Classification and Regulation of Daily Fantasy Sports

• In Event: Roundtable: White Collar and Corporate Crime

Abstract

The daily fantasy sports (DFS) industry received a “pass” in 2006, when federal law excluded it from the national limits imposed on other forms of online gambling. The exclusion reflected intense lobbying efforts by sports leagues sponsoring “season-long” fantasy games with small prizes. The rationale for “hands off” underscored a distinction between games of skill and games of chance. This exemption failed to anticipate the latest iterations of “daily” fantasy games emerging in a marketplace free from oversight since 2006. Given the rapid growth of DFS options, we have constructed a typology classifying these contests along a continuum of risk, skill, exposure, and odds. The classification scheme defines acronyms, and specifies parameters (e.g., leagues, tournaments, and game structures), strategies (i.e., stacking), and requirements (e.g., bankroll, buy in, rake/commissions, pay outs, etc.). A qualitative and theoretical approach guides a discussion of the limits of criminal sanctions and regulations to control (e.g., impose accountability and transparency) in a financial industry of this scale. In jurisdictions where DFS is ruled to be gambling, state and possibly federal prohibition or regulation is inevitable. If, however, as proponents of this form of gaming argue, it is a game of skill, then all bets are off.

Authors

• Cynthia Koller, Shippensburg University

• Laura Patterson, Shippensburg University

• Elizabeth Scalf, Heartland Advisors, Inc.