Daily Fantasy Sports (DFS) is a form of paid contest that allow players to compete by building a team of professional players from the chosen leagues. The player earns points based on the performance in the real competitions. According to an excerpt on Wikipedia, the DFS industry is dominated by two companies, the Boston based DraftKings and New York based FanDuel. These companies control up to 95% of the $2 billion plus Daily Fantasy Sports market. These services were established using venture capital supported start-ups from various stakeholders.
The stakeholders include club owners, leagues, sports broadcasting companies and investment firms. The legality or illegality of the DFS in the US is determined by the states and the existing gambling laws. Cash based fantasy sports are considered legal under the Unlawful Internet Gambling Enforcement Act (UIGEA). According to the website Daily Fantasy Café, the federal law defines fantasy sports as a game of skills, rather than a form of gambling. The essence of skills is well grounded because the player needs to be familiar with the leagues, players, teams and salary cap management.
The sport was first declared legal in 1999 under the UIGEA Act. According to a report by ABCNews, 20 states in the US have pending legislation regarding daily variety fantasy sports, with the majority being favorable. Most of the existing laws and those being proposed are targeted at protecting the consumers. On the whole, DFS laws in the US are generally fractured. The states where DFS is largely illegal include Arizona, Louisiana, Iowa, Washington and Montana. The states without any form of DFS legislation include Alaska, Wyoming and Utah.
The following states allow DFS:
Arkansas: The state approved cash based DFS in 2017. The new law signed in April by Gov. Asa Hutchison, touches on a number of issues, including the amount of taxes the operators are required to pay.
Virginia: The State Gov, Terry McAuliffe signed into law an Act that legalizes pay to play, Daily Fantasy Sports on March 2016. Among other things, the law covers operator regulations and licensing fee requirements.
Indiana: The law permitting certain kinds of Daily Fantasy Sports contests was signed into law in 2014 by former Indiana Gov. and current US Vice President, Mike Pence. DFS is recognized as a skill by the state’s gambling commission. Players must be age 18 and above. High school or college sports contests cannot be included in the DFS.
Colorado: Like most other states, Colorado prohibits fantasy sports in college sports. The state approved DFS in June 2016 following the signing of the DFS bill into law by the Governor. The biggest DSF player in the market is FanDuel.
Massachusetts: The issue of DFS has hit the headlines several times in Massachusetts. In March 2016, State Attorney General, Maura Healey set in place a multi-pronged regulation guiding the sport. The regulations placed several safeguards, including banning players under age 21 from participation.
Kansas: The state attorney general, Derek Schmidt released a memo that mostly favored DFS in March, 2015. The DFS game is considered a skill and not a lottery in the state of Kansas provided it falls within the agreed parameters of the law.
Mississippi: In 2016, Gov. Phil Bryant appended his signature to a legislation permitting DFS. Under the new laws, operators must be registered with the state’s gambling commission.
Missouri: In June 2016, Missouri through Gov. Jay Nixon approved a legislation permitting DFS.
The rules cover everything from auditing matters to licensing fee. Contest based on college sports are disallowed under the new DFS laws. The Missouri Gambling Commission is legally bound to conduct oversight.
Maryland: The state expressively excludes Daily Fantasy Sports from its stringent gambling laws. Maryland passed a law favorable to DFS in 2012, even though some clarity is being sought by parties across the divide.
New York: The state approved a legislation that explicitly approved DFS on August 2016. In the law signed by Gov. Andrew Cuomo, there is a balance that allows the sport to run smoothly in line with the consumer protection safeguards set by the state legislatures.
Rhode Island: The state approved DFS in 2016. In an approval letter written by state Attorney General Peter Kilmartin, DFS was described as a lawful game of chance.
Vermont: A bill allowing cash based Daily Fantasy Sport was signed into law in June 2017 by Vermont Gov. Phil Scott. The comprehensive legislation has also set a number of caps to protect the consumer, such as segregation of player funds from operating accounts and prohibition of certain computer scripts.
Tennessee: The new bill legalizing cash based DFS in Tennessee magnanimously approved it as a sport, unlike in the previous one that prohibited DFS. The bill was signed into law in April 2016 by Gov. Bill Haslam; it includes several items, including licensing agreement.
A growing number of states in the US are allowing DFS to thrive by instituting favorable laws. A brief published by PBS on March 2015 indicates that a total of 12 states consider DFS illegal or a form of gambling. Whereas 22 states by enlarge allowed DFS, another 16 states were in the process of reviewing their laws regarding the sport or assessing its legality through the pending bills. In states where there are pending bills, support for the sport is strong because emphasize is being placed on oversight rather than placing restrictions or a ban.