Electronic copy available at: http://ssrn.com/abstract=1907272

¿4ì\ Journal of S-!Z HARVARD I..AW SCHOOL

A Short Treatise on Fantasy Sports and the Law:How America Regulates its New National Pastime

Marc Edelmanl

TABLEOFCONTENTS

I. I¡,¡rnooucrroN. .. .

II. Tlrr H¡sronv on Feuresv Sponm LE¡,cursA. Beþre Fantasy Sports

B, A Neu Gøne is Creøted

C. TIte Fira Roüsserie Leøgue Baseball Auction

D, Rotisserie Baseball Grows in PoþrlarityE. Tlte Internet Boon .

III. Tue Fexrmv Sponrs lrqoustnv Toolv

' Marc Edelman is a member of the faculty at Barry University's Dwayne O.Andreas School of Law in Orlando, FL and a summer adjunct professor ¿t FordhamUniversity School of Law in New York, NY (Marc@MarcEdelman.com). Professor

Edelman earned his B.S. in economics from the rù(/harton School (University ofPennsylvania) and both his J.D. and M.,{. from the University of Michigan. !íhilea law student at the University of Michigan, Professor Edelman founded the fantasysports dispute resolution business, SportsJudge.com. In addition, Professor Edelmanhas served as a legal consultant to various fantasy sports businesses.

Professor Edelman wishes to thank ,tmit Schlesinger, Erica Cohen, Kristen Chigerand Raleigh \Øebber for their research assistance. He also wishes to thank his wife,Rachel Leeds Edelman, for her assistance in developing the concept for a course inFantasy Sports & the Law, and rhe students in his 2011 seminar on Fantasy Sports &the Law for providing their insights on fantasy sports gaming.

Professor Edelman retains full copyright to this article and has agreed to provide theHaruardJoarnal of Sports and Entertainment Lau with an irrevocable license to publishthis work.

Copyright @ 2011 by the President and Fellows of Harvard College.

344

5

7

I9

ll

Electronic copy available at: http://ssrn.com/abstract=1907272

HantardJoarnal of Sports & Entertainnent Law I Vol. 3

A. Different Tyþæ of Fantasy Ganes .

l. Different Fantasy Sports

2. Different lVays to Initially Allocate Players . ....3. Different Season Lengths

B. Tbe Staþebold¿rs

1. Participants2. Host Sites

3. Commissioners....4. Treasurers

,. Strategic Advisors

6. lnsurers

IV. LEcn Rrsxs Fon Fenrlsv Sponrs Hosr SIrrsA. State Ganbling l^øut.

1. Is Fantasy Sports Illegal Gambling under State

Law?..2. Is Fantasy Sports Illegal Gambling? (Majority

View).3. Stricter Views Toward Fantasy Sporm

4, Montana's Alternative Test of Fantasy Sports . . . .

B. Federøl Gambling l-aw..1. Interstate Vire Á,ct of 196l2. Illegal Gambling Business Act . ..3. Professional and Amateur Sports Protection Act4. Uniform Internet Gambling Act ..

C. lntellectual Propaty Iøws .

1. Patent Law..2. Copyright Law ..3. Trademark Law..4. Right to Publicity

V. Lrcer R¡srs Fon Frnrmv Sponrs Penrlc¡p¿¡,¡rs. . .. . ... . .

A. Criminal Liability ander Ganbling løusB, Ciail Lidbility for Gømbling Aaiabies

C. Violating Comþany Anti-Solicitation Policies

D, Bankruþtcy

VI. L¡c¡,r Rrsrs Fon Ar.¡c¡rr¡Ry FANTAsy Sponrs

BusrN¡ssrsA, Fantasy Sports Treøsury Sites ..B. Fantasy Sports Adaisors

C, Fantøsy Sþorts lnsurønce , . , ,

D, Fantasy Sporx Dispute RaolutionVII. Cor.¡crus¡or.¡

llt2ttI5I6r6t92t))242t25

26

26

29

3033

343435

3637

3838

394042454,464647

4848

49t1t252

2012 / A Short Treatise on Fantasy Sports and tbe l-aut

I. INrnopuc'r'roN

America is in the midst of a "fantasy s¡rorts revolt¡tion" that is chang-

ing the way sporrs fans interact with one another.' \With m<¡re chan 30million Americans playing fantasy s¡rorts,

j tocìay's s1>orts fans s¡rencl as much

time predicting the performance of professional athletes as \ùØall Street in-vestors spend predicting stocks and bonds.r

Some fantasy sports contests, such as the \ùl/orlcl Championship of Fan-

tasy Football, charge participanrs entry fees in the thousands of dollars, and

offer grand prizes upwards of $300,000.' Meanwhile, other br.rsiness ven-

tures, such as Bloomberg Sports, sell fantasy participants "analytical tools"and "expert advice."6 One insurance carrier, Fantasy Sports Insurance, has

even begun to offer fantasy pafticipants insurance policies against injury to

their star fantasy players.'

Nevertheless, with the rapid and unexpected emergence of fantasy

sports, few have devoted time to understanding how U.S. law applies to

fantasy sports businesses and their participants. Thus, many have miscon-

ceptions about the law of fantasy sports.This article explains how U.S. law regulates the emerging fantasy

sports industry. Part I of this article provides an overview of the history of

' Neil;anowitz, Bet on Footltall, D¡¡urocRRl'& CHRoN. (Rochester, NY), Sept.

