It starts out as a group of like-minded football fanatics eager to match wits and prove who has the ultimate imaginary compilation of professional offense and defense players. In the end, fantasy football leagues often take a lucrative turn toward buy-ins, payouts and online collaboration, resulting in a final, winner-take-all question: is any of this actually legal?
You may have never thought about it as gambling per se, but a casual bet with a fellow sports fan can quickly turn illegal in several states with conservative gambling laws despite the fact that the practice is, in general, legal under federal laws.
The following takes a look at the basic structure of the typical fantasy football league as compared with select state gambling definitions. It also includes tips on how to best pursue your fantasy football dreams without fear of interruption by the local vice squad.
I threw in $30 for a fantasy football pool. Is this really illegal?
It seems simple enough. A few friends convene together, take turns selecting players in various key offensive and defensive positions and compete for the highest season-end fantasy score. Sounds innocent, right? It is until someone decides to make it interesting by requiring a buy-in for participants.
The good news is that, under federal law, you’re still on legal ground. Under the Unlawful Internet Gambling Enforcement Act of 2006, or the UIGEA, Congress exempts the majority of online sports-related fantasy leagues so long as the fantasy team is not based on membership on an actual team, and
(i) Available prizes are established and made known in advance of the game;
(ii) Winning outcomes “reflect the relative knowledge” of the participant, and;
(iii) No successful outcome is based on the score or point-spread of an actual game or solely on the performance of a single athlete.
Moreover, general federal gambling laws also exempt fantasy sports, whether online or not, as long as the league participants are not in the business of wagering or gambling. In other words, casual placement of money on a fantasy league wager does not constitute unlawful gambling, at least according to the federal government.
States, on the other hand, are free to maintain stricter laws, and the legal analysis over whether fantasy football leagues are permitted varies heavily depending on your state’s willingness to allow a little risk.
States impose stricter guidelines
Under the unlawful gambling statutes of several U.S. states, an activity is considered illegal if it contains three distinct elements: consideration, reward and chance.
The first element, consideration, is also referred to as a bargained-for exchange. Simply put, consideration refers to the payment of a sum of money in exchange for the opportunity to participate in the game. This could be in the form of an entry fee, buy-in requirement or similar cash-money prerequisite to participating in the league.
The second element, reward, is equally straightforward. Is there a monetary or substantive result at the end of the fantasy rainbow? If so, this element is met and the final inquiry involves whether the successful fantasy leaguer must rely on chance to receive his bargained-for reward.
The element of chance is interpreted a number of different ways depending upon the jurisdiction. Some states find the presence of chance if any aspect of the fantasy league is reliant upon forces and results out of the control of the participant. Other states employ a so-called predominant skill test that examines whether a certain game requires more skill than chance. If the amount of skill required to succeed outweighs the element of chance, the activity may be deemed acceptable.
What should I do?
If you are interested or already engaged in a fantasy football league, the first step is to unearth your state’s take on fantasy sports gambling. In general, if your team follows the traditional fantasy football format, you are unlikely to face any sort of opposition from local or federal authorities.
However, leagues that award extra fantasy points based on the outcome of actual NFL games are more likely outside the purview of the UIGEA. You may face additional risks if your roster is small or your team results are based on a fraction of the actual 16-game season, as this format lends itself more to acts of chance and less to success based on the skill of the fantasy team creator.
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