The Law of Sports Wagering in the United States
Abstract and Keywords
The law of sports wagering in the United States reflects the exceptionalism of sports. Although limitations on gambling in general have undergone significant liberalization in recent decades, sports wagering remains subject to a complex interplay among federal and state prohibitions. This exceptionalism stems from the notion that sports contests would be ineluctably corrupted by betting, potentially giving contestants unduly large investments in the outcome, or in shaping the magnitude of the victory. Despite this continuing antipathy toward sports betting as a matter of formal legality, recent legal developments have unwittingly created a burgeoning industry in sports betting, which industry has created significant instability in the general prohibition. Specifically, the rise of daily fantasy sports contests, which can feature contests that appear remarkably similar to single-game bets on the outcome of a game, has both evidenced the domestic appetite for sports wagering, and has pushed against the boundaries set by the anti-gambling prohibitions. The legality of daily fantasy sports is highly debatable, and calls into question the very nature of a sports bet as a game of chance or skill, and whether or not fantasy play presents a substantially different set of characteristics. Whatever the legal outcome, strong arguments exist that suggest that fantasy play would not give rise to the concerns that animated the general prohibition on sports wagering.
Keywords: Sports wagering, Betting, Fantasy sports, Law of wagering, Point shaving, Wire Wager Act, Professional and Amateur Sports Protection Act, Unlawful Internet Gambling Enforcement Act, Prohibition of sports gambling, Legalization of sports wagering
A useful discussion of the law of sports wagering has to include consideration of two discrete legal topics: the law of wagering and the law of sports wagering. Conceptually, the latter is a subset of the former; however, the law of sports wagering has developed along such a distinct path, both as a matter of legality and of public policy, as to deserve to be permanently disentangled from the larger topic. Indeed, the evolution of the law of wagering and the law of sports wagering have proceeded along such a distinct route that, paradoxically, sports wagering in some forms has been permitted in places where gambling is prohibited, and sports wagering has been prohibited where gambling in general is permitted.
This strange separation between the law of wagering in general and the law of sports wagering in particular stems from the unique exceptionalism of sports in the United States. Unlike the laws in most other countries, and unlike many other underlying subjects of aleatory contracts, United States law in general prohibits wagers on sporting events. This notable antipathy toward sports bets stems from the perceived vulnerability of the sports contest to manipulation and fraud. The outcome of a contest is a product of mutual competitive efforts; the intentional failure of one of the contestants to sustain maximum effort can lead to loss of the contest, thus rendering the game susceptible to corruption, “point shaving,” bribery, and deceit. Nonetheless, recent developments in the sports wagering industry, stemming from the exploitation of certain provisions in federal and state law, give rise to the promise of increased legal sports wagering in the United States.
I. Statutes and Definitions
The legality of particular sports betting transactions is determined by federal or state law. The most applicable federal law is the Wire Wager Act.1 It prohibits bets or wagers on any sporting event or contest2; thus, interstate transmissions of wire communications that do not relate to a sporting event or contest fall outside of the reach of the Wire Wager Act.3 The next most relevant federal statute is the Professional and Amateur Sports Protection Act (PASPA).4 It prohibits any person from operating a betting scheme that is based on any competitive game in which amateur or professional athletes participate or on the performance of such athletes in such games.5 No federal law makes it a crime to place a bet. The Wire Wager Act specifically criminalizes those who are “engaged in the business of betting or wagering knowingly uses a wire communication or facility for the transmission … of bets … on any sporting event.”6 Finally, although not technically a statute that prohibits gambling or regulates gaming, the federal Unlawful Internet Gambling Enforcement Act of 20067 (UIGEA) prohibits certain financial intermediaries from facilitating transactions involving unlawful Internet gambling.8 Other federal statutes also regulate gambling, including sports gambling.9
State law varies widely.10 Each state has “primary responsibility” when determining which activities constitute prohibited gambling within that state.11 Most states prohibit gambling,12 unless the state has passed a specific statute or constitutional amendment permitting it.13 Gambling is generally defined as a transaction that involves the classic elements of consideration,14 chance,15 and prize.16 Very few states, most notably Nevada,17 have passed specific statutes permitting sports wagering.18
Sports betting consists of the activity of predicting sports results by making a wager on the outcome of a particular sporting event.19 Straight bets, also known as “spread bets,” are the most commonly known form of sports betting in which a betting line, often referred to as a point spread, is set and the bettor either bets on the favorite, giving up the points, or places a bet on the underdog, getting the points.20 This bet essentially involves a prediction by bookmakers on which team will win and by how much.21 Total line bets, the second most popular bet, occur when a number is set for the combined final score of both teams and the bettor bets on the actual score, staying “under” that total or going “over” the set number.22 A bettor who places a money line bet is picking a team to win without any point spread; the risk involved is the amount the bettor must wager to pick the favorite versus the amount the bettor stands to earn if he chooses the underdog.23 For example, if the Dodgers are favored against the Giants, the money line might read: “San Francisco (+120) vs. Los Angeles (-135),” and the bettor would stand to make $120 on a $100 bet on the Giants if the Giants win, and would have to risk $135 to win $100 on a Dodgers’ victory. This type of bet is typically used for baseball and hockey. Parlay bets involve the act of grouping together two or more picks into one single bet. The betting odds on a parlay bet payout are adjusted according to the total number of picks the bettor chooses to group together. To win on a parlay bet, all of the bettor’s picks must be correct; thus, parlay bets can be very high risk/high reward and are not always appropriate for those who prefer playing it safe.24 When a bettor chooses to group two or more picks together in a single bet and then has the option of adjusting the point spreads in exchange for a lower overall possible payout, the bettor is engaging in a teaser bet.25 For example, if the sports book is offering a 6-point teaser bet, then a 3.5-point underdog would now get 9.5 points. “Teasing the spread,” as it is commonly termed, results in a lower payout and is more suitable for mitigating risk. Head-to-head bets are common in NASCAR and professional golf and require the bettor to pick between just two competitors. A proposition bet, commonly referred to as a “prop bet,” is essentially any wager that is not directly decided by the game’s final outcome.26 Individual prop bets allow the bettor to bet on the performance of athletes during a game, such as how many touchdowns a player will throw; team prop bets allow the bettor to bet on a particular team’s performance, such as the number of sacks for a football team, instead of the final outcome.27
Sports betting also encompasses pari-mutuel wagers typical in horse racing and a few other sports.28 Some states have never permitted gambling of any kind,29 including bets on horse races. Yet during the long periods in the nation’s history where gambling in all of its forms was generally prohibited,30 pari-mutuel bets on horse races have been specifically permitted by statute or even constitutional amendment.31 This toleration and tacit encouragement of horse betting grew from an appreciation of the importance of the horse stock to the national economy during its formative stages.32 Betting on horses improved the breeding of horses.33 Bets on horses generated large financial pools with huge payouts to winning horse owners, either through a bet on the horse or through the “stakes” skimmed from the betting pool.34
Finally, defining bets requires identifying both the counter-parties to the bet and the bookmaker who facilitates the transaction. A bookmaker (“bookie”) is someone who enters into bets or wagers with others, risking the loss of something of value.35 A bookmaker also determines odds, receives bets on the outcome of events, and pays out to winners.36 A side bet, also referred to as a “side wager,” is a bet usually made with the bettor’s friend or a different bookmaker in addition to the straight bet placed in a sports book.37 A layoff bet is a unique type of bet in which a bookmaker places bets with other bookmakers to help reduce exposure and minimize risk on a wager.38
II. The Unstable Prohibition on Sports Gambling
In part, the widespread prohibition on sports gambling in the United States stems from the general and historical antipathy toward gambling. In recent decades, this general anti-gambling sentiment has evolved toward tolerance.39 American gambling history has been categorized into three waves of regulation: (1) during the colonial period until the mid-1800s; (2) the end of the Civil War until the early twentieth century; and (3) from the Great Depression until today.40 During the first wave, in New England and Pennsylvania, Puritan attitudes toward gambling prevailed, including the outlawing of cards, dice, and gaming tables. Lotteries, however, were played as a civic responsibility, proceeds of which helped establish some of America’s earliest and most prestigious universities, including Harvard, Yale, Columbia, Dartmouth, and Princeton. During the second wave, most types of gambling were illegal, and gamblers were affiliated with municipal corruption and blamed in part for economic difficulties.41 By 1860, all banking games, where the player bets against the house, were banned. From 1894 to 1964, no legal government-sponsored lotteries operated in the United States,42 and by 1910, virtually all forms of gambling were prohibited in the United States.43 As for the third wave of gambling, the Great Depression led to a much greater legalization of gambling as society’s mood shifted due to tremendous financial distress. Today, gambling is widespread in the United States.44
Sports wagering, however, has not enjoyed the same liberalization. Federal statutes that have limited the legal expansion of sports wagering have also, paradoxically, given rise to opportunities for its incipient growth. First, the PASPA statute, which precludes states from offering or sanctioning wagers on professional or amateur sports contests, specifically exempts from its prohibition several states, including, most notably, Nevada, which had state-sanctioned sports books or sports-based lottery games at the time the federal statute was passed. Except for Nevada, the permitted states have had meager luck in exploiting their special status.45
The second development in the sports wagering industry, again fueled by federal law, is the rise of fantasy sports.46 As a preliminary matter, although not free from doubt, the more likely conclusion is that fantasy contests constitute “gambling” under both federal and state law. They are a wager on a sporting event. Under federal law, the Wire Wager Act prohibits transmitting information involving wagering on any sporting event, except in states where such bets are legal. PASPA precludes bets on the performance of professional athletes or the games they play, unless such betting activity was legal in a state at the time of passage. Thus, if indeed fantasy contests are truly wagering contests, then both principal federal statutes appear to prohibit fantasy games, unless specifically permitted under state law. Yet state law provides little relief. In general, fantasy games are prohibited under state law because gambling is prohibited under state law. A fantasy contest involves the classic elements of consideration, chance, and prize. Fantasy game operators and investors are under the constant risk of federal or state prosecution. “Black Friday,” which shut down the comparatively smaller market for internet poker,47 might one day be regarded as a dress rehearsal.
