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Pallone: “How do fantasy sports differ from gambling?”

Sep 14, 2015
Press Release
Ranking Member Requests Hearing to Examine Relationship of Fantasy Sports to Gambling and Professional Leagues

WASHINGTON, DC — Today, Energy and Commerce Ranking Member Frank Pallone, Jr. (D-NJ) requested that the Committee hold a hearing to review the legal status of fantasy sports, given the Committee’s jurisdiction over professional sports and gambling and the overwhelming popularity of fantasy sports websites.  In fact, just this year, an estimated 57 million people in the United States and Canada will participate in fantasy sports.

The official request, sent to full Committee Chairman Fred Upton (R-MI) and Commerce, Manufacturing, and Trade Subcommittee Chairman Michael C. Burgess (R-TX), highlighted the need to examine how participation in fantasy sports differs from gambling, as well as the relationship between professional leagues, teams, and players and the fantasy leagues.  

“Anyone who watched a game this weekend was inundated by commercials for fantasy sports websites, and it’s only the first week of the NFL season,” said Ranking Member Pallone.  “These sites are enormously popular, arguably central to the fans’ experience, and professional leagues are seeing the enormous profits as a result.  Despite how mainstream these sites have become, though, the legal landscape governing these activities remains murky and should be reviewed.”

The Professional and Amateur Sports Protection Act of 1992 (PASPA) prohibits sports betting nationally, except in states in states that legalized sports betting prior to passage of PASPA.  Online sports betting and online gambling are also prohibited under Federal law.  However, the Unlawful Internet Gambling Enforcement Act (UIGEA) specifically exempts fantasy sports games that meet certain criteria thanks to a loophole that has become known as the fantasy sports “carve out.”  This loophole has blurred the lines between betting conducted through fantasy sports websites and online gambling.

“Fans are currently allowed to risk money on the performance of an individual player.  How is that different than wagering money on the outcome of a game?” noted Pallone. 
Involvement of players or league personnel who may be able to affect the outcome of a game also raises additional questions about the relationship between the entities, especially when professional leagues often actively promote fantasy sites, like DraftKings or FanDuel.

The full text of the letter can be found here.