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Final Fantasy: Fantasy Sports vs Gambling Laws

Final Fantasy: Fantasy Sports vs Gambling Laws: Illustrations by Justyn Iannucci

Illustrations by Justyn Iannucci

In March 2010, Chris Prince was obsessing over his fantasy baseball teams—a spring ritual in which he has indulged for nearly two decades—when an ad for FanDuel caught his eye. The new fantasy league promised tournaments that cash out daily instead of at season’s end, and he signed up on a lark. Username: beermakersfan.

Five years later, Prince has won more than $650,000, bought a house and earned minor celebrity in the exploding world of daily fantasy sports, the next wave among America’s 30 million fantasy sports players. “My wife was skeptical at first with all the time it took, but once I won a chunk of money, it alleviated her concerns,” he says with a chuckle.

The concept behind daily fantasy sports is simple: Players buy in with $1 to $1,000, build rosters under salary limits and earn points when their picks score big. Whoever holds the most points at the end of the day wins the pot. Where fantasy players once angled and argued for months, the gameplay here refreshes every 24 hours. And with research that shows the desire to play increases as a player’s control increases, daily fantasy trumps its counterpart psychologically too: What lends more control than the ability to buy and drop team members every night?

When CEO Nigel Eccles co-founded FanDuel in 2009, he projected 10 million potential players, but the game has proved to be far more popular. “Many, particularly the basketball players, had never played fantasy before. We started to think about the 80 million sports fans who don’t play fantasy,” says Eccles. He was right: In the past year, FanDuel has quadrupled its numbers, to more than half a million paying players.

The FanDuel model is also a clever play around gambling laws. Although online gambling is still illegal, the 2006 Unlawful Internet Gambling Enforcement Act allows for fantasy sports and other “games of skill.” The murky definition of “skill” is all that stands between sites like FanDuel and federal seizure, which explains FanDuel’s absence in five states. “The federal statute involves a skill-based game. Somewhere along that continuum these contests ceased to be skill-based and involved a greater level of chance,” says Marc Edelman, a law professor who consults for the industry. “What’s labeled ‘daily fantasy sports’ runs the gamut. There’s FanDuel and its imitators, which involve math and thinking, and then contests with three clicks and you’re in.”

Formal court battles to determine the exact legality of the new category may be brewing. In August, Kansas clarified that any league with a buy-in, daily or not, is illegal, and Edelman estimates a dozen other states have similar statutes. Eccles claims his data prove FanDuel is a skill-based game.

Meanwhile, Prince and millions of others continue to play. The 37-year-old regularly fields questions from friends about the proposition of drafting 49ers running back Frank Gore over Eagles running back Darren Sproles. “I’m the go-to guy for fantasy advice. It’s fun,” he says. And lucrative.

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