The argument in favor of the legality of fantasy sports48 has two principal components. First, the Unlawful Internet Gambling Enforcement Act (UIGEA) prohibits certain financial intermediaries from facilitating transactions involving unlawful Internet gambling.49 What constitutes unlawful Internet gambling is not defined by the statute; instead, the UIGEA refers to other applicable, aforementioned federal and state laws. But the UIGEA contains several “carve-outs,” exemptions to the otherwise breathtaking sweep of its language. These carve-outs are notable: stock and commodities trading,50 insurance,51 banking,52 and fantasy sports.53 As a matter of legality, the specific exemption for fantasy sports only allows financial intermediaries to facilitate transactions involving fantasy games. The exemption does not make fantasy sports legal; indeed, the exemption does not speak to the issue of legality at all.54 Nonetheless, the fact that the federal financial intermediary statute specifically permits funding of fantasy sports activities has been understood by many to constitute an implicit endorsement of their legality.55
The second principal argument in favor of the legality of fantasy sports refers to state law. Citing the “chance” element derived from the common law definition of gambling, and citing to the numerous state court decisions that adhere to it,56 this argument holds that fantasy sports, in which success appears to involve an apparent measure of skill, do not fall within the common definition of gambling.57 The conception of “chance” to which most state courts appear to adhere,58 however, does not comport with the expansive notion of chance that these proponents have in mind. State courts generally take a broader, more commonsensical approach to defining “chance,” with an eye toward precluding gambling in the traditional sense.59 Certain varieties of fantasy contests have the appearance of gambling games. State courts will one day likely respond accordingly. Courts generally construe the elements of a wager expansively, specifically consideration, chance, and prize.60 Most judicial decisions defining a wager arose from disputes involving “lotteries.” The lottery cases have been numerous because many state constitutions contain provisions banning lotteries.61 “Consideration” requires merely that the participant give “something of value” beyond the mere effort of registering for the contest.62 The element of “chance” has received the most judicial and scholarly attention and has been stretched broadly, even where the outcome of the contest was determined merely by the independent decisions of opponents to cease participation.63 “Prize” can include winnings as meaningless as pinball replays, although some decisions have limited “prize” to items that are tangible and have an independent value in the marketplace.64
The fact that fantasy sports are specifically exempted from the UIGEA statute is highly suggestive that Congress contemplated that fantasy sports do constitute sports wagers in the first place. In fact, various state Attorneys General have recently classified daily fantasy sports as gambling.65 The statute prohibits funding of games involving a “bet” or a “wager,” defined as “staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.”66 Two of the elements are clearly satisfied: (1) ordinary fantasy play requires consideration, assuming participants must purchase the opportunity to join the league and (2) the substantial payoffs for league victors constitute a “prize.”
Proponents of the view that fantasy sports do not constitute a bet argue that the “chance” element does not obtain.67 Sustained success at any contest that involves repeated trials requires a significant component of skill. The common “fantasy league” that involved a season-long series of games requires research and judgment for optimal success.68 Certain fantasy products offer “same-day” or “single-game” contests69; at one fixed point along a spectrum, these contests increase the significance of luck at the expense of skill. They move closer to single-game “side bets” or “straight bets” that are the principal object of the federal prohibitions on sports betting.70 Requiring bettors to win multiple single-game contests over the course of a season, on the other hand, increases the importance of skill-factors in determining the outcome.71 Those jurisdictions that have adopted the most pro-gambling test for chance, specifically the “predominance” test72 that permits contests where skill is the dominant component of winning, could look benignly on the season-long fantasy tournament.
Nonetheless, the more likely outcome is that fantasy contests will fail even under the more generous legal standards, even with regard to fantasy leagues involving season-long tournaments. A season-long fantasy contest consists of a series of individual contests, each one of which has all the components of luck as does a single-game bet.73 Indeed, the fantasy bet may involve even more luck than the single-game straight bet: unlike predictions of overall team strength endemic in straight bets, the fantasy bet hinges on predictions of both team and individual play.74 To score in an athletic game, the team must be in advantageous positions against its opponent. The successful bettor must assess team advantages. The fantasy player must also assess and predict individual play. Fantasy play asks not only which team will likely have the upper hand in the sports game but also how that upper hand will result in a score. In other words, the fantasy bet demands that the bettor determine both which team is likely to prevail and also how that prevailing team will capitalize on its dominance and in what manner of scoring play.75 The fantasy bet involves a lot of luck. Its multiple points of assessment and prediction look more like a highly risky multigame parlay wager than it does a classic straight bet against a point spread.76 If the straight bet in sports involves a degree of “chance” that exceeds the legal limit,77 then a fortiori the fantasy bet does as well.
III. The Case for the Legalization of Sports Wagering
It is doubtful that Congress would ever repeal its panoply of statutes to permit a national industry in sports wagering. Nonetheless, some arguments suggest it should. Creating a gambling market on sports might reduce or eliminate some socially significant problems. The increased financial rewards of sports to athletes, franchises, and leagues have improved sports: more young athletes seek specialized instruction and other assistance to increase their opportunities,78 and the outsized salaries79 likely induce multiskilled young people to focus on the most popular games. The huge financial pools that would be generated by legalized sports betting, of which fantasy sports is a part, would multiply these incentives. A pool of money focused on improving sports performance could generate greater funding for high schools and colleges, higher salaries for participants, and larger returns for investors and owners. Greater returns would improve the study and understanding of the games, and expensive analytical studies of game play would lead to improved game play. Betting pools that enhanced the financial rewards of victory might also help solve the ubiquitous problem of selfish play: player salaries based on winning rather than individual contracts would better align personal incentives with team needs. Franchises that did award lengthy, expensive contracts to injury-prone athletes could hedge the risk of the contract by taking the opposite “short” position in a highly liquid betting market filled with available counterparties.
In short, although unlikely, increased room for the development of legal sports wagering markets would have some socially positive effects. It would also help satisfy the obvious demand for financial interest in sports contests, as the huge illegal market for sports wagers attests. Those advantages would have to be weighed against the image of sports games corrupted by the money invested in their outcomes.
(1) See Federal Wire Act of 1961, 18 U.S.C. § 1084 (2012) [hereinafter Wire Wager Act].
(2) See id. § 1084(a) (“Whoever … assist[s] in the placing of bets or wagers on any sporting event or contest … shall be fined under this title or imprisoned not more than two years, or both.”).
(3) Memorandum from Virginia Seitz for the Assistant Attorney General, Criminal Division (Sept. 20, 2011) (on file with the U.S. Department of Justice). See also Sports Bribery Act, 18 U.S.C. § 224 (2012), which was derived from hearings pertaining to the Wire Wager Act, and strictly prohibits gambling-related corruption in sporting contests; see also John T. Holden & Ryan M. Rodenberg, The Sports Bribery Act: A Law and Economics Approach (2015) (discussing the origins of The Sports Bribery Act).
(4) See Professional and Amateur Sports Protection Act, 28 U.S.C. §§ 3701–04 (2012) [hereinafter paspa]; see also James C.W. Goodall, Bringing Down the House: An Examination of the Law and Policy Underpinning the Professional and Amateur Sports Protection Act of 1992, 67 Rutgers U. L. Rev. 1097, 1097 (2015).
(5) See 28 U.S.C. § 3702 (“It shall be unlawful for … a person to … operate … [a] betting, gambling, or wagering scheme based … on one or more competitive games in which amateur or professional athletes participate … or on one or more performances of such athletes ….”).
