a skill-based activity. As the season progresses, you can switch your lineup and trade players with others. There is a lot of trial and error involved, and you must pay close attention to the players and the games. You must keep track of who has been hurt or suspended. Your predictive skills come into play with every fantasy game.

Fantasy sports websites, however, have moved to a model that is arguably chance-based. Subscribers play one-day or one-weekend games. There’s very little room to modify your team or make skill-based decisions as in a season-long game. Essentially, you pick your lineup and hope for the best. The major websites have advertised massive jackpots, where people win millions based on a single game.

This sounds quite a bit like gambling based on chance, and some states agree. For now, there are six states in the Union that have outlawed online fantasy sports. Massachusetts’s exclusion from that list is surprising. The state is hard on alleged gamblers, as guilty verdicts can lead to five years in prison. The law itself specifically mentions the internet. As time goes by and we learn more about fantasy sports sites, it will be interesting to see if Massachusetts illegalizes them.

If you are facing gambling charges, call us today at 617-227-3700, or contact us online. With over 40 years of experience, we have the skills to defend alleged gamblers in criminal court.