Daily fantasy sports (DFS) are a subset of

fantasy sport A fantasy sport (also known less commonly as rotisserie or roto) is a game, often played using the Internet, where participants assemble imaginary or virtual teams composed of proxies of real players of a professional sport. These teams compete bas ...

games. As with traditional fantasy sports games, players compete against others by building a team of

professional athlete In professional sports, as opposed to amateur sports, participants receive payment for their performance. Professionalism in sport has come to the fore through a combination of developments. Mass media and increased leisure have brought larg ...

s from a particular

league League or The League may refer to: Arts and entertainment * ''Leagues'' (band), an American rock band * ''The League'', an American sitcom broadcast on FX and FXX about fantasy football Sports * Sports league * Rugby league, full contact footba ...

or competition while remaining under a

salary cap In professional sports, a salary cap (or wage cap) is an agreement or rule that places a limit on the amount of money that a team can spend on players' salaries. It exists as a per-player limit or a total limit for the team's roster, or both. Sever ...

, and earn points based on the actual statistical performance of the players in real-world competitions. Daily fantasy sports are an accelerated variant of traditional fantasy sports that are conducted over short-term periods, such as a week or single day of competition, as opposed to those that are played across an entire season. Daily fantasy sports are typically structured in the form of paid competitions typically referred to as a "contest"; winners receive a share of a pre-determined pot funded by their entry fees. A portion of entry fee payments go to the provider as

rake Rake may refer to: * Rake (stock character), a man habituated to immoral conduct * Rake (theatre), the artificial slope of a theatre stage Science and technology * Rake receiver, a radio receiver * Rake (geology), the angle between a feature on a ...

revenue. In the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

, the daily fantasy sports industry was dominated by two competing services: the

New York New York most commonly refers to: * New York City, the most populous city in the United States, located in the state of New York * New York (state), a state in the northeastern United States New York may also refer to: Film and television * '' ...

-based

FanDuel FanDuel Group is an American gambling company that offers sportsbook, daily fantasy sports, horse racing, and online casino. The company operates sportsbooks in a number of states including New Jersey, Pennsylvania, Indiana and West Virginia, as ...

, and the

Boston Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...

-based

DraftKings DraftKings is an American daily fantasy sports contest and sports betting company. The company allows users to enter daily and weekly fantasy sports–related contests and win money based on individual player performances in five major American ...

. Both companies were established as

venture capital Venture capital (often abbreviated as VC) is a form of private equity financing that is provided by venture capital firms or funds to startups, early-stage, and emerging companies that have been deemed to have high growth potential or which h ...

-backed

startup companies A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...

, received funding from investment firms, sports broadcasters, leagues, and team owners, and became known for the aggressive marketing of their services. As of September 2015, both companies had an estimated value of at least $1 billion and controlled 95% of the U.S. DFS market. The two primarily compete against smaller DFS services, such as Fantasy Aces and

Yahoo! Sports Yahoo! Sports is a sports news website launched by Yahoo! on December 8, 1997. It receives a majority of its information from STATS, Inc. It employs numerous writers, and has team pages for teams in almost every North American major sport. B ...

. The popularity of the daily fantasy format has been credited to its convenience in comparison to season-length games, as well as the focus on major cash prizes in the promotion of these services. Daily fantasy was also credited with helping to improve television viewership and engagement with sports. DFS faced criticism over its semblance to

sports betting Sports betting is the activity of predicting sports results and placing a wager on the outcome. The frequency of sports bet upon varies by culture, with the vast majority of bets being placed on association football, American football, basket ...

; multiple U.S. states ruled that DFS contests constituted gambling and sports betting—which, at the time, was effectively illegal in most states under the

Professional and Amateur Sports Protection Act of 1992 The Professional and Amateur Sports Protection Act of 1992 (), also known as PASPA or the Bradley Act, was a law, judicially-overturned in 2018, that was meant to define the legal status of sports betting throughout the United States. This act ...

—arguing that their elements of chance were predominant over those or skill, or how much control the player has over the outcome of the game. A

New York State New York, officially the State of New York, is a state in the Northeastern United States. It is often called New York State to distinguish it from its largest city, New York City. With a total area of , New York is the 27th-largest U.S. sta ...

lawsuit, spawned from an investigation of allegations that DraftKings and FanDuel employees had used

inside information Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...

to win cash prizes from each other, spawned retaliatory lawsuits from the companies. They argued that the rulings were the result of a misinterpretation of the nature of their services. By December 2017, 18 states, including

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and

Virginia Virginia, officially the Commonwealth of Virginia, is a state in the Mid-Atlantic and Southeastern regions of the United States, between the Atlantic Coast and the Appalachian Mountains. The geography and climate of the Commonwealth are ...

, had ruled that DFS was a legal game of skill. In the U.S., these issues became largely moot in 2018, when the Professional and Amateur Sports Protection Act of 1992 was struck down in the Supreme Court lawsuit '' Murphy v. National Collegiate Athletic Association''. With states free to legalize sports betting, DraftKings and FanDuel subsequently expanded into

bookmakers A bookmaker, bookie, or turf accountant is an organization or a person that accepts and pays off bets on sporting and other events at agreed-upon odds. History The first bookmaker, Ogden, stood at Newmarket in 1795. Range of events Bookm ...

to leverage their existing customer base, while FanDuel agreed to be acquired by Irish company Paddy Power Betfair to become its main U.S. subsidiary.

Gameplay

There are several main disciplines of daily fantasy sports competitions, divided into two categories: cash games, and guaranteed prize pool (GPP). DFS contests typically utilize a

format, in which players are allotted a maximum budget to spend on athletes for their team, represented as either

play money Play money is noticeably fake bills or coins intended to be used as toy currency, especially for classroom instruction or as a marker in board games such as Monopoly, rather than currency in a legitimate exchange market. Play money coins and bi ...

or points. Each athlete has their own cost, with elite athletes having the highest costs. In "Double-up" or "50/50" cash game competitions, players win a prize equal to double their entry fee if they finish with a score within the top 50% of all participants. Head-to-head competitions are similar, except that the player must win against another user of their choice. Guaranteed prize pool contests have higher stakes, using tiered payouts based on finishing in different

percentile In statistics, a ''k''-th percentile (percentile score or centile) is a score ''below which'' a given percentage ''k'' of scores in its frequency distribution falls (exclusive definition) or a score ''at or below which'' a given percentage fall ...

s or positions of the field of contestants. Further variations of double-up games, including Triple-up, Quadruple-up, and Quintuple-up, may also be offered. Leagues are smaller versions of GPP contests, with tiered payouts and a smaller number of contestants. Daily fantasy games exist in a variety of major and minor sports, depending on service, including but not limited to

American football American football (referred to simply as football in the United States and Canada), also known as gridiron, is a team sport played by two teams of eleven players on a rectangular field with goalposts at each end. The offense, the team wi ...

