Latest Revelation On Federal Fantasy Sports Carve Out: Senator Who Created It Says DFS Should Be Regulated

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Senate UIGEA

The U.S. senator who introduced the language that would eventually exempt fantasy sports from the Unlawful Internet Gambling Enforcement Act doesn’t remember doing so and also said the daily fantasy sports industry should be regulated, according to a report at GamblingCompliance.

The report from GC (paywall) is the latest story on the origins of the fantasy sports carveout in the UIGEA as its place in federal law has come under more scrutiny.

Former Nevada senator talks fantasy sports

GamblingCompliance’s Tony Batt spoke with former U.S. Senator Richard Bryan of Nevada, who introduced an amendment to the Internet Gambling Act (IGA) in 1998. That bill never became law, but the language Bryan introduced — saying that putting money on the results of a fantasy sports contest should not be considered a “bet or wager” — would surface eight years later in the UIGEA, which passed in 2006. That law created the environment in which the daily fantasy sports industry grew to what it is today.

Among the things Bryan revealed in the interview:

More on the UIGEA’s history

The story advances a report from ESPN’s Ryan Rodenberg in October, in which it came to light that the carveout in the UIGEA was not a covert addition to that bill, but rather had its roots in the IGA:

A month-long investigation of archived public records by Chalk reveals that Congress’ addition of a fantasy sports exemption wasn’t the result of any last-minute inclusion by a legislator working at the behest of the NFL or another sports league, as has often been reported and speculated the past several weeks with the DFS industry under scrutiny.

On July 22, 1998, Democratic Sen. Richard Bryan of Nevada presented — for the first time — an amendment to pending legislation that exempted fantasy sports from what would be considered illegal online gambling. Sen. Bryan’s fantasy sports amendment included many of the same elements found in UIGEA, passed by Congress eight years later.

Earlier this year, we also learned that the UIGEA’s sponsor, former Rep. Jim Leach, said that he believed that “no one ever conceived” of the DFS industry when the bill was passed, as first reported by Think Progress.

All of this information about the backstory of the UIGEA comes during increasing scrutiny at the state level and with the possibility of a Congressional hearing.

The UIGEA: Crucial to DFS, or not?

The UIGEA, as the basis of daily fantasy sports cropping up in the wake of its passage, continues to come up in the DFS industry:

At the same time, there have been signs that the industry is downplaying the importance of UIGEA compliance, and rely instead on the perceived status as a “skill game” under state law. After all, the UIGEA simply creates a “safe harbor” for DFS operators and payment processing under federal law, as long as the games are legal under state law. Earlier this year, DraftKings removed UIGEA language from its website:

Evidence entered in the New York case by the attorney general’s office showed that there was discussion within the Fantasy Sports Trade Association about DraftKings potentially not being in compliance with the UIGEA. Evidence in the case also revealed that the FSTA apparently changed its paid-entry operator charter so that UIGEA compliance does not have to be enforced within a 30-day timeframe.