Fantasy Sports Deemed Legal By US Federal Court

Several Viacom companies were sued recently for allegedly violating state gambling laws by operating fantasy sports web sites. The lawsuit came about because these companies require an entry fee to join and provide prizes to their winners. A New Jersey Federal Court passed down their ruling in favor of fantasy sports, declaring the combination of entry fee and prize did not violate gambling laws.

The Unlawful Internet Gambling Enforcement Act (UIGEA) also deems fantasy sports leagues to be legal as they do not constitute gambling. The UIGEA restricts online gambling, such as bingo, poker and casino activities, but fantasy sports does not fall into these categories. The reason being that unconditional entry fees are required and fixed prizes awarded; key factors which do not constitute gambling according to US law.

The plaintiff in this case alleged that the submission of an entry fee for participation constituted wagering a bet. The court judge denied this, ruling in favor of fantasy sports operations - a huge boost to the industry and participants alike. Like fantasy sports, state-sponsored horse race betting received the same guidelines under the UIGEA.