Are fantasy sports legal? The short answer is yes, absolutely. There is no requirement that fantasy sports be played for money, so if you are playing fantasy sport for the love of the game then you have absolutely nothing to worry about.
Of course, many of us play fantasy sports for reasons beyond love of the game. This is the point where the situation becomes a little bit stickier. Technically, if you’re playing with a group of your friends, each person pays an entry fee and you win a percentage of that money, what you’re doing is illegal gambling and violates a number of laws, with the exact number depending on how much money is involved and where the people involved live. While it is never prudent to disregard the law, it should be pointed out that the regulation of these particular laws is almost impossible. When registering your league with ESPN, that site neither asks nor wants to know whether or not money will be exchanged, making it very difficult to trace. Additionally, fantasy sports rarely involve large amounts of money being exchanged by individual persons. The whole appeal of the leagues from a gambling perspective is the ability to make a lot more money than you’re investing and to do so with your friends. This means that no bookies are involved, and while a $3000 dollar pot (unusually high even for a big fantasy football league) would be significant to the winner, it doesn’t really enter the government’s radar.
One interesting question that arises out of considering the legality of fantasy sports involves contests sponsored publically by ESPN and the NFL, as well as many other bodies. If gambling is illegal, how is it that CBS is allowed to offer $5000 to the contestant who chooses the best fantasy playoff team? I’ll admit that I had to do a little research on this subject myself, and I found the answer in a great piece written by Christine Hurt of Marquette Law school, the link to which I’m providing at the bottom of this article. Essentially, when Congress drafted bills to prohibit internet gambling, they provided for two exceptions. The first applies to trading stocks and other fincane-related products, the second grants an exception to any participation in a simulation sports game, an educational game, or a contest, that “(I) is not dependent solely on the outcome of any single sporting event or nonparticipant's singular individual performance in any single sporting event; (II) has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance), and, in the case of a simulation sports game, has an outcome that is determined predominantly by accumulated statistical results of sporting events; and (III) offers a prize or award to a participant that is established in advance of the game or contest and is not determined by the number of participants or the amount of any fees paid by those participants.”
In the last clause you see how these promotions are distinguished from the leagues you form with your friends, as the amount paid in user leagues depends directly on the number of participants and the amount of fees paid.
So, if you are a fantasy sports fan, enjoy playing for money, and want to do so without breaking any laws, you can do so by participating in any of the large promotions available online.
Christine Hurt’s article: http://www.theconglomerate.org/2005/07/fantasy_footbal.html