(6) 18 U.S.C. § 1084(a) (emphasis added).
(7) 31 U.S.C. § 5363 (2012).
(8) Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. § 5363 (2012) [hereinafter UIGEA] (“No person … may accept … credit, … an electronic fund transfer, … any check, draft, or similar instrument … or the proceeds of any form of financial transaction … which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person.”); see, e.g., Kraig P. Grahmann, Betting on Prohibition: The Federal Government’s Approach to Internet Gambling, 7 Nw. J. Tech. & Intell. Prop. 161, 161 (2009) (“The UIGEA bans acceptance of any financial instrument used for unlawful Internet gambling.”); James L. Johnston & Josh J. Gordon, Daily Fantasy Sports presents Opportunities and Risks to Companies, 27(1) Intell. Prop. & Tech. L.J. 19, 19 (2015) (“[The UIGEA], among other things, prohibited financial transactions that supported unlawful online gambling.”).
(9) The Illegal Gambling Business Act, 18 U.S.C. § 1955(b)(4) (2012) [hereinafter IGBA], which was enacted as part of the Organized Crime Control Act of 1970, Pub. L. 91-454, 84 Stat. 922, helps states enforce their laws by prohibiting illegal gambling businesses. “[G]ambling includes but is not limited to … bookmaking, … conducting lotteries, policy, bolita or numbers games, or selling chances therein.” 18 U.S.C. § 1955(b)(4). The Travel Act, 18 U.S.C. § 1952 (2012), generally prohibits travel or use of any facility in interstate or foreign commerce with intent to “promote, manage, establish, carry on, facilitate the promotion, management, establishment, or carrying on, of unlawful activities,” such as racketeering or illegal gambling. The Travel Act concentrates on a broader spectrum of “illegal activity.” Id. Compare Travel Act, § 1952 with Wagering Paraphernalia Act, 19 U.S.C. § 1953 (2012), which concentrates on illegal gambling and prohibits interstate transportation of gambling materials, specifically “any record, paraphernalia, ticket, certificate, bills, slip, token, paper, writing, or other device used, or to be used, or adapted, devised, or designed for use in (a) bookmaking; or (b) wagering pools with respect to a sporting event; or (c) in a numbers, policy, bolita, or similar game ….” Similar to the Travel Act, the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962 (2012) speaks broadly to individuals engaging in an “enterprise” of criminal conduct. “It shall be unlawful for any person who has received any income derived, directly or indirectly, from a pattern of racketeering activity … to use or invest … [in] the establishment or operation of, any enterprise which is engaged in, or the activities of which effect, interstate or foreign commerce.” Id. § 1962(a). “‘[R]acketeering activity’ means (A) any act or threat involving … gambling ….” Id. § 1961(1). The Illegal Money Transmitters Act, 18 U.S.C. § 1960 (2012) prohibits the ownership, control, or supervision of a business while knowing that the business is an illegal money transmitting business; “unlicensed money transmitting business” is defined in the Act as any business that affects interstate commerce and fails to comply with the state law or registration requirements for businesses under 31 U.S.S. § 5330 (2012). The Johnson Act, 15 U.S.C. §§ 1171–78 (2012), prohibits the transport of gambling devices to states where such a device is prohibited by law and essentially requires the manufacturers and distributors of gaming devices to register and disclose each year with the U.S. Department of Justice to be marked for shipment. Although not directly related to sports betting, there are still other relevant federal statutes that pertain to this topic. For example, the Bank Secrecy Act, 31 U.S.C. §§ 5311–32 (2012), in an effort to fight money laundering, requires financial institutions, such as Internet or interactive casinos, to report currency transactions exceeding $10,000. Additionally, the Money Laundering Control Act, 31 U.S.C. §§ 5311–32 (2012), established money laundering as a federal crime and requires banks to maintain certain procedures to ensure compliance with the Act. The Horseracing Act, 15 U.S.C. §§ 3001–07, regulates the horseracing industry. The Indian Gaming Act, 25 U.S.C. §§ 2701–21 (2012), governs the operation and regulation of gaming by Indian tribes.
(10) A key distinction among gambling and sports gambling, and the brunt of the discussion in numerous court cases, is whether sports gambling is considered a “game of chance” or a “game of skill.” State courts generally employ one of two guides to determine whether chance or skill is present in gambling: (1) the predominance test, also referred to as the dominant factor test or American Rule and (2) the material element of chance test. See Jonathan Hilton, Refusing to Fold: How Lawrence DiCristina Went Bust Fighting for a Novel Interpretation of the Illegal Gambling Business Act, 83 U. Cin. L. Rev. 1467, 75 (2015); see also, e.g., Town of Mount Pleasant v. Chimento, 737 S.E. 2d 830, 836 (S.C. 2012) (applying the “American Rule”).
The material element test is applied by nine states and asks whether the element of change is a factor that is material to the final result. Hilton, supra note 10, 83 U. Cinn. L. Rev. at 1476; material element states include Alabama, Alaska, Hawaii, Missouri, New Jersey, New York, Oklahoma, Oregon, and Washington. Id. (citing Anthony N. Cabot, Glenn J. Light & Karl F. Rutledge, Alex Rodriguez, a Monkey, and the Game of Scrabble: The Hazard of Using Illogic to Define the Legality of Games of Mixed Skill and Chance, 57 Drake L. Rev. 383, 390 (2009)). In other words, this tests looks to see whether chance has “more than a mere incidental effect on the game.” Cabot et al., supra, 57 Drake L. Rev. 383, 390.
The dominant factor doctrine was defined in Morrow v. State, 511 P.2d 127, 129 (Alaska 1973), and laid out three qualifications for when a scheme is dominated by skill: (1) Participants must have a distinct possibility of exercising skill and must have sufficient data upon which to calculate an informed judgment; (2) participants must have the opportunity to exercise the skill, and the general class of participants must possess the skill; and (3) skill or the competitors’ efforts must sufficiently govern the results—skill must control the final result, not just one part of the larger scheme. As the court explained in Morrow, “[U]nder New York law a ‘contest of chance’ encompasses games in which the skill of the contestants may play a role, so long as the outcome depends in a material degree on chance.”) (citing United States v. Gotti, 459 F.3d 296, 342 (2d Cir. 2006)). See also United States v. DiCristina, 886 F. Supp. 164 (E.D.N.Y.), rev’d, 726 F.3d 92 (2d Cir. 2013), which originally held poker to be a game requiring sophisticated skill. The court considered the defense’s expert’s statistical data depicting the top ten best and worst poker players’ consistency and discussion of techniques such as “bluffing,” “raising,” and “folding,” which require “honed skills.” On appeal, the appellate court held poker to be illegal under the IGBA’s statutory “including but not limited to” language and because the appellee’s poker business fell directly within the realm of the statutory provisions because the business (1) operates in violation of the law of the state in which the business is conducted; (2) is conducted by five people or more; and (3) is either in operation for more than thirty days or earns more than $2,000 in one day. The court refused to engage in a skill or chance analysis of poker; therefore, it is arguable that poker remains to be considered a game of skill, although it retains an element of chance, that is, the dominant factor test is employed. See, for example, Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85, 87 (Nev. 1961) for an illustration of the usage of the dominant factor test.
(11) See 15 U.S.C. § 3001(a)(1) (2012).
(12) See, e.g., 720 Ill. Comp. Stat. Ann. § 5/28-7 (West, Westlaw through P.A. 99-3 of the 2015 Reg. Sess.) (“Gambling contracts [are] void.”); Ind. Code Ann. § 35-45-5-3 (West, Westlaw current with all 2015 Regular Session of the 119th General Assembly legislation effective through June 28, 2015) (“A person who … commits professional gambling [is guilty of] a Level 6 felony.”); Ky. Rev. Stat. Ann. § 372.010 (West, Westlaw current with all immediately eff. legislation signed from the 2015 Reg. Sess.) (“Every contract … lost or bet in any game, sport, pastime, or wager … is void.”); N.Y. Penal Law § 225.10 (West, Westlaw through L.2015, chs. 1 to 18, 50 to 61) (stating that gambling is a Class E felony); Ohio Rev. Code Ann. § 3763.01 (West, Westlaw through 2015 Files 1 to 6 of the 131st GA (2015–2016)) (“All promises … bet at or upon a game of any kind, … sport or pastime, or on a wager … are void.”).