(

college A college (Latin: ''collegium'') is an educational institution or a constituent part of one. A college may be a degree-awarding tertiary educational institution, a part of a collegiate or federal university, an institution offerin ...

and the NFL), association football (soccer),

auto racing Auto racing (also known as car racing, motor racing, or automobile racing) is a motorsport involving the racing of automobiles for competition. Auto racing has existed since the invention of the automobile. Races of various sorts were organise ...

baseball Baseball is a bat-and-ball sport played between two teams of nine players each, taking turns batting and fielding. The game occurs over the course of several plays, with each play generally beginning when a player on the fielding t ...

basketball Basketball is a team sport in which two teams, most commonly of five players each, opposing one another on a rectangular Basketball court, court, compete with the primary objective of #Shooting, shooting a basketball (ball), basketball (appr ...

cricket Cricket is a bat-and-ball game played between two teams of eleven players on a field at the centre of which is a pitch with a wicket at each end, each comprising two bails balanced on three stumps. The batting side scores runs by st ...

golf Golf is a club-and-ball sport in which players use various clubs to hit balls into a series of holes on a course in as few strokes as possible. Golf, unlike most ball games, cannot and does not use a standardized playing area, and coping wi ...

ice hockey Ice hockey (or simply hockey) is a team sport played on ice skates, usually on an ice skating rink with lines and markings specific to the sport. It belongs to a family of sports called hockey. In ice hockey, two opposing teams use ice ...

rugby Rugby may refer to: Sport * Rugby football in many forms: ** Rugby league: 13 players per side *** Masters Rugby League *** Mod league *** Rugby league nines *** Rugby league sevens *** Touch (sport) *** Wheelchair rugby league ** Rugby union: 1 ...

horse racing Horse racing is an equestrian performance sport, typically involving two or more horses ridden by jockeys (or sometimes driven without riders) over a set distance for competition. It is one of the most ancient of all sports, as its basic pr ...

and

sumo wrestling is a form of competitive full-contact wrestling where a ''rikishi'' (wrestler) attempts to force his opponent out of a circular ring (''dohyō'') or into touching the ground with any body part other than the soles of his feet (usually by thr ...

. Daily fantasy contests have also been held in professional-level

e-sports Esports, short for electronic sports, is a form of competition using video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams. Although orga ...

events.

History

Early examples

In 1990, a pair of nationwide fantasy games, Dugout Derby and Pigskin Playoff, were launched in a variety of newspapers across the United States, including the ''

Arizona Republic ''The Arizona Republic'' is an American daily newspaper published in Phoenix. Circulated throughout Arizona, it is the state's largest newspaper. Since 2000, it has been owned by the Gannett newspaper chain. Copies are sold at $2 daily or at $3 ...

'', the ''

Hartford Courant The ''Hartford Courant'' is the largest daily newspaper in the U.S. state of Connecticut, and is considered to be the oldest continuously published newspaper in the United States. A morning newspaper serving most of the state north of New Haven ...

'', the ''

Los Angeles Times The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper that started publishing in Los Angeles in 1881. Based in the LA-adjacent suburb of El Segundo since 2018, it is the sixth-largest newspaper by circulation in the ...

'', and the ''

Miami Herald The ''Miami Herald'' is an American daily newspaper owned by the McClatchy Company and headquartered in Doral, Florida, a city in western Miami-Dade County and the Miami metropolitan area, several miles west of Downtown Miami. Among the first sites to specialize in the format of daily fantasy was Instant Fantasy Sports, established in 2007; the service's co-founder Chris Fargis explained that the service was inspired by the format of

online poker Online poker is the game of poker played over the Internet. It has been partly responsible for a huge increase in the number of poker players worldwide. Christiansen Capital Advisors stated online poker revenues grew from $82.7 million in 2001 t ...

, and that his goal was to "take the time frame of season-long fantasy sports leagues and shrink it." The site was later acquired by

NBC Universal The National Broadcasting Company (NBC) is an American English-language commercial broadcast television and radio network. The flagship property of the NBC Entertainment division of NBCUniversal, a division of Comcast, its headquarters are ...

and re-branded as SnapDraft; NBC had also acquired the fantasy sports-focused website Rotoworld in 2006. SnapDraft was later shut down.

Growth

On July 21, 2009, the Edinburgh, Scotland-based

prediction market Prediction markets (also known as betting markets, information markets, decision markets, idea futures or event derivatives) are open markets where specific outcomes can be predicted using financial incentives. Essentially, they are exchange-trad ...

game

Hubdub Hubdub was a web-based prediction market in which players used virtual money to trade predictions on future events. Over time users built up a portfolio of live predictions across their chosen categories of interest such as politics, sport, entert ...

launched a spin-off known as

; the service attempted to market itself as a modern alternative to the fantasy sports services provided by other media properties, such as

and

CBSSports.com CBSSports.com (formerly CBS SportsLine.com and SportsLine USA) is an American sports news website operated by Paramount Streaming, itself a division of Paramount Global. It is the website for CBS's CBS Sports division that features news, high ...

, with the daily fantasy format and integration with popular social networks. Its founder,

Nigel Eccles Nigel Eccles is a technology entrepreneur currently serving as the CEO of the group chat company Flick. He is best known for being the co-founder and CEO of Hubdub and FanDuel. Career Nigel launched the online political prediction market Hubdub ...

, was inspired to create the site when he realized that the carve-out for fantasy sports in the U.S.

Unlawful Internet Gambling Enforcement Act of 2006 The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is United States legislation regulating online gambling. It was added as Title VIII to the SAFE Port Act (found at ) which otherwise regulated port security. The UIGEA prohibits ga ...

did not state that a legal, paid fantasy sports competition had to last for an entire season. In February 2012, the

-based DraftKings was established by former VistaPrint executives Jason Robins, Matthew Kalish, and Paul Liberman. DraftKings gained a local, Somerville-based competitor in StarStreet, when it introduced a daily fantasy game of its own. DraftKings and FanDuel in particular became the subjects of

investments by various parties; in April 2013,

Major League Baseball Major League Baseball (MLB) is a professional baseball organization and the oldest major professional sports league in the world. MLB is composed of 30 total teams, divided equally between the National League (NL) and the American League (A ...

invested an undisclosed amount in DraftKings, becoming the first U.S. professional sports organization to invest in daily fantasy sports. In 2014, DraftKings acquired DraftStreet, as well as StarStreet, and raised another $41 million in investment led by the Raine Group, bringing the company to a total of $75 million in outside funding. FanDuel pursued investments as well, with an $11 million Series C funding round that included

Comcast Ventures Comcast Ventures was a corporate venture capital firm headquartered in San Francisco, California. History In early 2011, Comcast and NBCUniversal combined their two venture arms, Comcast Interactive Capital founded in 1999 and the Peacock Fund, ...