16, 2005, at 128, auailøble at 20O5 \øLNR 269O0861 ; see aho infra, notes I 59 - 169

and accompanying text.¡ ,i¿¿ Gene \Øang, Fantasy Football Gex Benched, \Wrsn. Posr, May 29,2011, at

D3 (estimating about 30 million participants in fantasy football); Tom Van Riper,A Gry's Fdntas!, FoRnrs, Feb. 28, 201I, at 23 (estimated the entire fantasy sportsmarketplace at 30 million participants).

a See generally Fantary Football tVeb¡ite Aim¡ to Choose the Best Athletes Uing a

Formala Daiued from Wall Street, Iß Creatrrs øre Mo¡t Definitely Bullish on Fantasy

Sporx, Ftrt. Su¡{-Sh¡rl¡,¡aL, Aug. 26, 2OO9, ar 1D (drawing comparisons betweenthe selection of fantasy sports teams and investment portfolios).

t ,l¿¿ Chris Dempsey, Fantar! Reuoløion )nline Craze is Intoxicating to Anericau,

and Exþanding Oatside tlte Sportt tVorld,DrNv. Posr, Sept. 9,2007 , at Bl (describing

the entry fees and prizes involved in the !Øorld Series ofFantasy Football); Erick S.

Lee, Play Ball!: Sub¡titating Carrent Federal Non-Regilation of Fantasy Sþorts Leagtes

witb Linind Superaision of Hyþa-Conþøitiue Leagnes, Lov. L.Â. ENr. L. F.nv. J3,64(2008) (describing "the rise of hyper-competitive fantasy leagues offering cash

prizes as high as S100,000"); Childs \Øalker, DreanTeans: Tired of Second GrctsingHou Yoar Faaorite Sporr Clnbs Are Managed? Fantasy l*agau I¿t Yol TaÞe Charge oftbe Action, THn Barr. SuN, March 6,2006, at lD ("You can find high-stakes na-tional games with top prizes in the hundreds of thousands of dollars.").

6 See infra, notes 161 -764 and accompanying text.

1 See infra notes 165 - 169 and accompanying rexr.

HaruardJoarnal of Sports €t En¡erlainntenl lttut / VoL 3

fantasy sports leagues. Part II explores the fantasy s¡rorts indr"rstry t<lclay.

Part III explains how U.S. laws apply to fantasy sports host sites. Part IVdiscusses how U.S. laws apply to fantasy sl)orts participants. Finally, Part Vapplies U.S. laws to businesses that ¡:rovicle ancillary services to fantasy

sports host sites and participants.

II. Tr¡n Hrsronv or Far.¡rnsv Sponrs Lnlcur;s

A. Before Fantasy Sþorts

For the American sports fan, professional sports once meant simply an

opportunity to attend games, root for teams, and second-guess "the men

who ran [theJ teams."8 Then, in the 1920s, the company Ethan Allen re-

leased a "table game" called All-Star Baseball, which allowed baseball fans

to simulate team management by choosing a "team" from a collection ofplayer cards and selecting the team's lineup.e Each player's performance inAll-Star Baseball was determined by probabilities that were derived fromthe players' actual past performances, in conjunction with the random event

of rotating a spinner over these cards."tFor almost forty years, All-Star Baseball v/as seen as the best way for

sports fans to simulate ream management. I' Then, in 1961, Hal Richman, a

Bucknell University mathematics student, devised a more complex simula-tion game.r2 Richman's game, Strat-O-Matic Baseball, included one play-

' Valker, suþra note 5.e David G. Roberts Jr., Note, The Rigltt of Púlicity ancl Fantasy Sports: tVhy the

C.B.C. Distribution Coart Got lt'Vrong,58 C¡s¡ L. Rav. 223,231 (2007); ¡ee al¡oTiþh Play: Per¡onal Reuieras, Op-Ed Pieces, and Polenics fron Ouride tbe Pwvietu of the

Unpiret, NrNr, Sept, 22, 2006, ar 110, auailal¡le at 2006 \7LNR 24732952.to

See Triple Play, snpra note 9.t' ld,t2

See Yøn Riper, saþra note 3 at 24; Stuarr Miller, Strat-O-Matic Deulteer Celebrate

Its 50tb Anniaersary, N.Y. TIvrs, Feb. 14, 20'll, at D5 ("In his 20s, af¡er discour-agement from his father and rejection from numerous companies, Richman bor-rowed money from friends and started [Strat-O-Matic] on his own."); CodyDerespina, Strat-OTarningtlteBig5-Ob!, NrvsDay, Feb. 13, 20II,at Â73 (funhernoting that "Richman began to develop the game as an ll-year-old in 1948 alterbecoming dissatisfied with the statistical randomness present in other baseballgames of the era. He found that using dice added an element of predictability thatjibed with the results of actual ballgames."); Calling All SABR G¿¿å¡, N.Y, D,urvNnvs, Feb. 6, 2011, at 73; Mike James, Extra Base¡: Strat Stretcha Board Game

History to 50 Years, USA Too,rv, Jan. I 1, 20ll , at 8C; Rich Freeman, Strat-)-MaticStill Going,S/roag, TnnNtoN Trvns, Jul. 7, 201O, at B2.

2012 / A Short Trcatise on Fantasy Sports and the l-atu

ing card for each Major League Baseball player.'i Each card c<¡ntainecl

various ratings and result tables that corresponded to dice rolls.''r For each

game, Strat-O-Matic participants would select teams and batting orclers, rollthe dice, and then review charts to determine game results.'t

By the 1980s, many other companies had joined Ethan Allen and Strat-O-Matic in the simulation sports market, with some companies, such as

Micro League Baseball and Avalon Hill, providing their games digitally via

the computer.'(' One of the benefits of playing sports simulation games on

the computer was the increased range of managerial options.rt However,

much like the earlier "table games," the computer sports simulations stillhad one significant limitation: they did not allow participants to showcase

managerial prowess by predicting future events.'"

