A Wait-and-See Approach: Federal Prosecutors Waiting to See What States Do With Fantasy Sports

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The game of chance versus game of skill debate is nothing new in the realm of the daily fantasy sports industry. But on Friday, April 1, 2016, the U.S. Attorney for the Eastern District of Pennsylvania, Zane Memeger, indicated his office’s intent to see how states resolve the question of whether or not companies like DraftKings or FanDuel are violating anti-gambling laws:

From the Department of Justice’s perspective, we’re waiting to see what the states are going to do with fantasy sports, in terms of whether or not it’s truly a game of skill or a game of chance and something that they’re going to regulate and make unlawful, which will then tie to whether or not there’s going to be federal enforcement with regard to illegal gambling activity.

The debate is slightly further along in New York, where DraftKings and FanDuel recently reached an agreement with New York Attorney General Eric Schneiderman. Under the agreement, the fantasy sports giants will not operate paid contests in New York unless legislation expressly legalizes the contests by June 30, 2016. The case itself is being pushed along to the Supreme Court Appellate Division for review, which will take place in September.

There has also been discussion on the issue of how such contests should be regulated, if they are to be allowed at all. Suggested regulations have included auditing requirements for certain parts of the fantasy football calculus, as well as bans on fantasy advertising during sports broadcasts. Some have also voiced concerns about the long-term effects fantasy sports will have on gambling addiction rates.

For the time being however, it appears the states are the ones stuck with the question: chance or skill?

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