, a $70 million Series D round in September 2014 led by Shamrock Capital Advisors with participation from

NBC Sports NBC Sports is an American programming division of the broadcast network NBC, owned and operated by NBC Sports Group division of NBCUniversal and subsidiary of Comcast. The division is responsible for sports broadcasts on the network, and its ...

Ventures and KKR among others, and a Series E funding round of $275 million in July 2015, valuing the company at over $1 billion. In October 2014, NBC Sports entered into a content sharing partnership with the DFS information website Rotogrinders, in which it would provide daily fantasy-oriented content for Rotoworld. DraftKings and FanDuel began to pursue advertising and endorsement deals with sports franchises and leagues; in November 2014, DraftKings entered into a multi-year sponsorship deal with the

National Hockey League The National Hockey League (NHL; french: Ligue nationale de hockey—LNH, ) is a professional ice hockey sports league, league in North America comprising 32 teams—25 in the United States and 7 in Canada. It is considered to be the top ranke ...

, complementing team-level sponsorship deals it had previously reached with seven NHL franchises. Also in November, the

National Basketball Association The National Basketball Association (NBA) is a professional basketball sports league, league in North America. The league is composed of 30 teams (29 in the United States and 1 in Canada) and is one of the major professional sports leagues i ...

acquired an equity stake in FanDuel and entered into a four-year sponsorship deal with the company. In April 2015, after the

National Football League The National Football League (NFL) is a professional American football league that consists of 32 teams, divided equally between the American Football Conference (AFC) and the National Football Conference (NFC). The NFL is one of the majo ...

began to allow daily fantasy providers to sign multi-year team sponsorship deals, with caveats, FanDuel reached deals with sixteen NFL teams for placements on team-oriented digital properties, radio, and in-stadium. DraftKings had also received an investment by

Robert Kraft Robert Kenneth Kraft (born June 5, 1941) is an American billionaire businessman. He is the chairman and chief executive officer (CEO) of the Kraft Group, a diversified holding company with assets in paper and packaging, sports and entertainment ...

—a local businessman whose holdings include the

New England Patriots The New England Patriots are a professional American football team based in the Greater Boston area. They compete in the National Football League (NFL) as a member club of the league's American Football Conference (AFC) AFC East, East divisio ...

Mainstream popularity

By 2015, the daily fantasy sports industry had experienced a major growth in mainstream popularity. The rise was credited to several factors, including the convenience of the format, the ability to access the services on

mobile device A mobile device (or handheld computer) is a computer small enough to hold and operate in the hand. Mobile devices typically have a flat LCD or OLED screen, a touchscreen interface, and digital or physical buttons. They may also have a physica ...

s, and aggressive marketing campaigns which promoted the prospective cash prizes of their largest contests. The structure and payouts of daily fantasy games have been described as providing a feeling of " instant gratification" to its players, similar to that of

online gambling Online gambling is any kind of gambling conducted on the internet. This includes virtual poker, casinos and sports betting. The first online gambling venue opened to the general public was ticketing for the Liechtenstein International Lottery i ...

. Writing for ''

The New York Times Magazine ''The New York Times Magazine'' is an American Sunday magazine supplement included with the Sunday edition of ''The New York Times''. It features articles longer than those typically in the newspaper and has attracted many notable contributors. ...

'',

Jay Caspian Kang Jay Caspian Kang is an American writer, editor, television journalist and podcast host. He is a staff writer at the ''New York Times Magazine'' and the opinion section of ''The New York Times''. Previously he was an editor of ''Grantland'', then ...

noted that despite its similarities to gambling, DFS appealed to mainstream sports fans because it evoked the feelings of community commonly associated with traditional fantasy sports, rather than the "shady underground games" of poker. The popularity of daily fantasy has also influenced fan engagement with sports;

Fox Sports Fox Sports is the brand name for a number of sports channels, broadcast divisions, programming, and other media around the world. The ''Fox Sports'' name has since been used for other sports media assets. These assets are held mainly by the F ...

president Erik Shanks felt that daily fantasy sports help improve television viewership of sporting events, while FanDuel stated that players became more engaged with sports content after joining the service. In July 2015, Yahoo!, a historic provider of season-length fantasy sports, announced that it would begin to offer paid daily and weekly fantasy games as part of its

website. Moneyball, one of the first Australian DFS services, was also established by former

Fairfax Media Fairfax Media was a media company in Australia and New Zealand, with investments in newspaper, magazines, radio and digital properties. The company was founded by John Fairfax as John Fairfax and Sons, who purchased '' The Sydney Morning Hera ...

employees James Fitzgerald and Rax Huq; the company secured $1.8 million in series A funding. Fitzgerald noted that the sports betting industry in Australia had brought in $900 million in yearly revenue and that DFS was "a more ethically and morally preferred means of partnership with a

bookmaker A bookmaker, bookie, or turf accountant is an organization or a person that accepts and pays off bets on sporting and other events at agreed-upon odds. History The first bookmaker, Ogden, stood at Newmarket in 1795. Range of events Bookm ...

." In September 2015, DraftKings and FanDuel expanded their offerings into

competitive video gaming Esports, short for electronic sports, is a form of competition using video games. Esports often takes the form of organized, multiplayer video game competitions, particularly between professional players, individually or as teams. Although orga ...

; FanDuel acquired the e-sports focused DFS service AlphaDraft (which FanDuel planned to operate as an independent brand), while DraftKings added contests for the 2015 ''League of Legends'' World Championship.

Increased scrutiny

In 2015, daily fantasy sports began to face increased legal scrutiny. In August 2015, a class action lawsuit was filed against DraftKings, alleging that it engaged in

false advertising False advertising is defined as the act of publishing, transmitting, or otherwise publicly circulating an advertisement containing a false claim, or statement, made intentionally (or recklessly) to promote the sale of property, goods, or servic ...

in regards to a promotion in which the service claimed it would double a new user's first deposit. The suit alleged that DraftKings would only credit the deposit bonus to a player's account if they fulfill certain monetary and participation requirements within four months, causing them to "incur additional and substantial monetary obligations", rather than instantly receive the bonus as implied by advertising. On October 6, 2015, following reports that a DraftKings employee had used

to win $350,000 on FanDuel,

New York Attorney General The attorney general of New York is the chief legal officer of the U.S. state of New York and head of the Department of Law of the state government. The office has been in existence in some form since 1626, under the Dutch colonial government o ...

