The NBA Gets an Assist on Daily Fantasy Sports Games

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November 20, 2014

Daily Fantasy Sports Games: The NBA Tips Off

daily fantasy sportsJust last week, the National Hockey League (NHL) announced that it was joining Major League Baseball (MLB) in striking up a partnership with the daily fantasy sports industry’s second largest site, DraftKings, to offer an officially sponsored NHL daily fantasy sports contest.  Fresh on the heels of the NHL’s deal, the National Basketball Association has announced its own partnership with FanDuel, the industry’s leading provider of daily fantasy sports games.

Despite the involvement of the three out of four major professional sports associations in the daily fantasy sports game space, questions still remain about whether or not daily fantasy sports games involve enough skill, as opposed to luck, in order to enjoy protected status under applicable state and federal law that permits certain types of fantasy sports games to charge entry fees and pay out prizes to winners.

There have only been two notable direct legal challenges to the popular daily fantasy sports model (as discussed here and here), but those cases were either dismissed on procedural grounds, or settled out of court, confidentially.

The NBA’s Daily Fantasy Sports Full Court Press

The daily fantasy sports games to be offered by FanDuel that will carry the NBA’s official imprimatur will be free to enter, but contestants will be eligible to win valuable prizes.  This format mirrors the game types associated with the respective MLB and NHL deals with DraftKings.  While the official NBA games will be free to enter, the NBA does not appear overly concerned about a partnership with a site that offers numerous pay-to-enter short term fantasy contests as well.

Similar to the NHL accord with DraftKings, FanDuel will be featured across the NBA’s various digital outlets, including its website and mobile apps.  However, the NBA will be staking out a more involved relationship with FanDuel than any other major professional sporting league.  Pursuant to the terms of the agreement reached last week, the NBA will actually become an investor in FanDuel and, as reported by the International Business Times, “NBA executive Sal La Rocca will join FanDuel’s board.”

The NBA’s investment comes soon after FanDuel’s recent raise of $88 million – an indication of Wall Street’s burgeoning enthusiasm for this business model.

Slam Dunk?

As mentioned above, the NBA now joins MLB and the NHL as official partners of leading daily fantasy sports venues.  In addition to the involvement of these professional sports leagues, and the money from Wall Street flowing in, reputable names in publishing (such as USA Today and Sports Illustrated) have recently launched proprietary or co-branded daily fantasy sports offerings.   Nevertheless, as we have repeatedly cautioned, this high-profile involvement does not ensure that the underlying legal issues associated with daily fantasy sports contests have been resolved.  The trends, however, are clearly positive.

The increasing participation of professional sports leagues in a form of gaming that is backed-up by an evolving state and federal legal framework remains a significant topic for all gaming attorneys, fantasy sports lawyers and those interested in fantasy sports law in general.

This blog post touches on only a few of the relevant legal issues involved in the fantasy sports arena.  If you plan on engaging in, or operating, a fantasy sports venture, it is important to retain competent legal counsel to help you design the contests in a way that comports with applicable law.

If you are interested in learning more about this topic or pursuing a venture in this area, 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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