B, A New Game is Created

\With both traditional "table games" and "computer simulationgames" failing to provide sports fans with a way to predict players' futureperformances, some highly educated sports fans began to experiment withways of creating sports simulation games that incorporated future events.'e

One of the first people to construct a forward-looking baseball simulationgame was Bill Gamson, a psychology professor at Harvard University and

the University of Michigan.tn Gamson's game, which he called "The Base-

ball Seminar," included a series of participants who paid a ten-dollar entry

B See Miller, nþra note 12,

'a Id.; sæ also Freeman, saþra nore 12; Rob Biertempfe, MLB Q&A: Talking uithHal Richman, Ptrr. Tnra. Rrv., May 30, 2010, aaailable at 2010 \üLNR 11122984.

It See Miller, st¿pra note 12; Biertempfe, sapra note 14.

t6 See generalþ Miller, t,tþra noie 12 (noting how computer-based simulation

games began to replace card-based games).t'

S¿¿ Micro League Baseball Instructions, http://www.stadium64.com/manuals/microleaguebaseball,htm (noting that Micro League Baseball participants were ableto make players steal bases and bunt).

t8 See generally Amorak Huey, Vlhat if Sputs Proaid¿s Strfers uith Dream Matcbaþs,

Gna¡.¡o Raplns Pnnss, Mar. 8, 2O05,arD2 (comparing fantasy sports with simulationsports games).

e Id.20

S¿¿ Geoffrey T. Hancock,Ilpstaging U.S. Ganing l¿u: Tbe Potential Fantasy

Sport Quagnire and ilte Reality of U.S, Ganbling Io*,31 T. Jrnnrnsox L. Rcv. 317,323 QO08); Sam Allis, Lord of the Garnes: Fantasy Baæball Indeltted to Truo Innouators,

Bosro¡,r Glooe , Mar. 6, 2006, ar A3; Bill Shea, Yer, ThE are Playing Fantøsy Sþorts at'Vork, bnt i¡ that Bad? So¡ne Execatiae¡ Bet Not, CnaIN's D¡lnotr Bus. J., Mar. 17,2008, at 11, available at 2008 Ìù(/LNR t4O4899.

Haruard Joat'nal of Sports & Enteruinuenl l¡tut / Vol, 3

fee to "draft" a team of baseball players.'' The winner of Gamson's ¿¡ame

was the participant who, over the course of an actual Major Leaguc llascball

season, selected players who earned the most points in a pre-determinccl sct

of sraristical categories.ttOne of Gamson's "Baseball Seminar" participants was lìobert Sklar, a

retired reporter for the Los Angeles Tines who, at the time, taught journalism

and film studies at the University of Michigan.2J ln 1965, Sklar mentionecl"The Baseball Seminar" to one of his mentees, Daniel Okrent.'1 Almostfifteen years later, while working as a journalist for Texas Monthly, Okrentdecided to revive "The Baseball Seminar" as a fun competition amon¿l some

of his journalist and advertising friends."Okrent first proposed the game to his friends in November 1979, over

lunch at a now-defunct New York Frenclr bistro, La Rotisserie Francaise."ó

After his friends expressed enthusiasm, Okrent contacted Sklar, who, by thistime, was teaching film studies at New Y<¡rk University's Tisch School of

2f .1¿¿ Hancock, suþra note 20; Allis, stpra note 20 (noting that Bill Gamson

called his game ^ "Seminar" to redt¡ce any association between it and illegal

gambling).22

See Hancock, srþra note 20; Allis, stpra note 20; Shea, nþra note 20.2J

S¿¿ Hancock, snþra note 20 at 324. Sæ gnerally \tíilliam Grimes, Rol,ert Sþl¿r,

74, Historian Vlto Pø Fihns in Context (Obituary), N.Y. Ttvas, Jul. 12, 2011, at,t20 (noting that Sklar was best known as a scholar for his 1975 book "Move-Made

America," which "was one of the first histories to place Hollywood films in a social

and political context, finding them a key to understanding how modern Americanvalues and beliefs have been shaped.").

2't See Yan Riper, snþra note 3 at 24; Hancock, rilþra note 20 at 324; Fdnrdty

Baseball's Reality Defia Belief, Drrnolr Nrvs, Apr. 17, 2OO5, ar Cl, aoailaltle at200t \øLNR 2698158.

2t S¿¿'$ü'alker,tilpranoteS;seealso;FantarySportsBornonlgTgFlighttoTexas,Mvnr. Brlcn SuN N¡vs (Myrtle Beach, SC), Dec. 18, 2005, at 88, aaailable at 2005\øLNR 20423O98; Dave Cunningham, Still Cooþin': Rotiserie Baseball Celebratet itt20tb Year, Onr. Sc¡¡rrNEL, Mar. 26,2000, at C10; Brad Townsend, It Began as a

Pastine Anong New Yorþ Linraü, Bat Roti¡¡erie Baseball Soon tYoand nþ Firing aþ a

FantasytVoild,Drl'r-. MonNlNc NEvs, Sept. lp, 2003, at lC; Patrick Hruby,TheCate Against Fantøsy,þorlr, Sü'asu. T¡¡urs, Apr.29,2003, at C1 (describing DanielOkrent's creation of Rotisserie Baseball on a plane flight from New York, NY toAustin, TX).

26 Sæ Fantary Sþorts Born on 1 97 9 F light to Texas, srþra note 25 ; æe aln Mike Hale,

Tlte Fe¿a \Vho Fot¿nded Fantasy Ba¡eball, N.Y. Tlvns, Apr. 20, 201O, at C4 (describ-

ing the role of an inaugural ou/ners meeting at La Rotisserie Francaise); Fred Fer-

rerti, For Major-League Addict¡, A lVay to 'V'in a Pennant, N.Y TIuns, July 8, 1p80,

at 8.

