PASPA, UIGEA and state fantasy sports laws have created an environment allowing for 'creative' forms of sports wagering
Legal Sports Report

Blurring The Lines On What Is ‘Legal Sports Betting’ In The US Will Continue Without Action

I’ve already opined on multiple occasions that the “ban” on sports betting in the US is a myth that people like to pretend still exists in any meaningful way in the internet age.

It’s so easy to place a bet on almost any sporting event on an offshore book that it’s difficult to believe it’s even illegal for them to operate in the US. A lot of people betting at those sites probably don’t even realize that it’s banned, it’s so easy to Google “sports betting” and find any number of sites willing to take their wagers.

There’s another side to the coin, as well: Without changes to sports betting and gambling laws in the US, there are increasingly going to be US-based companies and products that blur the line on what is sports betting.

That’s not to imply that what these companies are or will be doing is illegal. But some are going to take every liberty afforded to them under state and federal law to try to offer things that approximate sports wagering.

One example of sports betting that isn’t ‘sports betting’

The newest product that I’ve seen in the DFS/sports betting/skill gaming scene is DraftEasy.

One of its contest types is certainly not a unique or new idea: It uses the mechanics of parlay betting tied to player performances.

The site gives users the ability to pick a player from a pre-determined matchup of two players. The user then picks players from multiple matchups. If the players the user picks scores more fantasy points than than the alternative player in each matchup, the user wins a cash prize:

DraftEasy

The tagline for DraftEasy? It says it’s “the legal alternative to sports gambling.”

Now, most of us can easily identify the product that DraftEasy is offering as gambling (from a common-sense, non-legal standpoint), albeit with skill involved. There are other similar products in the US already. Hot Roster and Dober Games, for example. A similar type of game is also offered in New Jersey as a regulated form of daily fantasy sports — FastPick, powered by SportAD.

But could the product be a legal form of gambling in many US jurisdictions? Sure.

Why is this happening?

The laws in the US have created an environment where creative definitions and constructions are needed to offer the closest thing to sports betting without actually defining a product as “sports betting.”

  • First there’s PASPA, the Professional and Amateur Sports Protection Act. PASPA bans single-game wagering outside of Nevada sports betting. This law is being challenged in the US Supreme Court by the state of New Jersey.
  • There’s also the Unlawful Internet Gambling Enforcement Act. the UIGEA is the federal law that created a carveout for real-money sports that led to the likes of daily fantasy sports sites like FanDuel and DraftKings.
  • Then, of course, there’s the complicated web of state-level laws that deal with gambling (and now DFS, which are treated separately from gambling as a game of skill under the law of a variety of states.)

Games like the one DraftEasy offers try to thread this needle:

  • It declares itself “not sports betting” to avoid PASPA.
  • It uses fantasy stats to employ the safe harbor under UIGEA.
  • At the state level, it uses either DFS laws or “skill game” provisions to justify running contests for real money. (Of note, however: The list of states DraftEasy says it serves on its website does not include a lot of states that have passed DFS laws.)

Does all this work, legally, for products like DraftEasy? There’s a really good argument that it does, even though you can also argue the obverse easily as well. At a minimum, no one has tried for years to stop this or similar products from operating. So the status quo persists.

States can put their heads in the sand if they want…

My take: It’s poor policy to allow what are in essence gambling products to operate free of regulation (either as DFS or gambling). We already saw the result in the era of regulation-free DFS: Multiple companies closing down and simply taking players’ money.

Getting rid of PASPA — via the nation’s highest court or Congress — would be a good start. That action would mean states could start doing what they want when it comes to sports betting, and it would further marginalize products that are operating largely outside of any type of meaningful regulation.

If you’re a state that is sitting around and not acting in the gaming space, things like DraftEasy from US-based companies are going to continue to push the boundaries of what is:

  1. Sports betting
  2. DFS
  3. A game of skill

 

 

The bottom line: Pretend sports betting isn’t happening on a large scale in the US already, if you want. But realize you’re living in a make-believe world.

Dustin Gouker
- Dustin Gouker has been a sports journalist for more than 15 years, working as a reporter, editor and designer -- including stops at The Washington Post and the D.C. Examiner.