Thursday, 1 November 2012

The Other (More Silent) Challenge to Sports Anti-Gambling Laws

Ryan Rodenberg blogged yesterday (here) about how governor Chris Christie is moving forward with plans to bring sports gambling to New Jersey, and how America's major sports leagues have brought suit to stop this under the Professional and Amateur Sports Protection Act ("PAPSA").

However, the flamboyant Governor Christie is not the only person engaging in conduct reasonably likely to test the scope of PAPSA.  Several online fantasy sports websites are also challenging PAPSA in more subtle ways, such as by offering pay-to-enter NCAA tournament contests or NFL survivor pools that involve predicting the winners of actual sporting events.

A quick perusal of the Internet reveals at least a few well-established U.S. websites that currently offer pay-to-enter NFL survivor pools.  For example, the company Real Time Fantasy Sports runs an NFL survivor pool called King of the Mountain, in which participants pay $9.95 to enter and are awarded with a $10,000 prize if they pick the most consecutive NFL games correctly. 

While hosts of pay-to-enter survivor pools probably liken their games to fantasy sports leagues, there is technically a distinction between the two, at least under federal law.  As discussed in my recent law review article, A Short Treatise on Fantasy Sports and the Law, the Uniform Internet Gambling Act exempts from federal scrutiny games that meet three specific criteria: (1) the "value of the prizes is not determined by the number of participants;" (2)  "[a]ll winning outcomes relative the relative knowledge and skill of the participants," and (3) no winning outcome is based on the outcome of the score of games or the single performance of an individual athlete in a single, real-world event."  While some pay-to-enter fantasy sports games may fall within this three-prong safe harbor, it seems doubtful that any NFL survivor pool could meet the third prong.

Of course, in the grand scheme of things, running a pay-to-enter survivor pool is probably not the worst act someone could commit, and a creative lawyer might be able to argue that a small entry fee actually represents the cost of operating the website rather than a wager to enter.  However, if authorities choose not to challenge these type of contests, it becomes all that much harder to make a good faith argument against regulated sports books, such as the type that Governor Christie wants to allow in New Jersey.

Thus, perhaps sports leagues might soon seek to challenge these sorts of complex picking games as a way to preserve the strength of their argument against Governor Christie's plan to allow for more traditional sports gambling.  Authorities may also seek to challenge these games as a way to halt a slippery slope back toward gambling on individual game results.

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