(13) See, e.g., Cal. Const. art. iv, § 19 (West, Westlaw through Ch. 4 of 2015 Reg. Sess.) (“[S]lot machines, lottery games, and banking and percentage card games are hereby permitted to be conducted and operated ….”); Ky. Rev. Stat. Ann. § 238.510 (West, Westlaw current with all immediately eff. Legislation signed from the 2015 Reg. Sess.) (permitting charitable gaming); see also Mississippi Gaming Control Act, Miss. Code Ann. § 75-76-33 (West, Westlaw through 2015) (allowing the operation of a gambling game only with procurement of a state gaming license); Ohio Rev. Code Ann. § 2915.02(D)(1)(a)–(e) (West, Westlaw through 2015 Files 1 to 6 of the 131st GA (2015–2016)) (permitting certain types of “games of chance”).
(14) Cf. Blackburn v. Ippolito, 156 So.2d 550, 554 (Fla. 1963) (holding that weekly visits to a supermarket to punch a card to be entered into a contest to win prizes constituted consideration); Knox Indus. Corp. v. State ex rel. Scanland, 258 P.2d 910, 913 (Okla. 1953) (“[T]hings other than money can constitute sufficient consideration ….”); Cudd v. Aschenbrenner, 377 P.2d 150 (Or. 1962) (en banc) (holding that the element of consideration requires more than mere incidental in-store purchases at the time of registration); Seattle Times Co. v. Tielsch, 495 P.2d 1366, 1372 (Wash. 1972) (en banc) (holding that the newspaper’s free football contest satisfied the consideration requirement because it required effort to pick teams every week; “consideration in the form of time and mental effort … is a sufficient element of [gambling] ….”). See Restatement (Second) of Contracts § 71 (1981) (“To constitute consideration, a performance or a return promise must be bargained for …. The performance may consist of (a) an act other than a promise, or (b) a forbearance, or (c) the creation, modification, or destruction of a legal relation.”); Anthony N. Cabot & Louis V. Csoka, Games People Play: Is It Time for a New Legal Approach to Prize Games?, 4 Nev. L.J. 197, 216 (2004) (“Most courts follow the rule that ‘consideration,’ like a ‘prize,’ must be something of intrinsic value, such as money.”) [hereinafter Cabot & Csoka, Games People Play].
(15) Cf. MDS Inv., L.L.C. v. State, 65 P.3d 197, 203 (Idaho 2003) (describing chance as “risk—the chance of losing all or part of the consideration paid.”); Stevens v. Cincinnati Times-Star Co., 73 N.E. 1058, 1060 (Ohio 1905) (“Chance is something that befalls; the result of unknown or uncertain forces or conditions.”); People ex rel. Ellison v. Lavin, 179 N.Y. 164, 168 (1904) (holding the element of chance as being determinative of the issue of whether the defendant had advertised an illegal lottery); People v. Cohen, 289 N.Y.S. 397, 399 (Misc. 1936) (citing 38 C.J.S. Gaming § 2 (2015)) (“[G]ame of chance refers to a game determined entirely or in part by lot or mere luck …; a game in which hazard entirely predominates.”) (internal quotation marks omitted); see Marc Edelman, A Short Treatise on Fantasy Sports and the Law: How America Regulates Its New National Pastime, 3 Harv. J. Sports & Ent. L. 1, 28 (2012) (“[C]ourts have found that the element of chance requires that a game’s result be driven not by judgment, practice, skill or adroitness, but rather by factors entirely outside of the participant’s control.”) (internal quotation marks omitted) (citing State v. Gupton, 30 N.C. 271, 273–74 (1848)); Chance Definition, Merriam-Webster.com, http://www.merriam-webster.com/dictionary/chance (last visited Feb. 16, 2016) (defining “chance” as “something that happens unpredictably without discernible human intention or observable cause”).
(16) See, e.g., United States v. DiCristina, 886 F. Supp. 2d 164, 200–03 (E.D. N.Y. 2012), rev’d, 726 F.3d 92 (2d Cir. 2013), in which the court acknowledged that the definition of gambling varies according to whether dictionary definitions, the common law, or statutory language is being considered. See also Illegal Gambling Business Act, 18 U.S.C. § 1955(b)(4) (2012) for an example of a statutory definition of gambling: “[G]ambling includes but is not limited to … bookmaking, … conducting lotteries, policy, bolita or numbers games, or selling chances therein.” See generally D.A. Norris, What Are Games of Chance, Games of Skill, and Mixed Games of Chance and Skill, 135 a.l.r. 104 (1941) (discussing the elements of gambling: consideration, chance, and prize); cf. State v. 26 Gaming Machs., 145 S.W.3d 368, 374–375 (Ark. 2004) (noting that an intangible prize does not qualify as a reward for purposes of gambling law); Midwestern Enters., Inc. v. Stenehjem, 625 N.W.2d 234, 237 (N.D. 2001) (“The three elements of gambling are generally recognized as consideration, prize, and chance.”); State ex rel. Schillberg v. Safeway Stores, Inc., 450 P.2d 949 (Wash. 1969) (“[The] elements [of gambling], of course, are consideration, prize, and chance”).
(17) See Nev. Rev. Stat. Ann. tit. 41 §§ 462–467 (West, Westlaw through end of 28th Special Session 2014).
(18) See paspa, 28 U.S.C. § 3704 for an explanation about how the states that implemented a sports wagering scheme during the period of September 1, 1989, and October 2, 1991, before the passage of PASPA, are exempt from § 3702. See Nev. Rev. Stat. Ann. tit. 41 § 465.094 (1)(5) (permitting sports wagering of certain licensed persons and sports pools); Del. Code Ann. tit. 29, § 4825 (West, Westlaw through 80 Laws 2015, ch. 38); Am. Gaming Assoc., http://www.americangaming.org/government-affairs/key-issues/past-issues/sports-betting (last visited Feb. 16, 2016) (“PASPA bans betting on sporting events except in those states where such betting was legal at the time the law was approved, or in any state that legalized sports betting within a year of that date. Four states—Nevada, Oregon, Delaware and Montana—qualify for this exemption.”);
(19) David A. Jackson, Index Betting on Sports 309 (1994).
(20) See Dave Schwab, Different Types of Sports Bets, World Casino Directory, available at http://www.worldcasinodirectory.com/different-types-of-sports-bets.
(21) See Ian McGugan, The Case for Legalized Gambling on Sports, N.Y. Times (Jan. 23, 2015), http://www.nytimes.com/2015/01/25/magazine/risk-factor.html?_r=0; see also Daniel Townend, Sports Spread Betting: An Insider’s Guide 9–23 (2003).
(22) Dave Schwab, Different Types of Sports Bets, World Casino Directory, available at http://www.worldcasinodirectory.com/different-types-of-sports-bets; see also The Spread, http://www.thespread.com/betting-totals (last visited Feb. 16, 2016).
(24) See id; see also, e.g., In re Request of the Governor for an Advisory Opinion, 12 A.3d 1104, 1104 (Del. 2009) (explaining that in a parlay lottery, players must select the winning outcome on multiple elements, such as the winner of two or more games).
(26) See, e.g., NFL Prop Betting, BODOG, https://sports.bodog.eu/content/nfl-football/props-betting (last visited Feb. 16, 2016).
(28) Jai-alai, also known as the “world’s fastest game,” is a sport designed to serve as the basis for pari-mutuel wagering and is one of the only sports in the United States where betting is allowed based solely on human performance. See Roger I. Abrams, Keep Your Eye on the Pelots: Sports Arbitration at the Jai-Alai Frontation, 16 Marq. Sports L. Rev. 1, 4 (Fall 2005); Jai-Alai, http://www.fla-gaming.com (last visited Feb. 16, 2016) (providing a plethora of information pertaining to the game of jai-alai). It is a court game originally played in the Basque Country in Spain and France, in which a ball is bounced off a walled space. See Jai-Alai, http://www.fla-gaming.com. Betting on jai-Alai generally takes place in the form of pari-mutuel betting rather than fixed-odds betting; thus, all bets of a particular type are placed together in a pool. Id. Some examples of jai-alai bets available in the United States include the following: WinYou bets, a bet on your selection as the winner; PlaceYou bets, a bet based on your selection finishing in first or second place; and DailyDoubleYu, a bet based on your selection of winning entries of the first and second contest. Id. Although once a popular sport, “with the rise of fantasy sports and office pools and the massive modern sports entertainment complex, jai alai got left behind.” Michael J. Mooney, What Happened to Jai Alai?: Echoes of a Dying Game, SBNation (Feb. 28, 2013), available at http://www.sbnation.com/longform/2013/2/28/4036934/jai-alai-sport-in-america-miami (explaining the history of jai-alai in America and its decline in popularity).
