Legal Status of Fantasy Sports in Limbo in Many States

When the U.S. Supreme Court struck down the federal law prohibiting state-authorized sports betting in May 2018, it wasn’t just state legislatures that sprang into action.

The fantasy sports behemoths DraftKings and FanDuel also mobilized to become sportsbooks.

Indeed, DraftKings and FanDuel have become so synonymous with sports betting at this point that you’d be forgiven if you had forgotten they started out as something else entirely.

In fact, both still operate as, and derive revenue from, their original service: fantasy sports.

Fantasy sports are not sports betting. Sports betting involves wagering on the specific outcome of an athletic event, like the winner of the Super Bowl.

Fantasy sports players, on the other hand, pick real athletes for a pretend team and earn points based on those athletes’ performances in real life, which in turn can win them money.

The federal Unlawful Internet Gambling Enforcement Act has declared that fantasy sports are games of skill, not luck, unlike sports betting.

While sports betting has been generating headlines for years as more and more states legalize it in the wake of the Supreme Court’s ruling, fantasy sports is a powerful sector unto itself.

Fantasy sports are expected to generate $10.3 billion in revenue in the United States this year.

But fantasy sports have a problem, and it’s not just living in the shadow of sports betting.

While sports betting is explicitly legal in 38 states, fantasy sports are only regulated in 27 states. Fantasy sports are unregulated, but generally allowed, in 19 more states and not allowed in five.

This uncertainty about the legality of fantasy sports in at least some jurisdictions poses a problem for the billion-dollar sector. The Fantasy Sports and Gaming Association or FSGA, an industry organization, is actively pushing for state-level legislation clarifying the legal status of fantasy sports.

But curiously, almost all of the bills seeking to clarify fantasy sports’ status introduced in state legislatures this year failed.

What’s going on here?

Not Much Luck for Fantasy Sports Bills in 2024

At least 16 measures dealing specifically with fantasy sports were introduced in eight states this year, according to LexisNexis State Net’s legislative tracking system. Twelve of those measures failed, including five in Florida. The other four measures remain pending in two states, Illinois and New York. 

New Forms of Fantasy Sports Complicate Legal Status Clarification Efforts

According to State Net data, 16 measures dealing specifically with fantasy sports were introduced in eight states in 2024. Twelve of those measures failed, five in Florida, two in Iowa and in Louisiana, and one each in Georgia, Hawaii and West Virginia.

Only four bills remain pending: companion measures in Illinois (HB 5648/SB 3710) and New York (AB 10040/SB 9044).

Peter Schoenke, president of the fantasy website RotoWire and former FSGA chairman (as well as the current head of that organization’s Government Affairs Committee), said the stalled legislation this year boils down to fantasy sports’ common association with sports betting and the development of new fantasy sports products.

“Fantasy sports has kind of been on the backburner to sports betting,” Schoenke said. “It’s kind of gotten swept up in it.”

Schoenke said the association of fantasy sports with sports betting in the minds of many has made fantasy sports legislation a target of entrenched stakeholders in some states, like Florida and Hawaii. That’s what he attributed to the failing of some of this year’s bills.

In fact, a number of bills addressing fantasy sports along with other forms of gaming, including sports wagering, have also been considered this year. And most of those measures have failed as well.

The other issue complicating efforts to clarify the legal status of fantasy sports is the increasing variety of fantasy sports products. In addition to traditional fantasy sports, where players draft athletes to their fantasy teams and watch their points accrue over a season, there’s also daily fantasy, where players build a team for just a day (or a week) and single-player fantasy, in which a player builds a parlay-style lineup around athletes’ performances, a newer form of fantasy sports popularized by the site PrizePicks.

Schoenke said as these new variations on fantasy sports are developed, some states question whether they’re still games of skill, leading to clarifying legislation being introduced. That, in turn, can trigger the confusion of fantasy sports with sports betting again.

But Schoenke said the fantasy sports sector continues to work hard to distinguish itself from its 10-time bigger cousin. He said the lobbying work FSGA has done over the past decade or so has positioned fantasy sports to grow, even as sports betting gets most of the attention.

“Generally speaking,” he said, “fantasy sports is doing well and we’re not under attack.”

—By SNCJ Correspondent BRIAN JOSEPH

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