2012 / A Short Treatise on Fantasy Sþons and tlte ltttu

the Arts." \)Øith Sklar's hel¡r, Okrent upclatecl che game's rl¡les ancl an-

nounced the founding of the original Rotisserie League.'*

C. Tbe First llotiuerie League ßaseball Aactiott

In April 1980, Okrent and his friencls returned to tlìe La Iìotisserie

Francaise restaurant, along with Sklar, to concluct the first-ever ll<¡tisserie

League baseball player auction.2" For purposes of this auction, each <lf the

league's ten participants posted a #260 entry fee."' Each partici¡)ant tlìen

used his $260 entry fee to bid on players from Major Leagr.re Baseball's Na-tional League rosters.t'

According to the original Rotisserie Leagr.re rules, each participant

earned points based on his selected players' real-life performances in eight

statistical categories: four based on hitting, and four on pitching." At the

end of the Major League Baseball season, the Rotisserie League participant

2' See Fantasy Baseballs Reality Defia Belief, saþra nore 24 (providing a profile of

the original Rotisserie League team owners); Grimes, supra îtnte 23 (noting Robert

Sklar's appointment by New York University).28 SaøJosh Robbins, Geeþ, Ganes: Il's Been 25 Ye¿r¡ Since 11 Fan¡ Held the First

RotisserieArction,ORt. SnN.rtNeL,Jun.8,2O05,at Dl (disct¡ssing Daniel Okrent'srole in creating, and then reshaping, the Rotisserie League rules); rae a/ro Allis, supra

note 20 at A6 (describing Sklar as the link betrveen Gamson's Baseball Seminar and

Okrent's Rotisserie Baseball).2e

See generally Dan Raley, Liaing in a Fantasy lVorld: Rotis¡erie Leagnes haue'I'unalFans into Fanatics, Srarrrc Posr-INrr¡lltcENcER, Apr. 6, 1996,ar Dl (noting that"Fantasy or Rotisserie League baseball [began with] exactly 1l people in 1980"); ¡¿s

al¡o Townsend, nþra note 25; Ethan Skolnick, lls All Gæþ to Than, Pl'tu BracuPosr, May 16, 1999, at l lB; Ferretti, saþra nore 26 at I (noting that the full groupof inaugural owners in the Rotisserie League included: "Cork Smith, an editor at

Viking and owner of the Smith Coronas; Bruce McCall, an advertising writer, the

McCall Collects; Bob Sklar, a film and television critic, the Sklargazers; TomGuinzberg, former Viking editor, the Burghers; Michael Pollet, a lawyer, the PolletBurros; Miss Salembier, associate publisher of Ms. magazine; Mr. Fleder, an editorat Esquire; Mr. \Waggoner, an assistant vice president of Columbia University; Mr.Eisenberg, a writer at Esquire, and Dan Okrent, a freelance writer, owner of the OFenokees, and league commissioner.").

]0 S¿¿ Skolnick, sapra note 29; Fred Mitchell , Roti¡serie Ba¡eball lsn't Jast a Passittg

Fantas!, CuI. TnIn., Apr. 11, 1989, at I.r'

,1¿¿ Skolnick, suþra note 29.t2 Id. (noting the original four hitting categories included runs scored, runs bat-

ted in home runs and steals; the original four pitching categories included earned

run average, wins, saves and strikeouts); see also Cunningham, silþrd note 25; Fer-

rctti, saþra note 26,

Harvard Journal of Sports €t Enterlainntenl L¡tut / Vol. 3

whose team earned the most p<lints would receive a cash prize, as wcll as a

dousing in the chocolate drink Yoo-Hoo.rl

D. Rotisserie ßaseltall Grous in Poþalarity

The original Rotisserie League began "almost as a tongue-in-chcck ex-

ercise,"Jo and as an attempt by hard-working New Yorkers to have "some

goofy, albeit at times absurdly competitive, fun."" However, becattsc many

members of the Rotisserie League were also members of the media, the llo-tisserie League garnered national attention.,('

Several members of the press published stories about the llotisserie

League during its inaugural 1980 season.]7 For example, just four months

after the league's inaugural auction, New Yorþ Tines reporter Fred lìerrettipublished an article that detailed the league's participants and perform-

ance.3* Then, a few weeks later, the CBS Morning Naør produced a story on

the league.ie Shortly thereafter, members of the Rotisserie League even

agreed to publish a book to "introduce the game to the masses."r"

As baseball fans came to learn about the Rotisserie League, their game

began to develop a cult following among statistically-oriented sports fans.a'

Like any new game, different groups added their own nuances to the rules.12

13 ,!¿¿ Cunningham, npra note 25; Skolnick, saþra nore 2).J'' sü"lker, snþra note 5.It Townsend, utþra note 21,t('

S¿¿ Tim Feran, Bach in the Gane: Major l*agne Ba¡eball'frying to Reattracl Fan-

tasy Players uith Nelz )nline Formt, Coruvsus DIsr,t.rcH, Apr. 3, 2006, at 2OO6rù(/LNR 5582O02i see al¡o Hale, snpra note 26 ("Most of those team owners were

writers, editors or publishers, which guaranteed publicity.").t'

See infra notes 38 - 39 and accompanying text.r8

S¿¿ Ferretti, Jupra note 26 at 8; Townsend, tttþra noÍe 25 at lC.ìe Townsend, taþra note 25 at lC,tn tDü'alker, tilpra noce 5, ar lD.rr

Sø¿ Cunnin gham, suþra note 25 at C10; see also A Vbole Dffirent Ball Game,

,{TLaNTrc,June l, L985,ar30,auailableat 1985 \ILRN 1370459 (noting that by1985, the Rotisserie League Baseball ,{ssociation included 157 leagues, across 48

states); Craig Davis, The Paþer Tigers: Anericans' Teant Jast Read the Box Score¡: lt'¡Not \Vhetber tbry \Vin ø' Lose bnt Huu they Played Izst Garne, FLt. Sutt-SntlrtNrL,Mar.22, 1988, at lC (noting that by 1988 there were really 1,000 fantasy baseball

leagues in America and 15,000 to 20,000 team owners).'r2 S¿¿ Paul lVhite, Fantasy Leagaes Variations Keeþ Gane Fresb,lJSATooav, Aug.

