November 13, 2014
Daily Fantasy Sports Games: Out of the Penalty Box in the USA?
As analyzed numerous times on this blog, the legality of fantasy sports contests that require an entry fee to play, and that pay out cash prizes to winners, varies state by state, and can be considered illegal gambling in certain jurisdictions, depending on the nature of the games themselves and other factors.
There is currently a recognized exemption under federal law, as well as the laws of several states, for season-long fantasy sports games that adhere to certain defined criteria. However, there remains a question about whether or not short-term, or “daily,” fantasy sports games involve enough skill, as opposed to luck, in order to enjoy protected status under applicable law.
In 2012, a lawsuit filed by attorney Christopher Langone, entitled Langone v. Kaiser & Fan Duel (as discussed here and here), challenged the legality of short-term or “daily” fantasy sports contests. In March 2013, Langone filed another lawsuit including a similar challenge. The first suit was dismissed on procedural grounds. The second suit was resolved through a confidential settlement, dismissing all claims Langone had against the named defendants. As such, the underlying legal question remains unresolved.
The NHL Drops the Puck on Daily Fantasy Sports Games
Despite some lingering uncertainty, earlier this week, the National Hockey League (NHL) announced a partnership with the industry’s second largest fantasy sports site, DraftKings, to offer an officially sponsored NHL daily fantasy sports contest. While the contest that is being cross-promoted by the NHL and DraftKings is free to enter, contestants will be eligible to win valuable prizes.
Obviously, DraftKings offers multiple pay-to-enter short term contests as well. Despite this fact, the NHL is not shying away from entering into a robust relationship with Draft Kings. According to this story:
As part of the agreement, DraftKings will serve as the Official Daily Fantasy Game of the NHL and will receive prominent brand placement across the NHL’s digital platforms, including NHL.com, NHL Mobile™ and the NHL’s Twitter and Facebook properties. DraftKings will serve as the presenting sponsor of daily video previews for each regular-season matchup on NHL.com, NHL Mobile and the NHL app and “Fantasy Players to watch” segments on one of NHL Network’s signature shows, NHL Live™. In addition, DraftKings has partnered with numerous NHL Clubs, building its presence on the local level as well as the national level.
The NHL now notably joins Major League Baseball, which last March entered into its own partnership with Draft Kings, as well as USA Today and Sports Illustrated, which have recently launched proprietary or co-branded daily fantasy sports offerings.
Odd Man Rush?
As mentioned above, the NHL represents yet another in an increasingly long list of high profile names in publishing, professional sports and Wall Street that are investing heavily in daily fantasy sports offerings. As we have cautioned previously, this high-level involvement does not guarantee that the underlying legal issues associated with daily fantasy sports contests have been resolved. But the momentum is undeniable.
The involvement of professional sports leagues in an ever-changing landscape involving federal and state interpretations of applicable gaming laws 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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