(29) Hawaii and Utah are currently the only states without any form of gambling. See Haw. Rev. Stat §§ 712–1223 (West, Westlaw current through Act 196 of the 2015 Regular Session) (prohibiting gambling in Hawaii); Utah Code Ann. § 76-10-1102 (West, Westlaw current trough 2015 General Session) (prohibiting gambling in Utah); See also Nancy Todd Tyner, The Odd Couple: How Have Hawaii and Utah Staved Off Casinos—and Will They Ever Join the Game?, Casino J. (Nov. 2001), http://www.nancytodd.com/articles/Will_Hawaii_and_Utah_Join_The_Game_Nov2001.pdf (discussing Utah’s and Hawaii’s prohibition on pari-mutuel horseracing).
(30) For example, twelve states banned lotteries between 1833 and 1840, and by the time of the Civil War in 1861, all legal lotteries were prohibited; see also William Norman Thompson, Gambling in America: An Encyclopedia of History, Issues, and Society 33 (2001) (describing the chronology of gambling events throughout U.S. history). For further discussion on America’s gambling history and prohibition, see David Goldfield, Encyclopedia of American Urban History 289–90 (2007) (explaining the history of American gambling) (“For much of American history, … gambling has been illegal …. Gambling has been legalized sporadically, and usually briefly, from colonial times ….”).
(31) See, e.g., Ind. Const. art.1 § 23 (permitting pari-mutuel gambling in Indiana); Ky. Const. § 226 (permitting pari-mutuel horseracing in Kentucky); Ohio Const. art. XV, § 6 (permitting pari-mutuel horseracing in Ohio); Ind. Code Ann. §§ 4-31-1-1 to 4-31-13-9 (West, Westlaw current with all 2015 Regular Session of the 119th General Assembly legislation) (permitting pari-mutuel horseracing in Indiana); Ky. Rev. Stat. Ann. § 230.361 (West, Westlaw current through the end of the 2015 regular session) (regulating pari-mutuel horseracing in Kentucky); Ohio Rev. Code Ann. § 3769.08 (West, Westlaw current through 2015 Files 1 to 10, and 12 to 24 of the 131st GA (2015-2016) (permitting and regulating pari-mutuel horseracing in Ohio).
(32) See Roger Dunstan, Gambling in California ch. 9 (1997), available at http://www.library.ca.gov/crb/97/03/97003a.pdf (describing the economic benefits of gambling and the ways gambling can be a powerful economic development tool); Kristin Smevold, Horse Race Betting and the Stock Market, 11 The Park Place Economist 59–65 (2003), available at http://digitalcommons.iwu.edu/cgi/viewcontent.cgi?article=1073&context=parkplace (discussing the equities markets and its correlation to the horse race betting market); Mark Koba, Where Have the Horses Gone? Blame the Economy, cnbc (May 30, 2014, 1:04 PM), http://www.cnbc.com/2014/05/30/where-have-all-the-horses-gone-the-industry-wants-to-know.html (“Horses and their riders create an economic trifecta of products, jobs, and spending. The [American Horse Council] says that the industry has a $39 billion direct effect on the U.S. economy.”); American Horse Council, https://www.horsecouncil.org/legislation/testimonyrighttoride.php (last visited Feb. 16, 2016) (describing the economic impact of the equine recreation industry).
(33) Cf. Jane Allin, Horse Racing: Breeding by the Numbers, Int’l Fund for Horses, http://www.horsefund.org/resources/Horse_Racing_Breeding_by_the_Numbers.pdf (last visited Feb. 16, 2016) (explaining the drastic increase in thoroughbred horse breeding due to the horse racing industry); Janet Vorwald Dohner, The Encyclopedia of Historic and Endangered Livestock and Poultry Breeds 313 (2001) (“Racing was an important incentive to scientific horse breeding, and as a side effect, it improved the quality of horses used for pleasure activities.”).
(34) See Ricky Taylor, Profitable Betting Systems for Horseracing (2008) to learn more about various horse race betting systems.
(35) See Ben J. Hayes & Matthew J. Conigliaro, The Business of Betting or Wagering: A Unifying View of Federal Gaming Law, 57 Drake L. Rev. 445, 449 (2009).
(36) Black’s Law Dictionary (10th ed. 2014).
(37) See, e.g., SportingCharts, http://www.sportingcharts.com/dictionary/sports-betting/side-bet-or-side-wager.aspx#mobile-menu (last visited Feb. 16, 2016).
(38) See, e.g., People v. Oreck, 168 P.2d 186, 189 (Cal. Ct. App. 1946) (explaining that a “lay off” business involves transactions wherein the lay-off bettor underwrites or insures the bookie against losses on those portions of the bookie’s bets that the bookie desires to lay off).
(39) Nelson Rose, a leading expert in gambling law, coined the different “waves” of gambling in his book. I. Nelson Rose, Gambling and the Law 1–304 (1986); see also Roger Dunstan, History of Gambling in the United States ch. 2 (Gambling in California), http://www.library.ca.gov/crb/97/03/chapt2.html; See also I. Nelson Rose, Gambling and the Law: The Third Wave of Legal Gambling, 7(2) Jeffrey S. Moorad Sports L.J. art.5 (2010); see also Will Hobson, Sports Gambling in U.S.: Too Prevalent to Remain Illegal?, Wash. Post (Feb. 27, 2015), https://www.washingtonpost.com/sports/sports-gambling-in-us-too-prevalent-to-remain-illegal/2015/02/27/f1088e4c-b7d3-11e4-9423-f3d0a1ec335c_story.html.
(40) See I. Nelson Rose, Gambling and the Law 1–304 (1986).
(41) Professional gamblers were lynched in San Francisco in 1856. Roger Dunstan, History of Gambling in the United States ch. 2 (Gambling in California), http://www.library.ca.gov/crb/97/03/chapt2.html; see also William Norman Thompson, Gambling in America: An Encyclopedia of History, Issues, and Society 33 (2001).
(42) Dunstan, supra note 39, http://www.library.ca.gov/crb/97/03/chapt2.html. During this time, Nevada vacillated between legalizing and banning gaming, with legalization from 1869 to 1910. Id. Additionally, lotteries began to make a comeback to generate revenue to rebuild the region after the Civil War. Id.
(44) See Dunstan, supra note 39, http://www.library.ca.gov/crb/97/03/chapt2.html. For instance, Nevada legalized most forms of gambling in 1931, and horseracing and pari-mutuel wagering made a comeback with Michigan, New Hampshire, Ohio, and California legalizing it in 1933. Id; see also Thompson, supra note 41, at 290. Additionally, lotteries began their resurgence due to the growing opposition to tax increases, and, as a result, New Hampshire was the first state to sponsor a lottery in 1964, followed by New York in 1967. See Dunstan, supra; see also Thompson, supra at 233; NYConstitution.org, http://nyconstitution.org/professors-corner/casino-gambling/if-new-york-state-constitution-bans-gambling-why-there-so-much-opp (last visited Feb. 16, 2016). Hawaii and Utah are currently the only states without any form of gambling. See Haw. Rev. Stat §§ 712–1223 (West, Westlaw current through Act 196 of the 2015 Regular Session) (prohibiting gambling in Hawaii); Utah Code Ann. § 76-10-1102 (West, Westlaw current trough 2015 General Session) (prohibiting gambling in Utah); See also Nancy Todd Tyner, The Odd Couple: How Have Hawaii and Utah Staved Off Casinos—and Will They Ever Join the Game?, Casino J. (2001), http://www.nancytodd.com/articles/Will_Hawaii_and_Utah_Join_The_Game_Nov2001.pdf (discussing Ohio’s and Hawaii’s prohibition on pari-mutuel horseracing). For example, twelve states banned lotteries between 1833 and 1840, and by the time of the Civil War in 1861, all legal lotteries were prohibited. Thompson, supra at xi (describing the chronology of gambling events throughout history). For further discussion on America’s gambling history and prohibition, see David Goldfield, Encyclopedia of American Urban History 289–90 (2007) (explaining the history of American gambling) (“For much of American history, … gambling has been illegal …. Gambling has been legalized sporadically, and usually briefly, from colonial times ….”).
