Does Your Business Need a Fantasy Sports Opinion Letter?

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Fantasy Sports Opinion Letter
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Although the proposed merger between FanDuel and DraftKings (the two largest daily fantasy sports service providers) was called off years ago, the fantasy sports industry has only continued to thrive and evolve since then.  In recent years, many states have passed laws legalizing and regulating fantasy sports contests.  In addition to these statutes, federal laws and state common law interpretations of existing gambling and lottery laws have paved a way forward for what should continue to be a robust gaming industry throughout much of the country. In addition to complying with state and federal regulations, a necessity for entering the market is obtaining a fantasy sports opinion letter from an experienced law firm.

Start Operating With a Legal Opinion Letter

In order to get up and running, credit card companies and payment processors require that fantasy sports operators obtain a fantasy sports opinion letter from a qualified law firm as a prerequisite to accepting the fantasy sports operators as clients.  The fantasy sports opinion letter must establish that, upon a review of the subject fantasy sports operator’s business practices, the operator adheres to the many federal and state requirements that apply to its fantasy sports offerings.

While operators must comply with all applicable state and federal laws in connection with their fantasy sports business operations, that alone is not enough to ensure that businesses will have the necessary tools to succeed in the current regulatory environment.  Banks, credit card companies and payment processors alike require that daily fantasy sports businesses obtain, and maintain, a legal opinion letter from a law firm with knowledge and expertise in the practice area of fantasy sports and gaming.

What Should a Fantasy Sports Opinion Letter Cover?

While some of the specifics may vary based on the entity requesting the fantasy sports opinion letter, most service providers require that the opinion letter describe the particulars of the fantasy sports contest(s) offered by the applicable business, and whether the gameplay/functionality, fee structure, prize payouts and other features of the subject fantasy sports contest(s) comply(ies) with applicable state and federal law.

In connection with the foregoing, most fantasy sports opinion letters should discuss, on a state-by-state basis, whether the particular fantasy sports offerings comply with each such state’s legal requirements, or whether the fantasy sports offerings are, instead, blocked to residents of certain states.  In addition, fantasy sports opinion letters should address whether or not the subject fantasy sports offerings comply with applicable federal laws which include, without limitation, the 2006 Unlawful Internet Gambling Enforcement Act (“UIGEA”), the Interstate Wire Act (the “Wire Act”), the Professional and Amateur Sports Protection Act (“PASPA”), the Federal Antigambling Statute (the “Gambling Act”) and the Travel Act.

Retain a Fantasy Sports Lawyer

Like most other businesses, fantasy sports operators cannot function without bank, credit card and payment processing services.  In order to obtain those vital services, each fantasy sports operator must be able to show, through a fantasy sports opinion letter from a reputable firm that practices in the area of gaming law, that the operator complies with applicable state and federal law and regulation. For those reasons, it is essential to retain experienced, knowledgeable fantasy sports attorneys to review fantasy sports operations and, if compliant, provide the subject businesses with the requisite fantasy sports opinion letters in order to enter the marketplace.

Please note that this is only a brief overview of some of the legal issues surrounding daily fantasy sports and the opinion letters required to obtain payment processing services.

If you are interested in learning more about this topic or require assistance in connection with your fantasy sports business, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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This post was originally published on October 17, 2017, and updated May 4, 2021.

Photo by Riley McCullough on Unsplash

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