2024 Business Of Fantasy Sports Series: Education & Politics | How It Started | Mainstream Explosion | CBC v MLBAM | UIGEA | The Rise of DFS | The Fall of DFS | The Repeal of PASPA | Sports Betting Crossover | Fantasy Sports Feeds Sports Betting

Fantasy Sports Is My Life

On opening day in 1989, my first Rotisserie league began accruing stats. It was the beginning of a lifetime dedicated to fantasy sports. For me, it enveloped all that is good in the world. It was the first social network. It had comradery, statistics, and baseball. It made me feel like I belonged. 

That summer, I was chosen to work on the development team of Baseball Manager, the first online fantasy baseball game on the PRODIGY Network, an IBM company, six years before the Internet.  

From that day forward, I have played fantasy sports and innovated in digital sports media for 35 years.  

Politics & Education In Daily Fantasy Sports?  

These two concepts are at odds these days. Politics is the manipulation of facts and statistics to create a truth that helps gain more power, money, or an agenda. Education is explaining the facts and statistics so that the truth comes out.  

In the long history of fantasy sports, we have dealt with both in equal measure. Since the start, fantasy sports have been just a way to “make the games more fun to watch.” As fantasy sports evolved, enthusiasts created businesses to support the emerging hobby. These businesses engaged in deep cooperation and healthy competition. We called it “coopetition”! 

With the rise of the Internet, fantasy sports became very popular, and politics emerged. For a long time, the leaders of the fantasy sports industry successfully defended themselves by delivering the truth, but when big money and legislation began, it became a lot harder.

In 2015, I worked with the FSTA (now FSGA) to allocate time, energy, and capital to educate the masses. Educating the masses will, by extension, educate legislators and regulators. Unfortunately, we could not complete that in time, and power-hungry politicians like then New York Attorney General Eric Schneiderman attacked the industry, bringing it to the brink.  

Recently, I realized how few people know about the politics that existed for decades. I will publish some of the history as I saw it. This is my history, my recollection, my truth. I am not a lawyer, so when I need to post legal things, I will get help from my friends. I won’t get everything right, but you can trust I will try.

Before we start, let’s state some obvious things:

• Celebrate – The fantasy sports industry should celebrate that lawmakers largely understand that our skill-based games are not gambling.  You will see below that only five states do not allow paid fantasy sports.
• Educate – Leaders should steer clear of the politics that drive the most uninformed to attempt to call fantasy sports illegal.  We need to be out front instead of reacting.  We need to educate journalists, legislators, regulators, and the uninformed community with the truth.
• Be Human—As industry leaders, we need to forgive people for their mistakes or ignorance. We need to show them that our skill-based hobby brings joy to tens of millions, connects families and friends in a deep way, and creates a deeper connection with sports for all sports fans. It gives them a place to belong and makes the games more fun to watch. That is what it is all about.

With this posting, we start a 10-week plan:

• Politics & Education - Kickoff
• Early Days – NBA v Motorola (1997), GemStar Patents, Public Opinion Wars
• Mainstream Explosion - Media Companies Adopt Fantasy Sports Strategies
• MLB plays Hardball - CBC vs MLBAM
• UIGEA – Federal Law Decides not to take Supremacy over States
• DFS – Rise & Fall & Innovation to Rise Again
• FSCA - Fantasy Sports Compliance Association
• Pivot – Sports Betting – PASPA is repealed 2018
• Pandora’s Box is open – What is Gambling and What isn’t? 
• DFS+, Pick Ems, Games of Skill – Belief vs Law

What Is A Fantasy Sports Contest?

Before a 2006 federal law was passed, the leaders of the industry said a fantasy sports contest was:

• Participants managing a virtual team of professional athletes
• Teams score points based on actual athlete performance
• Standings were created to determine winners

That was it.  

Then, the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) defined the terms BET and WAGER to decide whether a sports contest is considered gambling under the law.  

UIGEA specifically defines Fantasy Sports Games as NOT gambling if it meets these requirements:

• The composition of the Fantasy Team could not be based on the current membership of an actual team.
• All prizes NEED to be made known to the participants in advance and not determined by the number of participants or the amount of any fees paid.
• All winners are determined by their skill at predicting athletes’ real-world performance
• No winners are determined either by a single athlete or a single real-world event.
• No winners are determined solely by the real-world score, point spread or real-world team performance.

When Congress passes a federal law, it can decide to say that law takes supremacy over state laws. In the case of UIGEA, it did NOT take supremacy over state laws. So, if one fits into UIGEA, one is free from UIGEA enforcement but could STILL be subject to state law enforcement should that state law(s) be violated and vice versa. Thus, state laws are still relevant when deciding if a game is gambling within that state.  

With UIEGA, we have a definition of gambling and fantasy sports games on a federal level, remembering that there are individual laws for each. Now, let’s take a moment here to talk about the differences between fantasy sports and sweepstakes or games of chance.

• PRIZE — If a sports contest does not have a prize, it can be run regardless of the next two rules. Many operators are using points-based systems for rewards to make fantasy sports and even other formats, like casino games, fit into sweepstakes law.
• CONSIDERATION (FREE vs. PAY) — If a sports contest is free, nothing of value is risked, and thus, there is no argument that gambling laws even apply. Stated another way, making a game free to enter resolves many issues associated with fantasy sports games.
• CHANCE/SKILL — Under the most recent Federal Law, fantasy sports are games of skill and, thus, not gambling. Few state laws address the issue directly. However, generally, if your sports contest is a game of skill (i.e., winning depends more on skill than luck), you can charge an entry fee and have a cash prize. Each state is different, and you need to make sure you are complying with the state laws to have a legal sports contest.  

Daily Fantasy Sports Betting - Legislation Map

This map is from the Vela Wood website. We see that 27 states or districts have clarifying laws for “paid fantasy sports,” 19 states are unregulated but allow them, and only five states do not allow them.

Fantasy Sports Facts: Fun & Fast

The meteoric rise of our industry over the last 25 years has been extraordinary. I wanted to leave you with a few fun, fast facts.

• In 2007, only 6% of Americans played fantasy sports
• In 2023, 21% of Americans played fantasy sports 
• In 1988, only 500,000 Americans played fantasy sports
• In 2023, 55.7m played fantasy sports
• In 1998, 4% of fantasy sports players were female
• In 2023, 32% of fantasy sports players were female

Well, once begun, half done. I hope after reading this, you feel more positive and know a little more about what makes up a fantasy sports contest.

Fantasy sports contests are fun and engaging, make you feel like you belong, and make the games more fun to watch. What could be bad?

Ignore Politics & Let The Truth Come Out.

Rick Wolf is a pioneer in the fantasy sports industry.  Wolf is a founding board member of the Fantasy Sports & Gaming Association. Wolf is also the Founder & President of Full Moon Sports who since 2001 has been providing solutions for sports media companies.  Through Full Moon he has consulted for CBS Sports, Rotoworld, NBC Sports and Fantasy Alarm. Full Moon is currently working with companies in the sports space including PrizePicks who is one of the leaders in skill based sports games.