24,1990, at C6 (discussing various innovations to the Rotisserie League baseball

rules that emerged in the 1980s); d Marc Edelman, lYhy Tlte Single Entiry Defense

can Neuer Apply n NFL Clús: A Pri¡ner on Prcþerry Rights Tbeory in Profesional Sports,

2012 / A Sbort Treatise on Fantasy Sports and tlte l-.¿ttu

Some early participants added a fifth statistical category for both batters ancl

pitchers.ll Others replaced the player auction with a draft t<¡ sclcct play-

ers.'rr Still others replaced the points-based scoring system with a heacl-to-

head system in which fantasy team-owners playecl against different fantasy

teams each week.at However, even as indiviclual leagr.res adclccl their own

nuances, most leagues adopted the original Rotisserie League's core rules.rn

These core rules were thereafter adopted into fantasy gamcs revolving

around other sports.'r7

E. Tbe lnternel Boon

By the early lppOs, America was already in the midst of a growing

fantasy sports revolution, featuring "[fantasy] magazines, season guides, ra-

dio shows, statistical services, management groups, sportswear ancl newslet-

ters."'l* Yet to many, fantasy sports were seen as "activit[ies] for outcasts

[and] engaged [in] by those presumed to be overly bookish and socially

challenged."ae One of the drawbacks to playing fantasy sports was the

18 Fonon¿u l¡¡r:ru. Pnop. MauIa & ENT. LJ. 891, 898 (2008) (noting a similarprocess of moving toward standardized rules also takes place in real sports, such as

professional baseball).{t

S¿¿ Cunningham, srpra note 25 at ClO. See generally Valker, snþra note 1 at

1D (mentioning the ten-category league format).f'r

S¿¿ Cunningham, snþrø note 25 at C10; see a/so Frank Clancy, For Rotissetie

Baseball Fanatia, A Grand Shan,L.A. Ttvrs, Apr. 30, 1986, at 1 (mentioning, as

early as 1986, that some fantasy baseball leagues had moved from an auction to a

draft format); \White, utþra note 42 ar C6 (also discussing the option of a league

draft).{t

.!¿¿ Cunningham, supra note 25 at C10; ¡ee also White, iilþra r,ote 42 at C6(noting that by 1990 some fantasy baseball leagues had moved to a head-to-head

format); Ed Spaulding, Cbarpentiey't Fantasy Football Digest Now a Real lVinner,

Hous. Cnno¡¡.,Jul. 21, 1991 ,at 16 (mentioning the head-to-head format of fantasy

sports).{r'

S¿¿ Cunningham, stpra note 25 at C10; cf, Robert Thomas )r., Sþórts'VorldSpæials: A Tean of )ne's Oun, N.Y. Ttues, ,tug. 20, 1984, at C2 (discussing the

creation of a book, formalizing the core rules for Rotisserie baseball).

^t ld.rs Cunningham, snþrd note 25 at C10.{e

.S¿¿ Bo J. Bernhard & Vincent H. Eade, Gambling in a Fantasy tYorld: Ax Ex-

þloratory Study of Roti¡serie Ba¡eball Games,9 UNLV G¡vlNc Rcs. & Rav. J. 2!'available at 2005'ùøLNR 6724835.

10 Haraard Jounal of Sports & Entertainnent hut / Vol, 3

amount of paperwork inv<¡lved in calculating both indiviclual player statis-

tics and team statistics.toThen, in 1994, tbe Internet came along and changed everytlìing.5r

The Internet boom brought a "broad demographic shift in fantasy sports

participation"s'because it enabled fantasy sports participants to instantane-

ously download tabulated statistics.tr Thus, fantasy sports participants no

longer needed pads of paper and calculators.ta In addition, the Internet

brought participants together from around the globe, whereas before fantasy

sports participants had "to scramble to find playmates."tr

ïíith the Internet's facilitation of fantasy sports, by the mid-1990s a

number of traditional sports and entertainment companies had begun toenter the online fantasy sports marketplace.tt' The first of these companies

to provide fantasy sports games on the web was the Entertainment SPorts

Programming Network ("ESPN"), which in 1995 launched its first entirely

Internet-based fantasy baseball game.t' By the year 2000, ESPN had ex-

r0 S¿¿ Dennis Lynch, Softuare Helps Handle Hassfu of Rnnning tt Føntasy Leagte,

CHI.Tnln., Sept. 17, 1998,at 7 (explaining that even though millions participate infantasy sports leagues, "the major drawback of such play has been the paperworkinvolved," and that "[tJhe process ofcompiling statistics and sending out standingsis time-consuming and tedious.").

