Many people across the United States play fantasy sports. It is fun and can add excitement to a sport’s season. On top of that, it can also be a way to make money through sites such as FanDuel and DraftKings, which are the two premier Fantasy Sports websites.
However, it may be illegal for you to play Fantasy Sports. That might sound weird, but it’s true. If the league that a player participates in has a fee for entry or has prizes given out, it may be an activity that is an illegal one.
The Legality of Fantasy Sports in the USA
The issue of the legality of Fantasy Sports in the US, especially online, is one that is complicated. The basic issue is how the states classify games – are they based on chance or skill?
For Fantasy Sports, there is some skill that is involved, especially for being successful. However, on the other side of the coin, there is also luck involved. So, as you can see, the issue is not one that is cut and dry.
For example, the states of Arizona, Washington, Montana and Louisiana have never offered Fantasy Sports, because all of them have laws that classify any game that has any chance to it as gambling. There are other states where the laws they have are not as clear, and it is up to the online operator if they want to offer their services in that state.
A majority of the operators online are in tune with what market leaders FanDuel and DraftKings do as far as where to offer their services. As of January 2020, those two Fantasy Sports websites block players from Arizona, Alabama, Hawaii, Idaho, Iowa, Louisiana, Montana, Nevada and Washington State.
There are now 19 states that have Fantasy Sports being a game that is one involving skill, and there are many others that will likely do the same in the not-to-distant future.
Crossing State Lines
One of the trickier aspects of the legality of Fantasy Sports is the issue of state lines. When you play in a Fantasy Sports league, you are not only dealing with the laws of the state you reside in but all of the other states where members of that league reside as well.
The state line issue brings federal racketeering laws into the equation, and those consequences can be serious.
In terms of the consequences when playing Fantasy Sports illegally, they mainly are due to taxes. Any type of income for a US Citizen, which does include any winnings from playing Fantasy Sports, has to be reported to the IRS, and failure to do so is seen as tax evasion.
In the Unlawful Internet Gambling Enforcement Act of 2006, it also states that you have to report winnings even if it is the case that you won them in an illegal manner in terms of the state you reside in. If a Fantasy Sports player reports winnings on the federal level, they are fine, but there are still the state laws to deal with in terms of gambling.
While playing Fantasy Sports in some states is illegal, jail time can be a consequence that is highly unlikely. All in all, state authorities do not view playing in fantasy leagues as a high priority and do not go after those that take part in them.
For example, offshore gambling is illegal, yet those who take part in that are rarely, if ever, prosecuted. Still, playing in illegal fantasy leagues is against the law and can be punishable by fines and/or jail time, but, again, those laws are rarely enforced.
The police will not raid your fantasy league night, but it is always a good idea to find out if playing Fantasy Sports is legal in your state.
An Attorney Can Help
If you really want to be on the safe side when playing Fantasy Sports or are looking to set up a fantasy league, a local attorney can help. They can look into the legality of those things in the state you are in and make sure you are playing in a legal manner.
They can also help if you have players that are taking part in the league and reside in another state. On top of the legality of Fantasy Sports and playing in leagues, a local attorney can also help you with any winnings to make sure you are reporting them in the right manner.
So What to Do?
Millions of Americans take part in Fantasy Sports, and it can be very exciting and even profitable to do so. However, you have to be aware that it can be illegal, and there are consequences.
As stated before, enforcement is minimal, but you still want to make sure that you are taking part in a legal venture when playing Fantasy Sports, as it all depends on the laws in your state.