Anyone who has watched much television recently, especially televised football games, has seen a lot of advertising for DraftKings, a fantasy sports company. A company called FanDuel is also competing for the dollars of sports fans. LBN’s Emily Collins reports that the fantasy sports companies may be due for some closer attention than they might want.
New Jersey Congressman Frank Pallone, a member of the House Energy and Commerce Committee, recently requested a hearing into the legality of fantasy sports. Pallone argues that these websites offer a form of gambling on sporting events. (Sports gambling is illegal in New Jersey.) Pallone says that real money is at stake for those who use the fantasy sports websites.
The question as to the legality of these websites involves two federal laws. The first is the Professional and Amateur Sports Protection Act of 1992. The statute made sports wagering illegal except in states where sports wagering was already allowed. The statute creates “an exclusive club of those who came before the law” and are grandfathered in to sports betting. This law prevented a recent effort by New Jersey Governor Chris Christie to legalize sports gambling in his state.
The other statute is the Unlawful Internet Gambling and Enforcement Act of 2006. The law specifically protects gambling on fantasy sports. Nigel Eccles of FanDuel set up his fantasy enterprise so as to take advantage of the loophole in the UIGEA. FanDuel and DraftKings have been very public about the success of their businesses. And the NFL, the NBA, and individual sports teams have financial interests in the success of fantasy sports.
Representative Pallone and the HECC may have a big task on their hands if they decide to butt heads with the fantasy sports industry.
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