5t Seeinfra notes 52 - 53andaccompanying rexr;seeaho Nicholas Bamman,Is tlte

Decþ Stacþ.ecl Against Internet Ganbling? A Cost-Benefit Analysis of Proþowd Regtløtion,19 J.L. & PoL'Y 23I,232 (2010) (noting that Internet gambling today is a $24billion annual industry, with about 25 percent of revenues derived from the UnitedStates); Kevin F. King, Geolocation and Federali¡n on the lilernel: Cttting lúernet Gatn-

bling's Gordian Knot, ll Coluv. Sct. & Trcn. L. R¡v. 4I,71 (2010) (noting that.{mericans today spend roughly $7 billion per year on Internet gambling)'

52 Bernhard & Eade, Ír¿þrø note 49i see also Risa J. \íeaver, Ùnline Føntasy Sþorn

Litigation and tl¡e Næd for a Federal Rigbt of Pablicity Statile,2l0 Durc¡ L. & TacH.Rev. 2, f I (2010) ("This phenomenal growth [in fantasy sports] can be explainedin two words: the internet,"); Nicole Davidson, Comment, lnternel Ganbling: Sboald

Fantdt! Sþorts l*agæs Be Prohibited,39 SrN DIrco L. Rrv. 201, 202 (2002).t3

See Føntasy Spat: A Booming Buiness, Mtss. LtNx, Sept. 17, 2003, ^t

Bl, aaail-able at 20O3 \íLNR L33654t2.

t4 Id.t' Greg Johnson & David G. Savage, Suþrane Court Calls Fantasy Baseball Safe,

Refiuø to Hør Major lzagrc's Argunent to Protect Statistict, L.A. Ttvrs, Jun. 3, 2008,at 41.

56 See infra notes 123 - 136 and accompanying text.

tt Sae Regis Behe, Fantasy Sports Leegtes Plt Annchair Quarnrbacks in the l*agte,

Prrr. Tntn. Rev. (Greensburg, PA), Dec. 14,2002,aoailableat2002'V/LNR12019633.

2012 / A Short Treatise on Fantasy Sþoru and the l-au

panded its fantasy sports offerings into football, baskctball, hockcy, NAS-

CAR, soccer, golf, and even fly fishing.'"

III. THu Fl¡¡rasv Spon'rs l¡¡t>tlsr¡rv Tol¡nv

A. Dffirent Tyþa of Fantasy Ganes

Fantasy sports today represent approximately u $5 billion per year in-dustry.te Given the size of the fantasy marketplace, fantasy games are now

subcategorized based on three attributes: (l) sport; (2) way ofinitially allo-

cating players; and (3) season length.r'

t* ld.; see al¡o Patrick Hruby, The Ca¡e Agaiut llanlary S1'orff, lù(i',\sH. Tltuns, Apr.29,2003, at Cl; Steve Brearton, Fanlasy Sþotts, Real Money: Hotu the ltanlasy Sþorlt

bagna uent frlùt a Cile Office Diaasion to a 83 Billion (U'S') lndnstry, Prouicling

Daydream for nþ to 30 Million North American Sports lìattatics, Gl-ot¡l: & M¡l¡- (To-

ronto, Canada), Apr. 24,2009, at 56 (noting that in 2009 FL\W Outcloors Fantasy

Fishing offered $10 million in prizes during its Fantasy Fishing for Millions comPe-

ririonX Chris Dempsey, Fantasy Reuolnion O¡line Craze is Intoxicating to Arnericans,

and Expanding Oatside ilte Sports \Vorhl, Dnxv. Posr, Sept. 9, 2007 , ar 83 ("Fantasy

NASCAR is growing, as is fantasy golf. There is fantasy tennis, fantasy soccer (who

is Chelsea's top midfielder again?), fantasy lacrosse, fantasy cricket and fantasy bass

fishing."); cf Anthony Vecchione, Fantasy Sþorts: Has Recent Anti-Ganbling Legisla-

tion'Dropped tlte Ball' by Prwiding a Slatntory Carae-Ottt for the Fanlaty Sþorts Indnstry,

61 SMU L. R¡v. 1689, 169) (2008) ("4 survey of fantasy sports players publishedin a 2OO3 article showed that 6J/o had football teams, 27o/o had baseball teams,

24Vo had basketball reams, ll%o had hockey rcams,9/o had NASCAR teams, and

3% had golf teams").t' SeeZach O'Malley Greenburg, Get Real, FoRBES, Mar. 16,2009,at 70 ('Add

all these betting sums ro revenues from magazine sales and stat-service subscriptionsand you get $468 per player, reports the Fantasy Sports Trade Association' Thatmakes for a $5 billion industry, not including undisclosed amounts from ads.").

Cf,, Mike Klis, NFL Preuie¿a'07 Footb¿ll Nation: Fantasy Football, DrNv. Posr, Sept.

6,2007, at J8 ("Fantasy football grosses more than $l billion a yeaÍ, and thatdoesn't include the private pots accumulated from the 4 million players in the free

Yahoo.com league."); Tim Feran, Bøcþ. in the Game: Major Leagrc Baseball Trying to

Reattract (sic) Fanta¡! Players uith Naa Online Fonnn, Co¡-uvsus DtsPATcH, .A,pr. 3,

2006, aaaìlable dr 2006 \üLNR t5820O2 (A 2006 "survey produced for the [Fan-tasy Sports Trade AssociationJ indicates that more than $3 billion is spent annuallyon publications, league fees, commissioner services, transaction fees and the

purchase of fantasy-sports-site content.").6u

See infra notes 61 - 100 and accompanying text.

ll

t2 HawarrlJournal of Sþorts (t ßntertrtitnteilt L.au / Vol. 3

l. Different Fantasy Sports

Today's fantasy participants play games in a wiclc rangc <lf different

sports.t Fantasy football is currently the most po¡rular, witl-r an estimatc(l

20 million participants per year."' Incleed, at present "[t]he [fantasy] foot-

ball season generates more revenue than the rest of the s¡>orts coml>inetl'"r"

Fantasy baseball is second in terms of popularity, with al>proximately

I I miltion annual participants.6n V/hile most sports fans consider fantasy

baseball to be the original fantasy sport, one <¡f the challenges in bqilding itspopularity is the extended length of the Major League Baseball season, ancl

the need for fantasy baseball owners to monitor their teams on a m<¡rc fre-

quent basis than owners in other fantasy games.nt

Immediately behind fantasy baseball in popularity lie fantasy racing,

basketball, and hockey.6(' According to the Fantasy Sports Ad Network, as

of August 2006 there were 4.6 million pafticipants in fantasy racing games

(including fantasy NASCAR), 3.2 million participants in fantasy basketball

games, and 1.9 million participants in fantasy hockey.nt

6t See infra notes 62 - 7l and accompanying text.