(45) Recently, however, states such as New Jersey and California have tried defying PASPA by legalizing and regulating sports betting. See Dustin Gouker, California Eyes Legalized Sports Betting, Introduces New Bill, Legal Sports Report (Sept. 11, 2015, 8:47AM), http://www.legalsportsreport.com/3757/california-eyes-legalized-sports-betting/; Should Sports Betting Be Legal?, U.S. News, available at http://www.usnews.com/debate-club/should-sports-betting-be-legal (last visited Apr. 7, 2016). In 2014, New Jersey’s legislature passed a law partially repealing that state’s ban on sports gambling, which legalized sports betting in casinos and racetracks. N.J. Stat. Ann. § 5:12A-7 (2014) (repealed); see also Will Hobson, Everything You Need to Know About New Jersey’s Pending High-Stakes Sports Gambling Ruling, Wash. Post (July 1, 2015), https://www.washingtonpost.com/news/sports/wp/2015/07/01/everything-you-need-to-know-about-new-jerseys-pending-high-stakes-sports-gambling-ruling/. However, in an August 2015 decision, the Third Circuit Court of Appeals held that the New Jersey law constituted a partial repeal of New Jersey’s gambling laws and violated PASPA. NCAA v. Governor of New Jersey, Nos. 14-4546, 14-4568, and 14-4569 (3d Cir. Aug. 25, 2015), http://www2.ca3.uscourts.gov/opinarch/144546p.pdf. In its February 2015 decision, the court reasoned that only if New Jersey completely removed itself from gambling decision-making would it be in compliance with PASPA’s prohibition on state authorization of gambling. Id. The Third Circuit heard this case en banc on February 17, 2016, and the court’s decision is not expected for several months. See NCAA; see also Jordan Hollander, Sports Gambling in Jew Jersey: The Wild, Wild East?, The Jeffrey S. Moorad Ctr. For Study of Sports Law (Mar. 17, 2016), http://lawweb2009.law.villanova.edu/sportslaw/?p=3536 (explaining that it will be months before the court announces its decision, but “some commentators who attended the hearing expect a loss for New Jersey”.).
Delaware was the first state to fully embrace online gambling beyond just poker with its enactment of the Delaware Gaming Competitiveness Act of 2012 (DGCA). See Del. Code Ann. tit. 29, § 4826(b) (2012); Kenneth N. Caldwell, The Shifting Tide in Internet Gambling: Survey of Recent Developments, 69 Bus. Law. 291, 293 (2013). Unsurprisingly, the limitation to the DGCS is requiring verification “that the player engaged in such a game is physically present in [Delaware] at the time they engage in such games.” Del. Code Ann. tit. 29, § 4826(b) (2012). Nevada has similar restrictions for its Internet sports gambling. For the most recent court decision on sports gambling legalization, see the New Jersey case, NCAA v. Governor of New Jersey, Nos. 14-4546, 14-4568, and 14-4569 (3d Cir. Aug. 25, 2015), http://www2.ca3.uscourts.gov/opinarch/144546p.pdf (holding that legalization of sports gambling in New Jersey would violate PASPA and affirming the decision in NCAA v. Christie, 926 F. Supp. 2d 551 (D.N.J. Feb. 28, 2013)).
(46) Fantasy sports can be traced back to the 1950s to a man named Bill Gamson, a psychology professor at Harvard University and the University of Michigan who created a game he dubbed “The Baseball Seminar,” in which participants paid a $10 entry fee to “draft” a team of baseball players. See Marc Edelman, A Short Treatise on Fantasy Sports and the Law: How America Regulates Its New National Pastime, 3 Harv. J. Sports & Ent. L. 1, 28 (2012). Years later, one of Gamson’s participants, Robert Sklar, introduced the same game to a group of friends at the New York restaurant, La Rotisserie Francaise, where Gamson’s original game and playing rules were updated and amended, creating the original “Rotisserie League.” Id. Much the way fantasy sports are played today, the participants of the Rotisserie League earned points based on selected players’ real-life performances in various statistical categories. Id. at 7. See Andrew C. Billings & Brody J. Ruihley, The Fantasy Sport Industry: Games Within Games 13 (2014) (describing the beginnings of the Rotisserie League).
(47) See, for example, Andrew M. Nevill, Folded Industry? Black Friday’s Effect on the Future of Online Poker in the United States, 2013 U. Ill. J.L. Tech. & Pol’y 203, 204 (2013), for a discussion on this April 15, 2011, event, dubbed “Black Friday” by poker enthusiasts, when the Department of Justice issued an indictment against three of the largest online poker websites, effectively prohibiting Americans from participating in online poker games. See also Chad Holloway, The Black Friday Timeline: One Year Without Online Poker, Poker News (Apr. 15, 2012), http://www.pokernews.com/news/2012/04/the-black-friday-timeline-one-year-without-online-poker-12445.htm, for a discussion on Black Friday; see also Chris Parker, Black Friday: How the Feds Shut Down Online Poker, L.A. Weekly (Mar. 1, 2012), http://www.laweekly.com/news/black-friday-how-the-feds-shut-down-online-poker-2174120, for a discussion on Black Friday.
(48) See, for example, Jon Boswell, Fantasy Sports: A Game of Skill that is Implicitly Legal Under State Law, and Now Explicitly Legal Under Federal Law, 25 Cardozo Arts & Ent. L.J. 1257 (2008), for a persuasive argument on why fantasy sports should be considered legal under federal and state laws. See also Darren Heitner, Daily Fantasy Sports Games Defend Legality of Their Services, Forbes (Mar. 13, 2013), http://www.forbes.com/sites/darrenheitner/2013/03/13/daily-fantasy-sports-games-defend-legality-of-their-services/ (quoting one of the largest fantasy sports companies, FanDuel’s, chief financial officer) (“[W]e have done statistical analysis as to the skill nature of the game and we can actually show that it is skill-predominant.”); Thomas Paschalis, The Legal Attack on Fantasy Sports, Ill. Bus. L.J. (Nov. 9, 2007, 18:32), https://publish.illinois.edu/illinoisblj/2007/11/09/the-legal-attack-on-fantasy-sports/ (arguing that fantasy sports are a legal form of gambling); see also Brent Schrotenboer, Fantasy Sports Debate: Gambling or Not Gambling?, USA Today (Jan. 12, 2015, 7:26 AM), http://www.usatoday.com/story/sports/fantasy/2015/01/11/fantasy-sports-gambling-debate-fan-duel/21612771/ (explaining FanDuel’s views concerning its fantasy game website) (“It’s not gambling …. It’s an entertainment product.”) (internal quotation marks omitted); Why Fantasy Sports Is Not Gambling— It’s a Game of Skill, Fantasy Sports Trade Assoc., http://fsta.org/research/why-fantasy-sports-is-not-gambling/ (last visited Feb. 16, 2016) (arguing that fantasy sports leagues are games of skill and thus are legal).
(49) Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. § 5363 (2012) [hereinafter UIGEA] (“No person … may accept … credit, … an electronic fund transfer, … any check, draft, or similar instrument … or the proceeds of any form of financial transaction … which involves a financial institution as a payor or financial intermediary on behalf of or for the benefit of such other person.”); see, e.g., Kraig P. Grahmann, Betting on Prohibition: The Federal Government’s Approach to Internet Gambling, 7 Nw. J. Tech. & Intell. Prop. 161, 161 (2009) (“The UIGEA bans acceptance of any financial instrument used for unlawful Internet gambling.”); James L. Johnston & Josh J. Gordon, Daily Fantasy Sports Presents Opportunities and Risks to Companies, 27(1) Intell. Prop. & Tech. L.J. 19, 19 (2015) (“[UIGEA], among other things, prohibited financial transactions that supported unlawful online gambling.”).
(54) Anthony N. Cabot & Louis V. Csoka, Fantasy Sports: One Form of Mainstream Wagering in the United States, 40 J. Marshall L. Rev. 1195, 1201 (2007) (“The exemption in UIGEA for fantasy sports does not mean that fantasy sports are lawful, only that fantasy sports are not criminalized under UIGEA.”).
(55) See Michael Trippiedi, Daily Fantasy Sports Leagues: Do You Have the Skill to Win at These Games of Chance?, 5 UNLV Gaming L.J. 201, 206 (2014) (“The UIGEA further cemented fantasy sports’ foothold in American culture. Although UIGEA prohibits many financial transactions … [the] specific carve out for fantasy sports … [has] allowed fantasy sports to boom nationwide as nothing legally can be said to stop them.”); cf. Jon Boswell, Fantasy Sports: A Game of Skill that is Implicitly Legal Under State Law, and Now Explicitly Legal Under Federal Law, 25 Cardozo Arts & Ent. L.J. 1257, 1264 (2008) (arguing that the “dominant factor test,” which prevails in the majority of states, resolves the ambiguous language of UIGEA and ultimately legalizes fantasy sports); M. Christine Holleman, Fantasy Football: Illegal Gambling or Legal Game of Skill?, 8 N.C. J. L. & Tech. 59, 72 (2006) (citing Jerry Magee, Its No Fantasy—NFL Puts Its Stamp on Gambling, San Diego Union-Trib., Aug. 17, 2003, at C17) (explaining that the NFL agrees that fantasy sports are a game of skill and thus are not illegal sports wagering); cf. Robert E. Goeller, The Money, Man, the Money: Sports Gambling in Professional and Amateur Sports, 12 Willamette Sports L.J. 1, 18 (2015) (“[P]rosecutors have not pursued any fantasy sports businesses or participants for violating gambling laws, likely because … consumer demand for fantasy sports leagues creates political pressure for legalization.”) (internal quotation marks omitted). Contra Nathaniel J. Ehrman, Out of Bounds?: A Legal Analysis of Pay-to-Play Daily Fantasy Sports, 22 Sports L.J. 79, 95 (2015) (“The UIGEA exemption for fantasy sports does not make fantasy sports legal ….”).
