** Please see added information in 11/21/2012 post: NBA’s involvement with Yahoo! Sports is limited to free fantasy sports. **
This year we have blogged extensively on emerging legal issues in fantasy sports (see here, here, here), as well as ongoing issues involving online sports gaming (see here and here). Now, the National Basketball Association has kicked off its 2012-13 season with another game-changer that may drastically change the future of both professional sports and fantasy sports -- a joint venture project with Yahoo! to provide play-for-cash fantasy basketball contests. Not only are NBA logos used in conjunction with this play-for-cash fantasy game, but a link to the game, labeled NBA.com / Yahoo ! Sports Fantasy Basketball, appears directly on the NBA.com webpage.
The NBA.com / Yahoo! leagues operate at two price points. $100 entry fee leagues pay out a first-place prize of $600. Meanwhile, $20 entry fee leagues pay out a first place prize of $120. What is unclear from the game's rules, however, is whether Yahoo! is simply paying the NBA a fixed amount for the endorsement and promotion of the game, or whether the NBA teams will be paid a share of the revenues (i.e. "rake") derived from operating the game.
Also unclear is whether Yahoo! has fully indemnified the NBA for any liability that could stem from operating this game, especially given that the Yahoo! Sports Terms of Service does not necessarily exclude every state with some risk for running a fantasy sports contest --even though Yahoo! Sports is indeed more risk adverse than CBS Sports. (For further discussion of that point, see here).
Finally, the NBA's current position in endorsing play-for-cash fantasy basketball leagues helps to clarify the league's stance on what forms of sports gaming it deems acceptable. Although the NBA continues to publicly support the Professional and Amateur Sports Protection Act of 1992 and its ban on most forms of sports betting, the NBA clearly now supports pay-to-enter fantasy leagues -- at least of the seasonal duration variety. Of course, from the standpoint of the NBA team owners, with fantasy sports looking like far more than just a fad, it is in their interest to share in the profits of America's new national pastime, rather than foregoing an increasingly lucrative revenue stream.
(For more on legal issues in fantasy sports, please see my Harvard law journal article, A Short Treatise on Fantasy Sports and the Law).