r'2 S¿¿ Mike Vaccaro, NFL Strife is l*aaing l¡ans Atu¿sb in Denial, N.Y. Posr, May

13,2}ll,at72 (noting that in 2010 nearly 20 million people played fantasy foot-

ball); ¡ee also Larry Copeland, Anericans Giue Thnnl,¡ lJp to Free Tine - Mostly 'IY,USATooav, Dec.23,2010, at 4.4, (noting that between 20 million and 30 millionAmericans play fantasy football); Gene \Øang, High-Staka Leaye Offers Carøraderie- and Agony of Defeat, VInc¡NIaN PtI-or & Lnocnn Sran (Norfolk, V,{), Nov' 25,

2OlO, ar 7.63 Gene Süang, Fantasy Football Get¡ Benclted, \ü7nsH. Posr, May 29 , 2Ol1 , at D3.6a

See This is Not a Fanlasy: Baseball Taka l*gal Ttuist, Players Tøn to Lauler¡ ,0

Mediate Leagte Dìryates, S. Fr,r. SuN-S¡Nr¡¡,¡el, Apr. 2, 2010, at A1 (noting thatthere are more than 11 million fantasy baseball participants in the United States);

Richard \üilner, Opening Day - Bloomberg Brings Numbers Gdne to Basebdll Statistics,

N.Y. Posr, Mar.2L,2010, at 38.6t

S¿¿ Chuck Corder, Snall Talþ, PrNsacol¡ Nnvs, Aug. 23, 2005, at Dl,aaailable at 2005 \øLRN 27180356 (discussing "daily transactions" as the downfallof fantasy baseball).

66 SeeTbis is Not a Fdnlas!, sîtþru ¡ote 64 ar. Al (referencing "fantasy basketball"and "fantasy NASCAR"); Childs \X/alke r, No More CÌtilly Rueption for Fantasy HockE

I*agtes, Balr. SuN, Sept. 21, 2006, at E2; ree also, infra, note 67 and accompanyingtext),

6' See Abolt Fantdr! Sporß, Fantasy Sports Ad Network, ^t http://www.fantasysportsadnetwork.com/aboutfantasy.htm (last visited Oct 17, 2011).

2012 / A Sbort Treatise on Fantasy Sports and tbe I'atu

Finally, one other fantasy game worth noting is fantasy golf.ó* Fantasy

golf is a niche game with a limited number of participants'"" Flowever,

because the demographics of golf fans skew toward the higher income brack-

ets, fantasy golf games often inch.rde higlr entry fees and high prize pools."'

To meet the needs of golf fans, companies sucl'r as Fantasy Pro T<lr'¡r Golfhave recently begun to offer fantasy golf contests with prizes u¡r to $3,000per season.t'

2. Different !(/ays to Initially Allocate Players

For each type offantasy sport, there are four potential ways to initiallyallocate players.tt The original way to allocate players in fantasy sports wâs

through an auction.T] Traditional auctions, the type used by the Rotisserie

League, involve a bidding process among participants for players, one player

at a time.71 Each player is ultimately assigned to the participant that bids

the greatest amount from a fixed sum of money for thar player.tt This con-

tinues until every team has "purchased" a full roster of players.t6

A second way to allocate players is through a "modified auction'"i7 In

a modified auction, the price of each player is determined before the compe-

tition begins, and multiple participants in a single league may select the

same player.'' The modified auction is especially popular in short-duration

leagues because it does not require all of the league's participants to simulta-

68 S¿¿ Bill Pennington, A Fantasy Falfilled, lncliling Yelling at the TV, N.Y.

TTMES, Jun. 9, 2009, ar, D6.6e Id.70 ,laaJosh Bousquet, Minor Møes May Helþ Signal Bargain Values, rùØoncsrsren

T¡r¡cn¡u & Gtznrrn,Jan. L4,2009,at C4.

" Id.72 S¿¿'!üØalker, tuþra note 5 at lD.7t Sæ sapra note 29 and accompanying text (describing original Rotisserie

League auction).7{

S¿¿ lValker, suþra note 5, at lD.7t

S¿¿ Bernhard & Eade, snþra noæ 49.76

S¿¿ tJØalker, rrþra îote 5, at lD.7'

See infra notes 78 - 79 anð accompanying text (describing modified auction

leagues).7' For fantasy sports games that allocate players in this manner, see, e,g., Rtlet,

DR¡rrSrnplr, http://www.draftstreet.com/rules.aspx (follow "Draft Styles" hyper-

link; then follow "salary Cap Leagues" hyperlink) (last visited Nov 7, 2011)(describing these leagues as "salary cap" leagues); Salary Cap Football, Yasoo!SroRrs, http://football.fantasysports.yahoo.com/salcap (last visited Nov. 7, 20ll).

t3

I4 Haruard.Journal of Sports €t Entertainntent l-cttu /Vol.3

neously select players.Te However, the downside to a modified attction is

that it removes the element of "trading" from fantasy sports because trading

players would not make sense if a particular player is already on morc than

one team's roster,

A third way that some fantasy sports leagues allocate players is thror'rgh

a league draft.sn Draft leagues take their inspiration from the way in which

new players are allocated in the majority of real, professional sports

leagues.s' Most fantasy sports leagues that begin their season with a clraft

adopt a "snake format draft," meaning that participants select players in

rotation, often with the same ownet who selected first in round one, select-

ing last in round two, and vice-versa.*2 The initial draft order is often deter-

mined by a random event.tt However, in some of the more comprehensive

fantasy sports competitions, owners have the opportunity to express theirpreference for a particular draft position before the draft begins'*{

Finally, in some rare cases, fantasy participants agree to have players

allocated to their teams randomly by software provided by the league's host

site."t For example, a growing number of host sites (such as ESPN.com),

provide an "Autopick Draft Option," in which a computer program, rather

7') See, e,g,, Rales, snpra note 78.