(56) See 15 U.S.C. § 3001(a)(1) (2012), which explains that each state has “primary responsibility” when determining which activities constitute gambling within that state. See, e.g., Haskell v. Time, Inc., 857 F. Supp. 1392, 1404 (E.D. Cal. 1994) (quoting Finster v. Keller, 96 Cal. Rptr. 241, 246 (Cal. Ct. App. 1971) (“In considering whether a game requires skill, the court looks to whether the players exercise some control over the outcome”) (internal quotation marks omitted); Mendelsohn v. BidCactus, LLC, No. 3:11-CV-1500, 2012 WL 1059702 (D. Conn. Mar. 28, 2012) (explaining that chance must predominate over skill to be considered illegal gambling); Nat’l Football League v. Governor of State of Del., 435 F. Supp. 1372, 1384 (Del. 1977) (“[A] ‘lottery’ should be interpreted to encompass not only games of pure chance but also games in which chance is the dominant determining factor.”); People v. Mitchell, 444 N.E.2d 1153, 1155, 1157 (Ill. App. Ct. 1983) (holding that bridge and poker are games of chance); Las Vegas Hacienda, Inc. v. Gibson, 359 P.2d 85, 87 (Nev. 1961) (“The test of the character of a game is not whether it contains an element of chance or an element of skill, but which is the dominating element”) (holding that golfing a hole-in-one is based primarily on skill, regardless of whether chance is involved); Humphrey v. Viacom, No. 06-2768, 2007 WL 1797648 (N.J. June 20, 2007) (holding fantasy sports as games of skill and not games of chance); People ex rel. Ellison v. Lavin, 179 N.Y. 164, 168 (1904) (holding the element of chance as being determinative of the issue of whether the defendant had advertised an illegal lottery); People v. Stiffel, 308 N.Y.S.2d 64, 64 (Misc. 2d 1969) (holding that a game of billiards is not a game of chance and is therefore legal); People v. Turner, 165 Misc.2d 222, 223–24 (N.Y. Crim. Ct. 1995) (“Games of chance range from those that require no skill, such as a lottery, to those such as poker or blackjack which require considerable skill in calculating the probability of drawing particular cards.”); State v. Gupton, 30 N.C. 271, 273–74 (1848) (holding the game of ten pins as not a game of chance, but a game of skill and therefore legal); Commonwealth v. Laniewski, 98 A.2d 215, 217 (Pa. Super. Ct. 1953) (“The question here involved is the interpretation of the word ‘chance.’”) (concluding that football betting pools and other similar betting schemes based on sporting events qualify as games of chance and are therefore illegal).
(57) See cases cited supra note 16; see generally Boswell, supra note 55, at 1257 (arguing that fantasy sports are a game of skill and therefore legal); see also Holleman, supra note 55, at 79 (citing Magee, supra note 55, at C17) (explaining that the National Football League agrees that fantasy sports are a game of skill and thus not illegal sports wagering: “Fantasy sports … involve elements of both skill and chance, but the skill elements are dominant”).
(58) See supra note 15. State courts generally employ one of two guides to determine whether chance or skill is present: (1) the pure chance doctrine, in which a scheme is illegal where the person’s judgment plays no part in winning a prize and (2) the dominant factor doctrine, which is used in the majority of states. The dominant factor doctrine was defined in Morrow v. State, 511 P.2d 127, 129 (Alaska 1973), and laid out four qualifications for when a scheme is dominated by skill: (1) participants must have a distinct possibility of exercising skill and must have sufficient data upon which to calculate an informed judgment; (2) participants must have the opportunity to exercise the skill, and the general class of participants must possess the skill; and (3) skill or the competitors efforts must sufficiently govern the results—skill must control the final result, not just one part of the larger scheme. As explained in Morrow, “under New York law a ‘contest of chance’ encompasses games in which the skill of the contestants may play a role, so long as the outcome depends in a material degree on chance.”) (citing United States v. Gotti, 459 F.3d 296, 342 (2d Cir. 2006)). See also United States v. DiCristina, 886 F. Supp. 164 (E.D.N.Y.), rev’d, 726 F.3d 92 (2d Cir. 2013), which originally held poker to be a game requiring sophisticated skill. The court considered the defense expert’s statistical data depicting the top ten best and worst poker players’ consistency and discussion of techniques such as “bluffing,” “raising,” and “folding,” which requires “honed skills.” On appeal, the appellate court held poker to be illegal under the IGBA’s statutory “including but not limited to” language, and because the appellee’s poker business fell directly within the realm of the statutory provisions because the business (1) operates in violation of the law of the state in which the business is conducted; (2) is conducted by five people or more; and (3) is either in operation for more than thirty days or earns more than $2,000 in one day. The appellate court refused to engage in a skill or chance analysis of poker; therefore, it is arguable that poker remains to be considered a game of skill, although it retains an element of chance, that is, the dominant factor test is employed. See, for example, Las Vegas Hacienda, 359 P.2d at 29, for an illustration of the usage of the dominant factor test.
(59) See State v. 158 Gaming Devices, 403 Md. 404 (1985) (holding that the element of chance is present in a device offering a monetary or merchandise reward to a successful player and thus constitutes illegal gambling); Laniewski, 98 A.2d at 217 (concluding that football betting pools and other similar betting schemes based on sporting events qualify as games of chance and are therefore illegal); Ward v. West Oil Co. 387 S.C. 268, 278 (2010) (holding that pull-tab game machines have the element of chance, which constitutes illegal gambling); Sun Light Prepaid Phonecard Co. v. State, 600 S.E.2d 61, 64 (S.C. 2004) (holding that phone card dispenser rolls present the element of chance and thus constitute illegal gambling); Geoffrey T. Hancock, Upstaging U.S. Gaming Law: The Potential Fantasy Sports Quagmire and the Reality of U.S. Gaming Law, 31 T. Jefferson L. Rev. 317, 320 (2009) (“[T]he adoption of the UIGEA … illustrates that there is a trend toward increased regulation of online activities, even when the activity may not fit the traditional definition of gambling.”) (internal quotation marks omitted); see also, e.g., Mitchell, 444 N.E.2d at 1157 (holding that bridge and poker are games of chance).
(61) See, e.g., Ala. Const. art. IV, § 65 (“The legislature shall have no power to authorize lotteries ….”); Utah Const. art. VI, § 28 (“The legislature shall not authorize any game of chance, lottery, or gift enterprise ….”).
(62) See Glick v. MTV Networks, 796 F. Supp. 743 (S.D.N.Y. 1992) (holding consideration not present because the use of the paid telephone system was a mere convenience to participants, who could have pursued a cost-free entry sweepstakes made available by the promoter); Knox Indus. Corp. v. State ex rel. Scanland, 258 P.2d 910, 913 (Okla. 1953) (“[T]hings other than money can constitute sufficient consideration ….”); Cabot & Csoka, Games People Play, supra note 14, at 216 (“Most courts follow the rule that ‘consideration,’ like a ‘prize,’ must be something of intrinsic value, such as money.”).
(63) See Valentin v. El Diario La Prensa, 427 N.Y.S. 2d 185, 185–87 (N.Y. Civ. Ct. 1980) (explaining that in a contest to determine the “King of the Infants, … [t]he chance was in purchasing and voting more coupons than others …”; thus, winning was determined by opponents ceasing participation).
(64) See Cabot & Csoka, Games People Play, supra note 14, at 216 (“Most courts follow the rule that ‘consideration,’ like a ‘prize,’ must be something of intrinsic value, such as money.”); State v. 26 Gaming Machs., 145 S.W.3d 368, 374–75 (Ark. 2004) (noting that an intangible prize does not qualify as a reward for purposes of gambling law); McKee v. Foster, 347 P.2d 585, 591 (Or. 1959) (holding that a “prize must be tangible in nature and have a value in the market place”).