Eric Schneiderman Eric Tradd Schneiderman (born December 31, 1954) is an American lawyer and politician who served as the 65th Attorney General of New York from 2011 until his resignation in May 2018. Schneiderman, a member of the Democratic Party, spent ten year ...

announced that he had opened an investigation into the two services and the allegations that employees from the two services were using this information to win prizes from each other.Drape, Joe and Williams, Jacqueline
New York Attorney General Opens Inquiry Into Fantasy Sports Sites
New York Times. October 6, 2015. Retrieved October 6, 2015. Both sites have since barred their employees from participating in daily fantasy games. On October 14, 2015, the FBI launched an investigation of its own into the two services regarding the inside information scandal. In the wake of the scandal, multiple class-action lawsuits were filed against both DraftKings and FanDuel, with suits alleging charges such as fraud,

racketeering Racketeering is a type of organized crime in which the perpetrators set up a coercive, fraudulent, extortionary, or otherwise illegal coordinated scheme or operation (a "racket") to repeatedly or consistently collect a profit. Originally and ...

, negligence, and false advertising, arguing that the employees' use of inside information had made the games unfair. One of the lawsuits were filed by a resident of New Orleans, despite paid fantasy games being illegal in the state. On October 30, 2015,

Washington Washington commonly refers to: * Washington (state), United States * Washington, D.C., the capital of the United States ** A metonym for the federal government of the United States ** Washington metropolitan area, the metropolitan area centered o ...

NFL player

Pierre Garçon Pierre Andre Garçon (; born August 8, 1986) is a former American Football wide receiver. He played college football at Norwich University and Mount Union College, and was drafted by the Indianapolis Colts in the sixth round of the 2008 NFL Dra ...

also filed a class-action lawsuit against FanDuel, arguing that the service had exploited his name and likeness without permission as part of its services and marketing. FanDuel objected to the lawsuit, arguing that its use of his likeness fell within existing case law surrounding the use of player names and statistics in fantasy sports games. Garçon's lawsuit was settled out of court. In December 2015, Canadian media company TheScore launched QuickDraft, a daily fantasy game targeted at both Canada and the United States, based on the intellectual property of its 2014 acquisition of Swoopt. In contrast to other DFS services and in an effort to work around the increased scrutiny and uncertain legality of paid games, the service is being positioned as a free-to-play service with smaller cash prizes, a more "casual" atmosphere with fewer "

sharks Sharks are a group of elasmobranch fish characterized by a cartilaginous skeleton, five to seven gill slits on the sides of the head, and pectoral fins that are not fused to the head. Modern sharks are classified within the clade Selachimorp ...

", and the possibility of being advertising-funded in the future. DraftKings and FanDuel attempted to merge in 2017, but the deal was shelved after the U.S.

Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction o ...

threatened to block it over concerns that the combined company would have a

monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...

on paid DFS.

Legalization of sports betting in the United States

In May 2018, the

—which outlawed state legalization of

in most U.S. states (excluding grandfathered states such as Nevada)—was declared unconstitutional by the

Supreme Court A supreme court is the highest court within the hierarchy of courts in most legal jurisdictions. Other descriptions for such courts include court of last resort, apex court, and high (or final) court of appeal. Broadly speaking, the decisions of ...

in '' Murphy v. National Collegiate Athletic Association''. The following month, Delaware became the first state to create new legislation to allow sports betting, followed shortly by New Jersey. Analysts predicted that the duopoly of DraftKings and FanDuel would make moves to capitalize on the decision, including leveraging their regulatory expertise and influence to lobby for state legalization of sports betting, and incorporating betting features into their platforms to take advantage of their existing market positions and

brand recognition Brand awareness is the extent to which customers are able to recall or recognize a brand under different conditions. Brand awareness is one of two dimensions from brand knowledge, an associative network memory model. Brand awareness is a key consi ...

. Later that month, FanDuel announced that it would be acquired by Paddy Power Betfair, to bolster the Irish

's U.S. operations. Both DraftKings and FanDuel launched sports betting operations in New Jersey in August 2018.

Marketing

The aggressive marketing tactics used by daily fantasy services have also affected the growth of the industry. In June 2015, DraftKings entered into a three-year sponsorship deal with ESPN valued at $250 million; the deal gave DraftKings exclusivity in advertising daily fantasy services on ESPN networks beginning in January 2016, and included " integration" of the service into ESPN's television and digital content. DraftKings also entered into an advertising deal with

; in exchange for Fox acquiring a $150 million equity stake in the company, DraftKings agreed to buy $250 million in advertising over the next three years. DraftKings' sponsorship exclusivity deal with ESPN was also to include the acquisition of an equity stake in the company, but this aspect of the deal was reportedly called off due to objections by ESPN's parent,

The Walt Disney Company The Walt Disney Company, commonly known as Disney (), is an American multinational mass media and entertainment conglomerate headquartered at the Walt Disney Studios complex in Burbank, California. Disney was originally founded on Octobe ...

, over financially associating itself with activities that could be classified as gambling. DraftKings and FanDuel also became known for their use of

direct response advertising Direct may refer to: Mathematics * Directed set, in order theory * Direct limit of (pre), sheaves * Direct sum of modules, a construction in abstract algebra which combines several vector spaces Computing * Direct access (disambiguation), a ...

on television, especially during sports telecasts. Capitalizing on the start of football season, iSpot.tv estimated that DraftKings and FanDuel collectively spent over $107 million on television advertising in September 2015 alone—with nearly half being spent on advertising during

telecasts ($23.6 million by DraftKings, and $26.7 million spent by FanDuel). Of the total, $60.1 million was spent by DraftKings, with $7.95 million spent during

college football College football (french: Football universitaire) refers to gridiron football played by teams of student athletes. It was through college football play that American football in the United States, American football rules first gained populari ...

games, $2.05 million during ESPN's sports news program ''

SportsCenter ''SportsCenter'' (SC) is a daily sports news television program that serves as the flagship program and brand of American cable and satellite television network ESPN. The show covers various sports teams and athletes from around the world and o ...

'', and $1.36 million during ''

South Park ''South Park'' is an American animated sitcom created by Trey Parker and Matt Stone and developed by Brian Graden for Comedy Central. The series revolves around four boysStan Marsh, Kyle Broflovski, Eric Cartman, and Kenny McCormickand ...

'' episodes. The marketing push was met with a negative reaction from viewers on

social networks A social network is a social structure made up of a set of social actors (such as individuals or organizations), sets of dyadic ties, and other social interactions between actors. The social network perspective provides a set of methods for a ...

such as

Twitter Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...

, who considered the repetitive airplay of DFS commercials during football games to be an annoyance. The increased legal scrutiny surrounding DFS resulted in providers spending less on marketing in order to focus more on legal costs. On February 10, 2016, it was reported that ESPN had backed out of its advertising deal with DraftKings, and that Fox had marked down its investment in DraftKings by 60%—a loss of $95 million.

Classification as gambling

There are conflicting arguments over whether paid daily fantasy sports games constitute

gambling Gambling (also known as betting or gaming) is the wagering of something of value ("the stakes") on a random event with the intent of winning something else of value, where instances of strategy are discounted. Gambling thus requires three ele ...

