March 23, 2016

Question of the Week: Should daily fantasy sports be considered gambling?

By the C|C Whistleblower Lawyer Team

In fantasy sports, players typically compete against one another by building teams of professional athletes, and earning points based on the actual statistical performance of those athletes throughout their respective seasons. Daily fantasy sports are a subset of fantasy sports that operate on an accelerated basis, typically through competitions in which users pay entry fees for the chance to win a share of a pre-determined pot. While daily fantasy sports websites such as DraftKings and FanDuel have had open and active participation in their offerings for nearly a decade, they have recently become embroiled in a controversy over whether daily fantasy sports are actually gambling.

A dramatic shift began on October 5th, 2015, when a New York Times article detailed a scandal in which an employee at DraftKings admitted to inadvertently releasing data prior to the third week of the NFL season, and subsequently winning $350,000 at a rival site, FanDuel, in the same week. New York Attorney General Eric Schneiderman’s office opened an investigation the next day into the two websites’ operations. Shortly thereafter, the NCAA and ESPN began to take steps to distance themselves from any relationship with the suddenly controversial websites.

On November 11th, 2015, New York Attorney General Eric Schneiderman issued cease-and-desist letters to daily fantasy sports wagering sites DraftKings and FanDuel, ordering both companies to immediately stop accepting wagers inside New York. Subsequently, Schneiderman’s office filed a formal complaint seeking a preliminary injunction against Fanduel and Draftkings.

In most states, all fantasy sports have traditionally been considered a game of skill, and consequently not a form of gambling. However, as New York, Texas, Illinois, and other states have undertaken investigations and legal actions, the future of daily fantasy sports has never been less clear. Critics of the games argue that participants are essentially wagering on the performance of individual athletes during a single game, which amounts to gambling. Proponents, on the other hand, have countered that preparing a daily fantasy team is an activity of skill that requires expertise and strategy, and therefore is not gambling.

What do you think? Please vote and/or comment below.

Should daily fantasy sports be considered gambling?

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