The Future of Daily Fantasy Games in Pennsylvania
By Zachary G. Evans, Staff Writer
In a not-so-shocking announcement, the New York Attorney General, Eric Schneiderman, declared daily fantasy websites illegal gambling under New York Law. In reaching this conclusion, Schneiderman opined that daily games constitute gambling because each bet “represents a wager on a ‘contest of chance’ where winning or losing depends on numerous elements of chance to a ‘material degree.’” Following this announcement, Schneiderman provided both FanDuel and DraftKings cease and desist letters, threatening future legal action if the companies failed to comply.[1]
Again, in not-so-shocking responses, both FanDuel and DraftKings’ spokespersons threatened to challenge the announcement in court and are in the process of obtaining an injunction. In a year where DraftKings and FanDuel have guaranteed to pay out one and two billion dollars, respectively,[2] Schneiderman’s declaration resulting in a diminished consumer market could significantly impact those promises. FanDuel is stating that the loss of New York as a market for its services is will lead the business to suffer irreparable harm, especially coming just a few weeks before Thanksgiving.[3]
Both DraftKings and FanDuel are fighting back to the classification as a game of chance. In their complaints against Schneiderman and New York, both attempt to differentiate between Daily Fantasy games and betting on outcomes by arguing that the predicting an individual’s performance contains elements of skill, not found in gambling on outcomes of games.[4]
Schneiderman utilized New York statutory language in forming his decision. Specifically, where illegal “Gambling” involves risking something of value upon the outcome of a contest of chance or a future contingent event not under his control or influence, upon an agreement or understanding that he will receive something of value in the event of a certain outcome.”[5] New York defines a “Contest of Chance” as one where “the outcome depends in a material degree upon an element of chance, notwithstanding that skill of the contestants may also be a factor therein.”[6]
FanDuel and DraftKings rely upon the Unlawful Internet Gambling Enforcement Act (UIGE) of 2006 for their primary defense.[7] Specifically, UIGE provides that fantasy sports is exempt from its scope where “no winning is based on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams.”[8] As the statute is written, individual players do not fall within the prohibition of UIGE.
Federally, online fantasy games that do not depend on “any single real-world team” are not considered gambling. DraftKings and FanDuel may very well be federally protected from a national attack, but traditionally, regulation of gambling has been delegated to the individual states.
Luckily (for all you daily-fantasy players out there), Pennsylvania does not have any similarly worded statutory prohibitions as New York. Pennsylvania’s statutory bans on gambling is limited to lotteries and video gambling devices.[9] With the current turmoil surrounding the Pennsylvania Attorney General, there most likely will not be any offensive action that could impact this daily fantasy season. New York joins only Nevada, Arizona, Iowa, Montana, Louisiana, and Washington as claiming that daily fantasy sites, specifically FanDuel and DraftKings, are illegal.[10]
[1] Belzer, Jason. New York Attorney General Says Daily Fantasy Illegal, DraftKings and FanDuel Must Cease Operations. Forbes.com, November 10, 2015. <http://www.forbes.com/sites/jasonbelzer/2015/11/10/new-york-attorney-general-says-daily-fantasy-illegal-draftkings-and-fanduel-must-cease-operations/>.
[2] Bianco, Anthony (Cognoscenti of Sports). A Kings Duel: Law vs. Fantasy Sports. sites.law.duq.edu/juris, October 16, 2014.
<http://sites.law.duq.edu/juris/a-kings-duel-law-vs-fantasy-sports/>.
[3] Dolmetsch, Chris. FanDuel Asks Judge to Block N.Y. Attorney General’s Shutdown Bid. Bloomberg Business, November 16, 2015. <http://www.bloomberg.com/news/articles/2015-11-16/fanduel-asks-judge-to-block-n-y-attorney-general-s-shutdown-bid>.
[4] < http://www.scribd.com/doc/289591230/DraftKings-v-Schneiderman>; < http://www.scribd.com/doc/289591106/Fanduel-v-Schneiderman>.
[5] N.Y. Penal Law § 225.00(2) (McKinney 2015)
[6] N.Y. Penal Law § 225.00(1) (McKinney 2015)
[7] See note 1, supra.
[8] 31 U.S.C.A. § 5362(1)(E)(ix)(III)(aa) (West 2015)
[9] 18 Pa. Stat. and Cons. Stat. Ann. §§ 5512, 5513 (West 2015)
[10] Grove, Chris. What Are The States Where You Can Play Daily Fantasy Sports. LegalSportsReport.com, November 14, 2015. <http://www.legalsportsreport.com/daily-fantasy-sports-blocked-allowed-states/>.