, due to its mixture of chance-based and

skill A skill is the learned ability to act with determined results with good execution often within a given amount of time, energy, or both. Skills can often be divided into domain-general and domain-specific skills. For example, in the domain of w ...

-based elements. Critics of DFS have argued that because athlete performance can vary on a week-to-week basis, players are essentially

wagering Gambling (also known as betting or gaming) is the wagering of something of value ("the stakes") on a random event with the intent of winning something else of value, where instances of strategy are discounted. Gambling thus requires three elem ...

on the performance of individual athletes during a given game, rather than managing their team on a week-to-week basis across a season. On the other hand, proponents have argued that the act of preparing a daily fantasy team is an activity of skill, as it requires knowledge of the sport, its individual players and their respective performance at a particular moment in time, and the ability to select suitable players within the limitation of a salary cap. In an "

IAmA IAMA may refer to: * Iama Island, Queensland, an island and a locality in the Torres Strait Island Region, Australia * Igreja Anglicana de Moçambique e Angola, a proposed new autonomous province of the Anglican Communion, currently in formation * ...

" thread on

Reddit Reddit (; stylized in all lowercase as reddit) is an American social news aggregation, content rating, and discussion website. Registered users (commonly referred to as "Redditors") submit content to the site such as links, text posts, imag ...

, DraftKings CEO Jason Robins described the service as being "almost identical to a

casino A casino is a facility for certain types of gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shopping, cruise ships, and other tourist attractions. Some casinos are also known for hosting live enterta ...

", described the concept of DFS as a cross between fantasy sports and

, and repeatedly referred to the service using gambling-oriented terms such as "wager" and "betting".Hohler, Bob
An uncertain line between fantasy sports, gambling
''The Boston Globe'' (Boston Globe Media Partners, LLC). August 2, 2015. Retrieved September 29, 2015.Irwin, Neil

The New York Times. September 24, 2015. Retrieved September 29, 2015. DraftKings and FanDuel have also entered into affiliation and sponsorship agreements with gambling-oriented entities; DraftKings sponsored the 2015 Belmont Stakes and the

World Series of Poker The World Series of Poker (WSOP) is a series of poker tournaments held annually in Paradise, Nevada and, since 2004, sponsored by Caesars Entertainment. It dates its origins to 1970, when Benny Binion invited seven of the best-known poker pl ...

, while FanDuel has affiliated with websites related to sports betting. At the same time, both companies have stated that their daily fantasy games represent a game of skill. In the 2007 federal lawsuit ''Humphrey v. Viacom, Inc.'', Judge Dennis M. Cavanaugh of the U.S. District Court of New Jersey distinguished an "entry fee" in a paid fantasy sports competition as being a fee required to participate rather than a "wager", because they are "paid unconditionally", and because the prizes in such games were "guaranteed" and determined in advance.

Skill of players

Bloomberg Businessweek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...

'' acknowledged that daily fantasy contests are often won by a minority of skilled professional players, or "

", who employ "elaborate statistical modeling and automated tools that can manage hundreds of entries at once and identify the weakest opponents". A DFS player interviewed by ''Bloomberg'' argued that "no matter how much somebody knows about sports, if you put an established player up against a new player, that established player's probably going to have a 75 percent chance of winning—at least." A study by

McKinsey & Company McKinsey & Company is a global management consulting firm founded in 1926 by University of Chicago professor James O. McKinsey, that offers professional services to corporations, governments, and other organizations. McKinsey is the oldest and ...

over the first half of the 2015 MLB season estimated that 91% of winnings were won by only 1.3% of players. FanDuel CEO Nigel Eccles disputed the accuracy of the study, arguing that its daily fantasy baseball contests do not have as many participants as those it runs for football. Writing for ''

'',

argued that DFS games themselves were "not inherently crooked", explaining that "most of the benefits praised by its enthusiasts — the ease of play, the camaraderie among fans, the challenge of solving what amounts to a math puzzle — are real. It does take skill to parse game film, diligently follow the news and interpret the thousands of bits of sports information that are generated each night. If a problem gambler at the poker rooms I frequent in New York City were to hire a programmer and flood the D.F.S. market with his lineups, he would almost certainly hemorrhage money." In response to these concerns, DFS services implemented changes to improve the fairness and transparency of their contests, including entry limits, banning off-site scripts, identifying veteran-level players, allowing users to block players they do not wish to compete against, and adding beginner-level contests intended for new users.

Legal definitions of gambling

In U.S. federal law, criminal gambling statutes include the

Federal Wire Act The Interstate Wire Act of 1961, often called the Federal Wire Act, is a United States federal law prohibiting the operation of certain types of betting businesses in the United States. It begins with the text: Several legal opinions and rulings ...

—which prohibits interstate sports wagering, the Illegal Gambling Business Act ()—which prohibits the interstate conduct of wagering activity prohibited under state law, and the

Unlawful Internet Gambling Enforcement Act The Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) is United States legislation regulating online gambling. It was added as Title VIII to the SAFE Port Act (found at ) which otherwise regulated port security. The UIGEA prohibits gam ...

(UIGEA)—which prohibits the transfer of funds in connection to

that is prohibited under state law. The

also forbade all states, besides Nevada and other grandfathered states, from authorizing sports wagering activities, although it was ruled in May 2018 that this law was unconstitutional. Each state applies varying standards in regards to determining whether a game is one of skill, or of chance; in most states, this determination is based on whether the skill-based elements of the game are predominant over those of chance, and whether these chance-based elements have more than an incidental effect on the outcome of the game (

dominant factor test The Dominant Factor Test (also known by several variants such as the Dominant Principle Test or Dominant Element Theory) is the principle that most U.S. jurisdictions (states or territories) use in determining, legally, what is and is not gambling. ...

, material degree). Some states use stricter criteria, under which games whose outcomes are influenced by any element of chance, or appeal to a "gambling instinct", are considered games of chance, regardless of the presence of skill-based elements. Applying the predominance test, the Supreme Court of Illinois ruled that participants in daily fantasy contests are "actual contestants in the bona fide contest for the determination of skill" and do not violate Illinois' prohibition on gambling. The court disagreed with an Illinois Attorney General Opinion that interpreted "actual contestants" to mean the persons in the athletic contest. In 2015, the Canadian Gaming Association commissioned an opinion on the legality of DFS in Canada from former

Alcohol and Gaming Commission of Ontario The Alcohol and Gaming Commission of Ontario (AGCO) is an Ontario Crown agency that reports to the Ministry of the Attorney General The Attorney General of Ontario is the chief legal adviser to His Majesty the King in Right of Ontario and, ...

general counsel Don Bourgeois. He determined that DFS would likely be classified as a game of chance under Canadian law, going on to say in an interview that under the

Criminal Code of Canada The ''Criminal Code'' (french: Code criminel)The citation of this Act by these short titles is authorised by thEnglishantexts of section 1. is a law that codifies most criminal offences and procedures in Canada. Its official long title is ''A ...

