Pending Fantasy Sports Merger Begs Question

fanduel-draftkings-fantasyNow that the two largest online daily fantasy sports sites are back in the news—nearing a deal to merge into a company drawing $100 million in revenue, according to the Wall Street Journal—it’s a good time to answer a nasty, nagging question: Are these sites legal?

Because the companies in question, FanDuel and DraftKings, are backed, respectively, by fat investments from Comcast and 21st Century Fox, it’s apparent that some high-powered attorneys must think that they are. And in fact, at this point, they’re clearly legal in at least nine states. So the real question is whether they will become legal in enough states and countries—Canada now permits it, and England recently approved it as well—to make for a healthy ROI.

To get the lay of the weird landscape these companies occupy, I spoke with Josh Schiller, a partner with Boies Schiller & Flexner, which represents DraftKings, and I. Nelson Rose, a law professor at Whittier Law School in Costa Mesa, Calif., who specializes in, and writes a blog on, gambling law.

Generally, whether gambling is illegal or not is a state law matter. The definition of what constitutes gambling varies, though in most states playing games of chance for money—like craps and roulette—is pretty clearly considered “gambling” while playing games of skill—like chess or golf—is pretty clearly not.

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