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Are Daily Fantasy Sports a Game of Chance or Skill?

Dec. 28, 2015|By Julia Guinane Wagner

Under federal law, internet gambling is illegal.  In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) to regulate the financial institutions that act as the intermediary between internet gambling consumers and the internet casinos.  Under the UIGEA, online casinos games, such as poker and online lotteries are illegal because they are considered games of luck.  Playing daily fantasy sports for money is considered a game of skill, however, and is therefore not considered gambling under the UIGEA. If it’s legal under federal law, why doesn’t Arizona allow residents to play daily fantasy sports?

Under Arizona regulatory laws, online fantasy sports have long been classified as games of chance and are therefore considered illegal gambling.  In February 2014, the Arizona Legislature introduced Senate Bill 1468 that would have allowed players in Arizona to partake in fantasy sports competitions offering a prize. The bill did not pass, however, because of the potential impact on the Arizona Tribal-State Gaming Compacts approved by voters in 2002.

On December 28, 2015, the Illinois Attorney General declared daily fantasy sports illegal under Illinois’s gambling laws.  The next step will be a lawsuit.  On December 11, 2015, a Manhattan Supreme Court Justice agreed with the New York Attorney General that the online gaming contests constituted illegal gambling under New York Law.  The daily fantasy sports companies are appealing.  With the addition of Illinois and New York, there are now eight states that prohibit daily fantasy sports: Arizona, Iowa, Louisiana, Nevada and Washington.

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