, games that mix chance- and skill-based elements are considered games of chance. However, Canadian authorities have not yet targeted DFS services; historically, the government has only targeted illegal gambling operations that have a presence within the country. While the service Sport Select offers legal sports wagering games through Canada's

lotteries A lottery is a form of gambling that involves the drawing of numbers at random for a prize. Some governments outlaw lotteries, while others endorse it to the extent of organizing a national or state lottery. It is common to find some degree of ...

, it is subject to a legal prohibition on wagering on individual sporting events.

UIGEA carve-out

The UIGEA has frequently been cited as having exempted daily fantasy games from being considered gambling, as the law does not consider an online contest with pre-determined prizes, and an outcome based on skill that is "determined predominantly by accumulated statistical results of sporting events, including any non-participant's individual performances in such sporting events", to be unlawful wagering. The carve-out was based on the language of an amendment proposed by Senator

Richard Bryan Richard Hudson Bryan (born July 16, 1937) is an American attorney and politician who served as a United States Senator from Nevada from 1989 to 2001. A Democrat, Bryan served as the 25th Governor of Nevada from 1983 to 1989, and before that ...

to the failed Internet Gambling Prohibition Act. The act itself does not define unlawful internet wagering, and expressly refrains from altering the legality of any underlying conduct other than funds transfers, meaning that state law remains binding. It also depends on banks to act as enforcers of the prohibitions. Congressman

Jim Leach James Albert Smith Leach (born October 15, 1942) is an American academic and former politician. He served as ninth Chair of the National Endowment for the Humanities from 2009 to 2013 Pogrebin, Robin"Rocco Landesman Confirmed as Chairman of the N ...

, who authored the UIGEA, explained that the fantasy sports carve-out was meant to relieve the burden of enforcement of the act by banks, nor cover the present-day daily fantasy industry, and that "it is sheer chutzpah for a fantasy sports company to cite the law as a legal basis for existing".

Self-imposed restrictions

Daily fantasy services have historically blocked residents of Arizona, Iowa, Louisiana, Montana and Washington from participating in paid games, under a presumption that DFS is illegal in these states due to the strictness of their gambling laws. However, a November 2015 investigation by ''The New York Times'' found that these geoblock restrictions could easily be circumvented using

anonymous proxies An anonymizer or an anonymous proxy is a tool that attempts to make activity on the Internet untraceable. It is a proxy server computer that acts as an intermediary and privacy shield between a client computer and the rest of the Internet. It acce ...

, and it was estimated that in 2014, DraftKings had still collected $484,897 in entry fees from players in the five states where it had voluntarily asserted that DFS was illegal. These reports led to regulatory probes by investigators in the aforementioned states. Both websites have since implemented measures to block proxy users.

Legal opinions and challenges

Louisiana attempted to pass a law that would exempt fantasy sports from its anti-online gambling laws, but the bill was defeated as the result of lobbying by both the

Louisiana Family Forum Louisiana Family Forum (LFF) is a social conservative non-profit group based in Baton Rouge, Louisiana. The organization supports Louisiana's covenant marriage law and opposes abortion and same-sex marriage. The group's stated mission is to "persua ...

(which showed concerns that players could develop an

addiction Addiction is a neuropsychological disorder characterized by a persistent and intense urge to engage in certain behaviors, one of which is the usage of a drug, despite substantial harm and other negative consequences. Repetitive drug use o ...

to daily fantasy games), and the Louisiana Video Gaming Association (which felt that DFS would cannibalize the legal

video poker Video poker is a casino game based on five-card draw poker. It is played on a computerized console similar in size to a slot machine. History Video poker first became commercially viable when it became economical to combine a television-like moni ...

industry, and needed to be highly regulated). On October 15, 2015, the

Nevada Gaming Control Board The Nevada Gaming Control Board, also known as the State Gaming Control Board, is a Nevada state governmental agency involved in the regulation of gaming and law enforcement of Nevada gaming laws throughout the state, along with the Nevada Gaming ...

published a memorandum ruling that daily fantasy sports games were a form of sports wagering, and that DFS services must cease serving customers in the state of Nevada until they obtain a sports pool license. The Board felt that DFS fell under the state's definitions of a "gambling game" and a "sports pool", as they " cceptwagers on sporting events or other events by any system or method of wagering", including wagers on events occurring during a sporting event (

props A prop, formally known as (theatrical) property, is an object used on stage or screen by actors during a performance or screen production. In practical terms, a prop is considered to be anything movable or portable on a stage or a set, distinc ...

), combinations of multiple events occurring within an event ( parlays), and against the performance of other players, with "rake-offs" taken by the operator on each wager (defined as a "percentage game" under Nevada law). In further support of its argument, the memorandum cited Jason Robins' comments on Reddit that described DraftKings using gambling-oriented terminology; the board stated that its classification was "consistent with how operators of certain daily fantasy sports describe themselves". On January 17, 2016,

Attorney General of Texas The Texas attorney general is the chief legal officer
of the

Ken Paxton Warren Kenneth Paxton Jr. (born December 23, 1962) is an American lawyer and politician who has served as the Attorney General of Texas since January 2015. Paxton has described himself as a Tea Party conservative. Paxton was re-elected to a t ...

issued an opinion, stating that "it is prohibited gambling in Texas if you bet on the performance of a participant in a sporting event and the house takes a cut." On the other hand, Paxton stated that traditional, season-length fantasy sports were legal. Prior to the ruling, it was also reported that Gary Grief, executive director of the

Texas Lottery The Texas Lottery is the government-operated lottery available throughout Texas. It is operated by the Texas Lottery Commission, headquartered in downtown Austin, Texas. History House Bill 54 was introduced for a state lottery on July 11, ...

, had been investigating ways of integrating DFS into the state lottery system, including attempts to pursue DraftKings as a partner for a proposed game which would have offered credit for the service as prizes. FanDuel ceased serving residents of Texas, but DraftKings filed a request for declaratory judgment on March 4, 2016, seeking clarification on the matter. On January 27, 2016, at the request of Senator Rosalyn Baker,

Attorney General of Hawaii The Attorney General of Hawaii ( haw, Loio Kuhina) is the chief legal officer and chief law enforcement officer of Hawaii. In present-day statehood within the United States, the Attorney General is appointed by the elected governor with the approv ...

