By Talina Handel – Thompson Rivers University 2L JD Student
The recent and rapid growth of fantasy sports leagues into a multi-billion dollar internet industry has many people questioning the legality of the activity: how are online fantasy sports games legal while the entire act of sports gambling is rendered illegal in the United States? The simple answer is that the passing of the Unlawful Internet Gambling and Enforcement Act (UIGEA) by the United States Congress in 2006 expressly made fantasy sports gaming a legal activity. Section 5362(1)(E)(ix) of the Act specifically exempts “participation in any fantasy or simulation sports game” from the definition of gambling, betting or waging, so long as the prizes and awards are known to participants before the contest commences and their value does not change with the number of participants. It also holds that the winning outcome cannot be based on any specific player’s performance or on any specific real-world game. In short, the Act carved out a special statutory niche for fantasy sports leagues and business has been booming ever since.
Regardless of the UIGEA, the government’s statutory exemption of fantasy sports leagues from the gambling world has many people scratching their heads in bewilderment. Federal and state legislation consistently define gambling activities as those in which the “opportunity to win is predominantly subject to chance.” Thus, much of the debate surrounding the legality of fantasy sports leagues is anchored in the argument that one of the key ingredients of fantasy sports games is skill; whereas sports betting is entirely dependent on chance. Participants in fantasy sports games use their discretion and knowledge to select players and ultimately build their ‘dream team’, the performance of which translates into winnings.
Although this argument is one of the main lines of reasoning advanced in favour of the legality of fantasy sports leagues, it might not be able to withstand a closer look. First, the amount of skill required on behalf of a fantasy sports game participant is very minimal. Before technology took over, participants engaged in a manual tracking and compilation of player statistics in order to build their ‘dream team’. Now, the technology of big-box fantasy sports leagues provides automatic statistical updates and access to expert fantasy sports analysis to its online participants. Thus discretion, rather than skill, is likely the more accurate word to describe a fantasy sports participant’s cognitive involvement in the activity.
Second, even if one concedes the very weak reasoning that there is in fact an element of skill involved in the selection of players in a fantasy sports game, this does not vitiate the presence of chance involved in the outcome of the fantasy game. There is an abundance of factors that can and do change an athlete’s performance each and every game; athletes are not robots after all. Wagering on a player’s performance by selecting them for one’s fantasy team based on automatically compiled statistical data is taking a chance on that player’s performance. Thus, chance is undeniably present in the outcome of a fantasy sports game and the level of ‘skill’ involved does not mitigate this fact.
The blurring of the line between skill and chance may very well be the strongest point of argument for rendering fantasy sports another form of sports betting. The United States courts have not yet decided on this issue. In 2007 Humphrey v Viacom Inc. presented the New Jersey District Court with the opportunity to delve into the difficult analysis of skill versus chance involved in fantasy sports leagues. While the court briefly hinted that skill may be the predominant factor in fantasy sports games, it declined to conduct the necessary legal analysis required to make a definitive decision and instead dismissed the case on an unrelated federal court rule.
There is ample opportunity to present a strong argument to a United States court that fantasy sports gaming is in fact an activity where the outcome is predominantly determined by chance. When this chance arises, it is likely that fantasy sports leagues will fall into the category of sports gambling and be consequently illegal under United States federal law.