Internet & the Law

The arguments continue raging over whether or not payouts for fantasy sports are legal. DraftKings CEO Jason Robins says payouts to players are permitted because it is a game of skill rather than chance.

In 2006, Congress passed a law called The Unlawful Internet Gambling Enforcement Act, which seeks to cut off funds for illegal internet gaming while making an exception for fantasy sports. The requirements that must be met include that winning outcomes be determined by statistical results and reflect the skill of the players.

At least five states do not agree with Mr. Robins. Arizona, Iowa, Louisiana, Montana and Washington have either banned fantasy sports payouts or have made the rules unfriendly to gamers.

According to the New York Times, players pay entry fees ranging from 25 cents to several thousand dollars. They may win awards ranging from a few dollars to more than $1-million. One of many issues raised is whether fantasy sports betting can become addictive. Opponents of the issue say that the exemptions should not be used to argue in favor of legalized sports gambling.

The issue came to light after an employee of DraftKings admitted releasing data and winning $350-thousand the same week on the sports fantasy site, FanDuel. For the moment, both companies have banned employees from playing games at other websites.

According to the Times, “The episode has raised questions about who at daily fantasy companies has access to valuable data…how it is protected…and whether the industry can – or wants to – police itself.”

As a result of this scandal, ESPN announced that it is cutting sponsored daily ads from within its shows.

Part of the problem is that data is normally not released until the lineups for all games are completed. Having early access to the information is a big advantage, which has been likened to insider trading.

What do you think? Should you be paid on your fantasy sports bets?


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