Doug Chin Douglas S. Chin (born July 21, 1966) is an American attorney and politician who served as the 13th Lieutenant Governor of Hawaii from February to December 2018. A member of the Democratic Party, Chin previously was the 14th Attorney General of Haw ...

issued an opinion that DFS could be illegal under

Hawaii Hawaii ( ; haw, Hawaii or ) is a state in the Western United States, located in the Pacific Ocean about from the U.S. mainland. It is the only U.S. state outside North America, the only state that is an archipelago, and the only stat ...

law, as it involves a wager on an event outside of the player's control. He explained that "the technology may have changed, but the vice has not." On April 5, 2016,

Attorney General of Alabama The Attorney General of Alabama is an elected, constitutional officer of the State of Alabama. The office of the Attorney General is located at the state capitol in Montgomery, Alabama. Henry Hitchcock was elected Alabama's first attorney general ...

Luther Strange Luther Johnson Strange III (born March 1, 1953) is an American lawyer and politician who served as a United States Senator from Alabama from 2017 to 2018. He was appointed to fill that position after it was vacated by Sen. Jeff Sessions upon Ses ...

ruled that DFS was illegal under state law, and sent cease and desist notices to DraftKings and FanDuel ordering them to stop serving residents of Alabama by May 1, 2016. He argued that while picking players for a fantasy team is an activity of skill, player performance can vary, and Alabama law dictates that it is illegal to risk something of value on any game with an element of chance.

Legalization

In September 2015, the state of

tabled a bill exploring the possibility of allowing the

Massachusetts Lottery The Massachusetts Lottery was established on September 27, 1971, following the legalization of gambling by the Massachusetts General Court, the legislature of the Commonwealth. The Lottery is administered by a commission of 5 members, who incl ...

to run online, skill-based games, such as daily fantasy sports. On November 19, 2015, the government announced that it would allow daily fantasy sports services to operate within Massachusetts under proposed regulations, including the requirement for all players to be 21 and over, banning members of the professional sports industry from playing the games (including athletes), and banning the marketing of the services in colleges and high schools. On March 7, 2016, the state of

passed legislation regulating "fantasy contests", defined as skill-based games with cash prizes that are based on the "accumulated statistical results of the performance of individuals"; the law makes no reference to sports or DFS. Services must pay a $50,000 registration fee, be restricted to those who are 18 and older, and be subject to yearly independent audits. The law was criticized for being broadly-worded, with critics believing that it could feasibly apply to season-length games or any similar activities, and that the required licensing fee adds a financial barrier for doing business in the state. On May 10, 2016, it was reported that the U.S. House Subcommittee on Commerce, Manufacturing and Trade was planning to discuss the legal aspects of DFS in a hearing. In August 2016, New York became the largest state to legalize daily fantasy sports. Nearby New Jersey and Pennsylvania each followed suit in mid-2017. By the end of 2017, 18 different states had legalized paid-entry fantasy sports contests. Governor

John Kasich John Richard Kasich Jr. ( ; born May 13, 1952) is an American politician, author, and television news host who served in the U.S. House of Representatives from 1983 to 2001 and as the 69th governor of Ohio from 2011 to 2019. A Republican, Kasic ...

Ohio Ohio () is a U.S. state, state in the Midwestern United States, Midwestern region of the United States. Of the List of states and territories of the United States, fifty U.S. states, it is the List of U.S. states and territories by area, 34th-l ...

signed a bill in late December making Ohio the eighteenth.

New York ruling and lawsuit

On November 10, 2015, Attorney General of New York State Eric Schneiderman issued a cease-and-desist order to DraftKings and FanDuel, arguing that DFS was illegal under state law (which specifies that games where players "risk something of value" and do not have "control or influence" over the outcome, are gambling), and ordering the two services to cease serving residents of New York. He stated that DFS "wagers" represented "a wager on a 'contest of chance' where winning or losing depends on numerous elements of chance to a 'material degree'". He characterized the DFS industry as being a "massive, multi-billion-dollar scheme intended to evade the law and fleece sports fans across the country", causing the "same public health and economic problems associated with gambling, particularly for populations prone to

gambling addiction Problem gambling or ludomania is repetitive gambling behavior despite harm and negative consequences. Problem gambling may be diagnosed as a mental disorder according to ''DSM-5'' if certain diagnostic criteria are met. Pathological gambling is ...

and individuals who are unprepared to sustain losses, lured by the promise of easy money." In response, DraftKings and FanDuel filed lawsuits against the state of New York on November 13, arguing that their games were one of skill, they had been denied

due process Due process of law is application by state of all legal rules and principles pertaining to the case so all legal rights that are owed to the person are respected. Due process balances the power of law of the land and protects the individual per ...

due to the Attorney General's abruptness, that he does not have the power to make such a ruling, and that Schneiderman engaged in tortious interference by sending cease and desist notices to their payment processors. On November 16, the two services tried to request a temporary

restraining order A restraining order or protective order, is an order used by a court to protect a person in a situation involving alleged domestic violence, child abuse, assault, harassment, stalking, or sexual assault. Restraining and personal protecti ...

to prevent Schneiderman from enforcing the cease-and-desist, but a state judge declared their request to be premature. Following the hearing, a spokesperson for the Attorney General declared that he could file a formal lawsuit against the two sites "as soon as tomorrow". The same day, state senator

Michael Ranzenhofer Michael H. Ranzenhofer (born August 15, 1954) is an American politician from the state of New York. From 2009 until 2020, Ranzenhofer was a Republican member of the New York State Senate from the 61st district. Education Ranzenhofer earned a B ...

introduced a bill that would explicitly classify daily fantasy sports as a game of skill. On November 17, 2015, the Attorney General filed a request for a temporary injunction to force DraftKings and FanDuel to cease serving customers in the state of New York. In the filing, Schneiderman argued that DFS was merely a "re-branding" of sports betting, and in response to claims that DFS constitutes a game of skill, he argued that "a few good players in a poker tournament may rise to the top based on their skill; but the game is still gambling." Schneiderman also acknowledged that the two services had "basic compliance issues" (alluding to the inside information scandal), had associated themselves with gambling-oriented entities, and that DraftKings had accepted entry fees from users in states where it argued that DFS was illegal. The Attorney General also issued a

subpoena A subpoena (; also subpœna, supenna or subpena) or witness summons is a writ issued by a government agency, most often a court, to compel testimony by a witness or production of evidence under a penalty for failure. There are two common types of ...

for information from

Yahoo! Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo Inc., which is 90% owned by investment funds managed by Apollo Global Mana ...

in regards to its own daily fantasy offerings. FanDuel stated that it would comply with the order and restrict participation by residents of New York, while DraftKings stated that it would continue to serve them, arguing that Schneiderman's decision was based on an "incomplete understanding of the facts about how our business operates and a fundamental misinterpretation and misapplication of the law". During hearings on November 25, 2015, Judge Manuel J. Mendez disputed assertions by the services that a player's choice of athletes represents "control or influence" over the outcome, stating that players are ultimately "relying on someone else's skill" to determine an outcome. On December 11, 2015, the temporary injunction was granted, forbidding DraftKings and FanDuel from "accepting entry fees, wagers or bets" from residents of New York state. Mandez argued that "the payment of an 'entry fee' as high as $10,600 on one or more contests daily could certainly be deemed risking 'something of value'." He also ruled that the UIGEA "has no corresponding authority under New York State law". However, Mandez granted a temporary stay following requests for an appeal. On December 31, 2015—prior to an

appeals court A court of appeals, also called a court of appeal, appellate court, appeal court, court of second instance or second instance court, is any court of law that is empowered to hear an appeal of a trial court or other lower tribunal. In much of ...

on whether they could continue to operate during the lawsuit, the Attorney General amended the lawsuit to demand that the two companies pay

restitution The law of restitution is the law of gains-based recovery, in which a court orders the defendant to ''give up'' their gains to the claimant. It should be contrasted with the law of compensation, the law of loss-based recovery, in which a court ...

