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The End of (Unregulated) Daily Fantasy?

By Christopher Coble, Esq. on October 08, 2015 6:57 AM

You may have missed this little tidbit in the latest deluge of daily fantasy advertisements, but the New York Attorney General's Office has begun investigating both daily fantasy sites on the suspicion that their employees "have won lucrative payouts based on inside information not available to the public." This after news broke that a DraftKings employee who had access to ownership and lineup data netted $350,000 in winnings at rival FanDuel.

There have been rumblings of a congressional investigation into daily fantasy sites, and this latest scandal may bring daily sports gambling fantasy leagues as we know them to a grinding halt.

Wait, How Is This Not Gambling?

It pretty much is, at least as much as playing poker is gambling. But daily fantasy sites and their proponents are quick to point out that fantasy leagues are defined and legal under the Unlawful Internet Gambling Enforcement Act (UIGEA). Under the statute, it's legal to wager in online contests that have "an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events."

So, for now, online fantasy leagues and contests have a legislative exception to illegal gambling laws.

And How Long Will This Not Be Gambling?

Perhaps not for long. Although Roger Goodell may have us think otherwise (perhaps due to the proliferation of ads during NFL games and on NFL networks and websites) many people look at fantasy sports like gambling. And now the NY Attorney General is doing the same.

The AG's office sent letters to DraftKings and FanDuel requesting information on employees that have access to inside or proprietary information and the policies each site has in place to ensure employees don't use that info to gamble bet wager fill out their own daily fantasy lineups. So if you find their TV ad blitz compelling and you (incorrectly) think you can win money on daily fantasy sites, you better set your lineup now, while the settin's good. It may not be around for much longer.

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