How Easy Streak Used Sweepstakes Law To Create A Legal, Real-Money Daily Sports Pool

Posted on April 23, 2016

[toc]This article was originally posted at the UCLA Gaming Law Association website, and is republished here with permission of the author. 

Author’s note: The views expressed in the post do not represent the views of the UCLA Gaming Law Association, UCLA Law School, or UCLA.  As of the date of this article, I do not hold any investment in EasyStreak or any other pay-to-play sports wagering site. 

As part of a continuing exploration of changes in the world of daily fantasy sports (DFS) and sports betting, this article will examine a company that is attempting to bring the excitement of daily fantasy sports to sports fans without the risks caused by the unsettled legal and legislative issues surrounding traditional DFS.

What is Easy Streak?

The new Easy Streak app offers sports fans a platform to compete in daily sports pools where they pick the winners of NBA, MLB, NFL, NHL and MLS games to win cash prizes. Easy Streak users don’t select players, they select teams; and the platform’s contests differ from traditional sports betting in that users only pick outright winners as opposed to picking against a spread or on the money line.

Easy Streak founder Matt Williams got the idea for Easy Streak while running his office’s NFL sports pools. According to Williams, Easy Streak’s goal is to capture the market of sports fans who feel daunted by the sharks dominating daily fantasy sports sites like FanDuel and DraftKings, or those who feel intimidated by Vegas oddsmakers and betting lines. He realized that the best way to engage the average fan in sports betting is with an easy-to-use and easy-to-understand “pick ’em” format instead of complicated spreads and over/unders.

Now that I’ve explained Easy Streak’s model, what makes Easy Streak any different from a legal perspective than pay-to-play daily fantasy sports sites?

Lottery, contest or sweepstakes?

In my prior article, I discussed the legal obstacles to daily fantasy sports (DFS) under state law, including the inability to separate the element of chance from the contest.

Easy Streak seeks to avoid these obstacles by operating as a sweepstakes. Sweepstakes and contests are legal forms of promotions while lotteries can only be operated by certain governmental entities.

As a legal term, “lottery” means any promotion that involves these three elements: 1) consideration (usually money) to enter, 2) chance in determining the winner, and 3) an awarded prize. Since the government is the only organization allowed to operate a lottery, any game has to eliminate one of the three elements in order to be considered legal.  Usually, sites accomplish this by removing either the consideration element (sweepstakes) or the chance element (contests).

Easy Streak operates under sweepstakes law by eliminating consideration element

One of the most popular sweepstakes is the McDonald’s Monopoly Game, wherein consumers buy McDonald’s food and receive complimentary game pieces that they can redeem for prizes.

Easy Streak’s business model operates similarly, but rather than paying for McDonald’s hamburgers, Easy Streak users pay to subscribe to Easy Streak’s “Fan Packages” to receive “Insider Articles” (similar to a subscription to ESPN Insider).

In addition to the articles, subscribers receive complimentary tokens they use to enter the real-money sports pools. Thus, the Easy Streak tokens are comparable to the Monopoly game pieces McDonald’s customers receive when they buy food.

In order to be a legal sweepstakes, consumers must have the option of “no purchase necessary” participation. Companies that use sweepstakes like McDonald’s get around this by offering a mail-in option to receive free game entries.

Pay-to-play DFS sites argue that they remove the chance element

Another way around the lottery issue is to eliminate the element of chance. Promotions that eliminate the element of chance are considered contests.

A commonly used example of a legal contest is a photography or poetry competition.  Even though judges may use their subjective opinions to determine a winner, the demonstration of superior skill by a participant, and that alone, should theoretically decide the outcome.

DFS sites long claimed that they had eliminated the element of chance and therefore operated completely legally as contests. By now, the arguments about skill vs. chance in daily fantasy sports are well recognized, and it is no longer disputed that DFS involves both skill and chance. Across the country, state attorneys general are becoming increasingly bold about declaring DFS illegal gambling because it involves at least some element of chance.

Unless the law changes, at either the state or federal levels, pay-to-play DFS sites will always carry legal risks because they cannot ever fully eliminate the element of chance.

Conclusion 

By using the sweepstakes model, Easy Streak has created an entirely different product from DFS in the eyes of the law, while still providing users with an exciting opportunity to win money on sports.

Easy Streak is a sweepstakes because it fully eliminates the consideration element. Contrastingly, pay-to-play DFS sites exist in an uncertain legal realm because they cannot fully eliminate the element of chance.

As a result of that legal distinction, Easy Streak presents far fewer legal risks to its operators and players than pay-to-play DFS.

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Peter Hammon

Peter Hammon is a second-year law student at UCLA Law School, B.A. in Economics & Accounting. He founded the UCLA Gaming Law Association.

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