—including the return of all money collected from customers in New York State. Schneiderman also acknowledged the services' deceptive advertising practices, such as "convoluted" first deposit bonuses. On January 11, 2016, DraftKings' and FanDuel's stay was granted, meaning that they could continue to serve New York residents, pending the outcome of the appeal. However, later that month,

Vantiv Worldpay, Inc. was an American payment processor, payment processing company and technology provider. In June 2019 it was acquired and merged into FIS (company), Fidelity National Information Services (FIS). Before its acquisition, it was headqu ...

announced that it would no longer provide its payment processing services to the DFS industry, and in early-February 2016,

Citigroup Citigroup Inc. or Citi ( stylized as citi) is an American multinational investment bank and financial services corporation headquartered in New York City. The company was formed by the merger of banking giant Citicorp and financial conglomera ...

announced that it would no longer process payments for DraftKings and FanDuel made by residents of New York State, "pending a final decision by the courts". The ''Boston Globe'' believed that a ruling on the legality of DFS in New York State would have industry-wide implications, as it is one of the largest markets for these services. Writing for ''The New Yorker'',

James Surowiecki James Michael Surowiecki ( ; born April 30, 1967) is an American journalist. He was a staff writer at ''The New Yorker'', where he wrote a regular column on business and finance called "The Financial Page". Background Surowiecki was born in Meri ...

believed that it was hypocritical for the state of New York to campaign against daily fantasy sports—which, in an op-ed, the Attorney General classified as a "particularly pernicious" activity, as the state already sponsors and/or endorses other forms of legal gambling based purely on chance rather than a mix of chance and skill, such as the state lottery, casinos, and horse racing. Surowiecki argued that "given the absence of a good argument for why daily fantasy should be illegal in New York, while the lottery and racetrack betting and casinos are not, the best strategy that DraftKings and FanDuel could pursue might be to get the State Legislature to eliminate the inconsistency and explicitly legalize them." On March 21, 2016, the Attorney General announced a partial settlement of its lawsuit, under which DraftKings and FanDuel agreed to cease offering paid games in the state of New York, and abide by the result of an upcoming appeals court hearing. The hearings, which would determine whether the services would have to pay restitution, were tentatively scheduled for September 2016—assuming that legislation legalizing daily fantasy sports was not passed by then. DraftKings and FanDuel spokespersons stated that the companies were working with local officials and supporting legislation to legalize DFS under state law. This settlement does not address the false advertising claims, which are still being pursued. The next day, Yahoo announced that it would voluntarily comply with the settlement and also cease offering paid games in the state of New York. On June 18, 2016, the New York State senate approved legislation to legalize daily fantasy sports. Daily fantasy providers will be required to pay 15.5% of their annual revenue to the

New York Lottery The New York Lottery is the state-operated lottery in the US state of New York that began in 1967. As part of the New York State Gaming Commission, it provides revenue for public education and is based in Schenectady. Overview Players must be ...

's education fund in order to serve customers in the state.

League policies

The

NCAA The National Collegiate Athletic Association (NCAA) is a nonprofit organization that regulates student athletics among about 1,100 schools in the United States, Canada, and Puerto Rico. It also organizes the athletic programs of colleges ...

considers all paid fantasy games—including daily fantasy—to fall under its prohibition of sports wagering by

student athlete A student is a person enrolled in a school or other educational institution. In the United Kingdom and most commonwealth countries, a "student" attends a secondary school or higher (e.g., college or university); those in primary or element ...

s, punishable by ineligibility to participate in NCAA-sanctioned athletics for one year. Advertising for daily fantasy services are also forbidden from being broadcast during telecasts of the NCAA's tournaments. In August 2015, the NCAA and a group of ten

conferences A conference is a meeting of two or more experts to discuss and exchange opinions or new information about a particular topic. Conferences can be used as a form of group decision-making, although discussion, not always decisions, are the main ...

jointly campaigned against daily fantasy games featuring college sports, asserting that DFS is inconsistent with the NCAA's policies and values. The SEC had discussions with its broadcast partners in an attempt to discourage the advertising of daily fantasy games during its telecasts, while both

Big Ten Network Big Ten Network (BTN) is an American sports network based in Chicago, Illinois. The channel is dedicated to coverage of collegiate sports sanctioned by the Big Ten Conference, including live and recorded event telecasts, news, analysis programs ...

and

Pac-12 Network The Pac-12 Network (P12N; also sometimes referred to as Pac-12 Networks) is an American sports-oriented digital cable and satellite television network owned by the Pac-12 Conference. The network's studio and production facilities are headquarter ...

prohibited advertising for daily fantasy games involving college sports. On December 9, 2015, it was reported that ESPN had similarly agreed not to air advertising for daily fantasy services during telecasts of the

College Football Playoff The College Football Playoff (CFP) is an annual postseason knockout invitational tournament to determine a national champion for the National Collegiate Athletic Association (NCAA) Division I Football Bowl Subdivision (FBS), the highest level ...

. On March 31, 2016, DraftKings and FanDuel jointly agreed to stop offering daily fantasy college sports following the conclusion of the 2016 NCAA Men's Division I Basketball Tournament. The NFL does not outright ban participation in paid or daily fantasy sports games by its players and staff, but does restrict how much one may win in such games. The

PGA Tour The PGA Tour (stylized in all capital letters as PGA TOUR by its officials) is the organizer of professional golf tours in the United States and North America. It organizes most of the events on the flagship annual series of tournaments also ...

prohibits its players from participation in paid DFS games involving golf, or endorsing DFS companies. FanDuel's Terms of Service bans any athlete, coach, referee, or owner from entering contests for the sport in which they are involved with. Furthermore, DraftKings announced that CFL players were not allowed to enter any CFL contests shortly after announcing their partnership with the league.

References

{{Fantasy sports Sports betting