The question of legality surrounding daily fantasy sports (DFS) sites in the US was raised right about the same time major operators like DraftKings and FanDuel hit the world wide web several years back. Five states (Arizona, Iowa, Louisiana, Montana, Washington) immediately declared the activity illegal, and operators responded by denying access to players in those states. Now, in a surprising move by state regulators, Nevada has been added to the list of states where DFS is illegal.
The media tickers of every major sports network in the US were alight with the message yesterday after Nevada officials made the announcement that they’ve come to a conclusive answer regarding the legality of daily fantasy sports.
DFS is gambling in Nevada, and unless an operator is licensed by the state, it is illegal.
For the last few years, DFS sites like DraftKings and FanDuel have been operating via a loophole federal in legislation. According to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), ‘fantasy sports’ is exempt from being labeled a gambling activity. Instead, it’s considered by federal lawmakers to be a game of skill. And since professional sport leagues have embraced it (unlike traditional sports betting), there’s been no move to alter that perception, at least until now.
David Gzesh is an attorney that specializes in gambling and sports law based out of Nevada. He helped to explain the decision of Nevada lawmakers, and the snowball effect it may have across the United States.
“The Nevada Gaming Commission concluded that daily fantasy is gambling and needs to be licensed here,” said Gzesh. “It should give other states pause because if it’s perceived as sports gambling here, no other state can offer it when it violates federal law.”
What makes Nevada so influential?
Nevada is the gambling mecca of the western hemisphere, and the only state in the US where traditional sports betting is legally active. Thus, if Nevada says DFS is gambling, chances are other states, and possibly the federal government as a whole, will come to the same conclusion.
What does that mean for this budding, multi-billion dollar industry? It means that DraftKings, FanDuel and everything other DFS site operating in the US market will have to apply for a regulatory license in Nevada if they wish to resume accepting customers from the Silver State.
If Gzesh’s snowball theory is correct, they may soon have to apply for licenses in other states as well. And the chance of receiving a license from regions where no other forms of online gambling are permitted are slim to none.
What About StarsDraft by PokerStars?
StarsDraft is just another successful daily fantasy sports betting site that happens to have a very recognizable brand name (PokerStars) behind it, right? The operator should be able to apply for a Nevada license just like the rest of the nation’s operators, right? Maybe not.
Jump back in time a few years when Nevada was scripting it’s online poker laws, and you may remember that the state specifically chose to exclude any and all operators that had any involvement whatsoever in Black Friday. No application from such an operator would even be reviewed, much less approved.
It didn’t matter that a more reputable parent company, Amaya Gaming, bought PokerSars from federal fugitive Isai Schienberg in 2014. The PokerStars name and software was already banned from the state’s online gambling market. And if the online poker giant is unable to obtain a license in Nevada, chances are its DFS extension will run into similar issues.