Is daily fantasy legal, in what states and is it really gambling?

daily fantasy sports legal states
(Image credit: DraftKings)

Daily fantasy sports have exploded in popularity thanks to platforms like DraftKings, FanDuel, and Yahoo! Sports. All told, around 10 million Americans play daily fantasy sports online, and that number is growing year after year.

Despite this, daily fantasy sports aren’t allowed in every US state. That’s created some confusion about whether daily fantasy sports are legal and where you need to be located to play. It’s also raised questions about whether daily fantasy is considered gambling.

To put these questions to rest, we’ll tell you where daily fantasy sports are legal and discuss more around the topic of its status as a form of gambling.

Daily fantasy is currently legal in 43 states, and you’ll find that most of the biggest daily fantasy platforms are operating in all 43.

The only states that don’t allow daily fantasy sports at time of publication are Washington, Idaho, Montana, Nevada, Arizona, Louisiana, and Hawaii. However, that could soon change, as several of these states are considering or have already introduced legislation that would legalize daily fantasy sports.

Daily fantasy is also legal in Canada and in several countries in Europe, including Germany, Ireland, Austria, and Malta.

Are daily fantasy sports considered gambling?

Are daily sports gambling? Well, it's a bit of a gray area. While of course daily sports have the elements of regular betting - you put down money in the hope of winning a larger sum of money back, your chances of winning money at daily fantasy sports are not based entirely on luck but also on your skill at the daily fantasy game itself.

Unlike slot machines or other truly luck-based games, daily fantasy requires knowledge of a specific sport and players’ past performance. Furthermore, a strong analysis of how two teams are likely to stack up against one another in a given match-up can dramatically increase your chances of winning. Gaining knowledge and improving at sports analysis takes practice, and players can hone their skills over time to increase their chances of winning.

From a legal perspective, the role that skill plays in success at daily fantasy sports makes a big difference. The primary federal law that governs online gambling and makes it illegal in most states is the 1999 Internet Gambling Prohibition and Enforcement Act. This law includes a specific exemption for fantasy sports, both daily and season-long, on the grounds that the chances of winning a known payout are directly related to the knowledge, skill, and statistical acumen of players. 

Another important thing that sets daily fantasy sports apart from sports betting is that no game hinges on the performance of a single team or player. Moreover, no daily fantasy sports game even relies on the actual score of a single game, which is what the majority of sports bets are placed around.

Instead, daily fantasy requires that players balance their roster across all the teams playing games on any given day. Usually, that means accounting for multiple different match-ups while also strategizing around the salary cap that most daily fantasy games impose. Outcomes are determined according to a point system that has little to do with the actual number of points scored in any single sporting event.

That said, many of the states that prohibit daily fantasy sports have their own online gambling laws that do not provide such an exception for online fantasy sports games. Or, these laws only allow for exceptions in the case of season-long fantasy sports. In those seven states that do not permit daily fantasy sports, daily fantasy is considered gambling at the level of the state legislature.

The future of betting and daily fantasy sports

Daily fantasy sports aren’t permitted in every state because of state-specific laws around online gambling. But, they are completely legal under federal law thanks to a specific exemption in the legislation covering online gambling. Daily fantasy sports do involve some luck, but skill is an important component if you want to win money at these games.

While the number of states that allow daily fantasy has crept up in recent years, this type of online gaming is still barred in seven states. New legislation that’s been introduced could change that over the coming years, so we may soon see the day when daily fantasy is legal across the US.

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Gambling responsibly

You probably don't need us to tell you that any form of gambling comes with serious risks and should never be undertaken as a silver bullet to solve your financial troubles. It's worth remembering the phrase...the house always wins!

If you suffer from a gambing problem or suspect somebody you know does, then we strongly suggest that you give the National Problem Gambling Hotline a call on 1-800-522-4700 to discuss it with a professional. It’s so important to make gambling safer for yourself and loved ones.

Michael Graw

Michael Graw is a freelance journalist and photographer based in Bellingham, Washington. His interests span a wide range from business technology to finance to creative media, with a focus on new technology and emerging trends. Michael's work has been published in TechRadar, Tom's Guide, Business Insider, Fast Company, Salon, and Harvard Business Review.