Several weeks after many football fans held their league drafts, Attorney General Maura Healey is reviewing the legality of the popular fantasy sports website Draft Kings. And its two dominant companies, DraftKings and FanDuel, are touting lucrative opening week prizes to try to draw more customers as more competitors pop up.
“Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the National Football League season”, said Rep. Pallone, the top Democrat on the House Energy and Commerce Committee. It creates big controversy, but also big profits.
The $70 billion fantasy football market may be adding Florida to what is anticipated to be a growing list of states that are examining their respective gambling laws, and determining that the activity is a game of skill rather than one of chance.
“It’s a game. It’s every day, you can change players on a weekly or daily basis”.
It is estimated that 57 million people will participate in fantasy sports this year.
Have you tried fantasy sports?
“Yahoo, given its leading position in fantasy sports, likely provides some of the most valuable Internet ad inventory for DraftKings and FanDuel”, DiClemente said.
In July, DraftKings raised a 0 million investment led by Fox Sports, with other investors including the Kraft Group, owners of the New England Patriots, and Boston financial giant Wellington Management. But the fantasy industry says it’s already legal and labels itself as “gaming, not gambling”.
Uncle Sam relies on honesty and big winnings reported on 1099-MISC forms to collect taxes from fantasy sports winners. Because they want their cut, which they can’t get from the Nevada and Delaware sports books. Major League Baseball Commissioner Rob Manfred came out for sports gambling earlier this year, just before sealing a deal with DraftKings. They’re betting on hybrid games that combine traditional gambling games of chance with the skills associated with younger players’ online favorites. “You’re betting on a dispersed team across many games”, said Treadway. Out of that $5, one million players, $5 million goes to DraftKings and they may pay out $4.9 million.
Unfortunately, a 2-1 ruling by a federal appeals court last month told NJ that its dream of a tsunami of sports wagering revenue will have to remain a fantasy. All of these things fall in the letter of the law.
But when money is involved, some said regulation is sure to follow. The lone voice in Congress calling for a federal investigation into whether the major fantasy league websites are violating PASPA is a guy from New Jersey, Rep. Frank Pallone, Jr.
While those in the fantasy sports industry utilize a carve out contained in the Professional and Amateur Sports Protection Act of 1992, or Bradley Act, due in part to a 1991 opinion by Florida’s 33rd Attorney General Bob Butterworth that states that NFL fantasy leagues that offer cash prizes for fee-based contests based on performance of the respective teams is illegal gambling, leaves Florida’s legal situation unclear.