(65) In the past two years, various state Attorneys General have opined that daily fantasy sports constitute illegal gambling. For further explanation of why daily fantasy sports constitute illegal gambling in Hawaii, see Press Release, Dep’t of the Hawaii Attorney General Doug Chin, Attorney General Opines that Daily Fantasy Sports Contests Constitute Gambling Under Hawaii Law (Jan. 27, 2016) (on file with Hawaii Office of the Attorney General), available at http://ag.hawaii.gov/wp-content/uploads/2016/01/News-Release-2016-2.pdf (“[D]aily fantasy sports contests constitute illegal gambling under Hawai’i law.”). For further explanation of why daily fantasy sports constitute illegal gambling in Illinois, see Letter from Illinois Attorney General Lisa Madigan to Representatives Elgie R. Sims & Scott R. Drury, Sports & Gambling: Daily Fantasy Sports Contests as Gambling (Dec. 23, 2015) (on file with Illinois Office of the Attorney General), available at http://www.legalsportsreport.com/wp-content/uploads/2015/12/Illinois-DFS.pdf (“Absent legislation specifically exempting daily fantasy sports contests from the gambling provisions, it is my opinion that daily fantasy sports contests constitute illegal gambling under Illinois law.”). For further explanation of why daily fantasy sports constitute illegal gambling in New York, see Letter from New York Attorney General Eric T. Schneiderman to Jason Robins of DraftKings, Notice to Cease and Desist and Notice of Proposed Litigation Pursuant to New York Executive Law § 63(12) and General Business Law § 349 (Nov. 10, 2015) (on file with the New York Office of the Attorney General), available at http://ag.ny.gov/pdfs/Final_NYAG_DraftKings_Letter_11_10_2015.pdf (demanding that DraftKings, Inc. cease and desist from illegally accepting wagers in New York State in connection with Daily Fantasy Sports); see also Letter from New York Attorney General Eric T. Schneiderman to Nigel Eccles of FanDuel, Inc., Notice to Cease and Desist and Notice of Proposed Litigation Pursuant to New York Executive Law § 63(12) and General Business Law § 349 (Nov. 10, 2015) (on file with the New York Office of the Attorney General), available at http://ag.ny.gov/pdfs/Final_NYAG_FanDuel_Letter_11_10_2015_signed.pdf (demanding FanDuel, Inc. cease and desist from illegally accepting wagers in New York State in connection with Daily Fantasy Sports). For further explanation of why daily fantasy sports constitute illegal gambling in Nevada, see Memorandum from Nevada Attorney General Adam Paul Laxalt to Nevada Gaming Control Board & Nevada Gaming Commission, Legality of Daily Fantasy Sports Under Nevada Law (Oct. 16, 2015) (on file with Nevada Office of The Attorney General), available at http://www.legalsportsreport.com/wp-content/uploads/2015/10/Nevada-AG-DFS.pdf (“[P]ay-to-play daily fantasy sports constitute sports pools and gambling games under Nevada law…. As a result, daily fantasy sports cannot be offered in Nevada without licensure.”). For further explanation of why daily fantasy sports constitute illegal gambling in Mississippi, see Letter from Mississippi Attorney General Jim Hood to Allen Godfrey, Fantasy Sports Wagering in the State of Mississippi (Jan. 29, 2016) (on file with the Mississippi Office of The Attorney General), available at http://www.legalsportsreport.com/wp-content/uploads/2016/01/A.Godfrey_Jan.29-2016-Fantasy-Sports-Wagering-in-the-state-of-Mississippi.pdf (“In our opinion, the possible existence of an element of skill in picking players in a fantasy sports game … is irrelevant to any charge of gambling on Fantasy Sports under Section 97-33-1 of the Mississippi Code.”). For further explanation of why daily fantasy sports constitute illegal gambling in Texas, see Letter from Texas Attorney General Ken Paxton to Myra Crownover of the Committee on Public Health (Jan. 19, 2016) (on file with Texas Office of The Attorney General), available at http://www.legalsportsreport.com/wp-content/uploads/2016/01/Texas-ag-dfs-decision.pdf (“Because the outcome of games in daily fantasy sports leagues depends partially on chance, an individual’s payment of a fee to participate in such actives is a bet. Accordingly … participation in daily fantasy sports leagues is illegal gambling under section 47.02 of the Penal Code.”). For further explanation of why daily fantasy sports constitute illegal gambling in Vermont, see Scott Malone, Fantasy Sports Illegal in Vermont, Attorney General’s Office Says, Reuters (Jan. 15, 2016, 4:53 pm), http://www.reuters.com/article/us-fantasysports-vermont-idUSKCN0UT2EN (John Treadwell, a Vermont State Assistant Attorney General, said in an interview, “[d]aily fantasy sports violate Vermont’s gambling laws.”).
(66) UIGEA, 31 U.S.C. § 5363.
(67) See cases cited supra notes 10, 15; see, e.g., Jon Boswell, Fantasy Sports: A Game of Skill that is Implicitly Legal Under State Law, and Now Explicitly Legal Under Federal Law, 25 Cardozo Arts & Ent. L.J. 1257, 1270 (2008) (arguing that skill, not chance, is the dominant factor in selecting and managing a winning fantasy sports team).
(68) See Humphrey v. Viacom, No. 06-2768, 2007 WL 1797648 (D.N.J. June 20, 2007) (holding fantasy sports to be games of skill and not games of chance); David Purdum, How Daily Fantasy Players Are Winning, espn (Apr. 8, 2015), http://espn.go.com/chalk/story/_/id/12380815/the-skills-required-succeed-daily-fantasy-sports-espn-chalk (explaining the importance of skills like mathematical expertise and strategic analyzing involved in playing and winning daily fantasy sports).
(69) See, for example, Nathaniel J. Ehrman, Out of Bounds?: A Legal Analysis of Pay-to-Play Daily Fantasy Sports, 22 Sports L.J. 79, 80–114 (2015) for a discussion about the growth of daily fantasy sports organizations, such as FanDuel; see also Purdum, supra note 68.
(70) See PASPA, 28 U.S.C. §§ 3701–04.
(72) Also referred to as “the dominant factor test,” this predominance test prevails in the majority of states. See sources cited supra note 10 and accompanying text; see also Boswell, supra note 67, at 1264 (“The states that follow the predominance test, however, greatly outnumber the states that adhere to the strict anti-gambling approach.”).
(73) See generally Sam Hendricks, Fantasy Football Guidebook: Your Comprehensive Guide to Playing Fantasy Football 1–371 (2010) (teaching the basic operations of playing fantasy sports as well as detailed concepts such as scoring, forming a league, draft rules, and strategies).
(74) See id. at 143 (discussing the importance of using historical data such as performance and ranking averages from several years in order to make a prediction of the statistics that a player or team will produce in the upcoming year when playing fantasy sports).
(76) See, for example, Nando Di Fino, A Random Walk to the End Zone, Wall St. J. (Jan. 15, 2010), available at http://www.wsj.com/articles/SB10001424052748703657604575005390372228982 for a discussion and persuasive argument as to why fantasy sports involve more luck than skill.
(77) See PASPA, 28 U.S.C. §§ 3701-04.1.
(78) See generally Tudor O. Bompa, Total Training for Young Champions (2000); see also William J. Kraemer & Steven J. Fleck, Strength Training for Young Athletes (2005) (describing physical and psychological development techniques to increase athletic performance); Avery D. Faigenbaum et al., Youth Resistance Training: Updated Position Statement Paper from the National Strength and Conditioning Association, 23 J. Strength & Conditioning Research 60 (2009) (“The qualified acceptance of youth resistance training by medical, fitness, and sports organizations is becoming universal.”), available at http://journals.lww.com/nsca-jscr/Abstract/2009/08005/Youth_Resistance_Training_Updated_Position.2.aspx; Larry Meadors, Practical Application for Long-Term Athletic Development; Nat’l Strength & Conditioning Assoc., http://www.nsca.com/education/articles/practical-application-for-long-term-athletic-development/ (last visited Apr. 7, 2016) (“A well-planned and balanced schedule of training, practice, competition, and recovery will enhance optimum development throughout the individual’s athletic career.”); Children and Adolescents, Am. Acad. of Pediatrics (2001), available at http://pediatrics.aappublications.org/content/107/6/1470.full.pdf (last visited Apr.7, 2016) (“Strength training (also known as resistance training) is a common component of sports and physical fitness programs for young people.”). Cf. Stephanie Chen, Going to Extreme Measures for Child Athletes, cnn (Jan. 20, 2011, 10:19 AM), http://www.cnn.com/2011/LIVING/01/20/making.of.sports.superstar/ (describing the increasing trend toward childhood enrollment in elite athletic training programs, and the benefits and downfalls to such programs)
(79) See, e.g., Kurt Badenhausen, Average MLB Player Salary Nearly Double NFL’s, But Still Trails NBA’s, Forbes (Jan. 23, 2015, 11:01 AM), http://www.forbes.com/sites/kurtbadenhausen/2015/01/23/average-mlb-salary-nearly-double-nfls-but-trails-nba-players/ (depicting the average NBA and MLB athletes’ annual salaries between $3 million and $30 million); see also Cork Gaines, The NBA is the Highest-Paying Sports League in the World, Bus. Insider (May 20, 2015, 5:03 PM), http://www.businessinsider.com/sports-leagues-top-salaries-2015-5 (explaining that NBA players are the highest-paid athletes in the world, averaging $4.6 million annual salary per player).