The author of the federal law that created a carveout for fantasy sports in the federal code said allowing DFS was not his intention.
The revelation came from a Think Progress piece called “The Hot New Form Of Fantasy Sports Is Probably Addictive, Potentially Illegal And Completely Unregulated.”
The story puts forth a view of DFS that diverges greatly from how the industry promotes itself: likening it to gambling, calling into question its legality and pointing out that the idea that the industry should be regulated.
UIGEA authors “never conceived” of DFS
None of those concepts, in and of themselves, are new. But the new ground was broken when Think Progress talked with the author of the Unlawful Internet Gambling Enforcement Act, Rep. Jim Leach (R-IA).
The UIGEA is a 2006 law that prevents financial institutions in the United States from processing transactions related to online gambling.
Leach, the story explains, was not in favor of a carveout for fantasy sports. In order to gain more support, though, a clause allowing real-money fantasy sports to be exempted was added.
But DFS, Leach stressed to ThinkProgress, was never intended to be part of the bargain:
The assumption was that while unconstrained Internet gambling could change the nature of America’s savings and investment patterns, fantasy sports would be a ‘de minimus’ footnote. No one ever conceived of it becoming a large scale activity or that it could transition into one-day contests
That’s perhaps not a shocking revelation.
At the time of the law’s passage, in 2006, season-long fantasy sports was already pretty big, but it was viewed mostly as an endeavor among friends with a little money on the line. Daily fantasy sports didn’t exist on any scale that we’re aware of.
Does Leach’s opinion matter?
In the end, Leach’s intention is interesting, but does it really change anything?
A bill’s intent generally matters less in terms of application than the actual language of the law. The UIGEA says that a “bet or wager” does not cover:
…participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions…
As the Think Progress piece and others have noted, there is some debate over whether every DFS contest offered is actually covered under the UIGEA, although there have been no legal challenges on that front, to date.
For instance, there are “single-game” fantasy contests that many would argue run afoul of the UIGEA.
The elephant in the room
However, it’s just the latest example of pushback on DFS as a non-gambling activity:
- A witness at a Congressional hearing called for the Restoration of America’s Wire Act — a bill that would ban online gambling of all forms in the United States — to end the UIGEA carveout.
- Jim Murren, CEO of MGM Resorts International, called DFS gambling.
- Earlier this year, legislators in Washington were starting to come to the same conclusion as Leach — that DFS is wholly different from its season-long sibling.
Leach’s revelation on its own is not a gamechanger for DFS. But the slow drip of people calling DFS gambling could have a cumulative effect that would create wide-ranging issues for the industry.