8t' For an example of a league that initially allocates players via draft, see, e.8,,

Fantary Football 2011, CBS Snonts.cov, http://football.cbssports.com/splash/foot-ball/spln/single/rules#rules-single-leagues (last visited Nov 7, 2011) (Oct' l8'201 1) (discussing the "live draft" and "automated draft" options).

8t See Marc Edelman & Brian Doyle, Antitntst and "Free Mtaanent" Rishs of Ex-

þanding U.S. Prcþsional Sports l*agtes ìnto Earoþe,29 N.\ø. J. Inr'r L. & Bus' 403,

406-7 (2009, ("The first-year player draft in [American professional sports leagues]

is a procedure under which clubs allocate negotiating rights to prospective players

in inverse order of the clubs' previous season on-the-field performance. . .[T]heteam with the poorest playing-field record during the previous season has the firstchoice of a player seeking to enter the league for the following season. The team

with the next poorest record has the second choice, and so on until the team withthe best record has picked. . . . These rounds continue until an appropriate number

of players is selected.").82

S¿¿ !üalker, søþrd îote 5, at lD.8)

See, e.g,, Fantasy Football 2011, stþra note 80 (stating that "[t]he order ofthedraft will be randomly generated between midnight and 6:00 AM ET either the day

of, or the day before the draft.").8t

See, e.g., Official Rrle¡ and Regalations of the NFBC, N¿r. FrNrasv B¡s¡s¡tLCHavrtoNSHre, http://nfbc.stats.com/baseball/375-slow-rules.asp (noting the

league's draft formar allows parricipanrs to express a preference for a particular slotin the draft order) (last visited Nov 7, 20lI).

"5 Sæ infra note 86 and accompanying text.

2012 / A Short Treatìse on lìantasy Sporn and the I'au

than a participant, "automatically drafts players to each team in tlrc league

on a scheduled draft date.""ó Despite the efficiency <¡f the "Aut<lpick l)raftOption," this option remains relatively r.rn¡ropular bccause it removcs all

skill from the drafting of players.

3. Different Season Lengths

Fantasy sports leagues also differ basecl on the lengths of their fantasy

seasons.tt Seasonal leagues (also known as "reclraft leagues") arc the most

common fantasy-season length."* In a seasonal league, the fantasy comPeti-

tion begins on the first day of a professional sport's regular season, and con-

cludes on the last day."" Thus, none of the fantasy team's rosters or

information carries over from one year to the next.e" Rather, at the end ofthe season, the league ceases to exist.'' Ifthe league's participants chereafter

wish to compete against each other for another season' the participants willneed to conducr an entirely new player auction or draft before the following

season begins.e'Somewhat less common than seasonal leagues are perennial leagues

(also known as "keeper leagues") that extend beyond a single professional

sports season.ej The two main types of perennial leagues are dynasty leagues

and rollover leagues.er In a dynasty league, each fantasy participant's entire

roster is carried over through the off-season, so fantasy particiPants are able

to make player trades with one another during the off-season time period.et

Meanwhile, in a rollover league, "each team can 'keep' a set number of

t6 ESPN Fantøry Football 2011: Rtrla, ESPN.cot"t, http://games.espn.go.com/ffllresources/help/content?name :drafts-autopick (last visited Nov. 7, 201 l).

81 See Definitions of the Varioa¡ Fantasy Sports l*agnet, St'oR'rs F¡t'¡Rrtcs FaNr¡sv

BASEnrLt, (Dec. 26, 2OO2), http://www.sportfanatics.net/,{rticles/General/Types-Of-Fantasy-Sport Leagues.htm.

8s See id.

8e See ìd.

eu See id,et

See id.

'2 See id.e1 See id,;see al¡o Liz Farmer, \Veb Sites )ffering Arbitrationfor Fantasy Spatt Dis-

þilter,DArLv Rac. (Baltimore, MD), Sept. 10, 2007 (describing leagues where teams

keep players beyond a given season as "keeper leagues").ea

See Definitions of the Variou Fantasy Sports l*agtes, vtpra nore 87.e5 See id., sl¿þØ note 87 . See al¡o David Kendricks, Pure Fantasy, S¡N A¡lroNlo

Expnrss-Nrvs, Jan. 6, 2007, at 2C (describing a "dynasty league" as one where a

fantasy participant can keep a player on his team for as many years as he wants); ree

r5

T6 Haward Joarnal of Sports & Entertuinntent Latu / Vol, 3

players at the end of each season to be on their roster for next year," witheach participant filling in the remainder c¡f his roster through a supplemen-

tal auction or draft.eó

Finally, some fantasy sports seasons last for less than one firll profes-

sional sports season.et Of these partial season leagues, the most popular are

daily leagues, which involve participants joining, paying entry fees, select-

ing players, and receivin g prize money, all in a single day.e" According to

Brian Schwartz, the founder of the daily fantasy league website f)raft-Srreet.com, daily fantasy sports leagues "appeal to aggressive [antasy sports

players looking for more instant gratification than traditional fantasy

leagues can offer."ee However, as Ulall StreelJournal fantasy sports reporter

Nando DiFino has noted, daily games have strugglecl to "shake off the

stigma of gambling."""'

B. Tlte Staþeholdas

!üithin each of these types of fantasy sports games, there are six differ-ent stakeholder groups involved in the action.t"'

l. Participants

Participants are the individuals who compete in the fantasy sports

leagues.'o' In 2010, there were more than twenty-five million fantasy sports

also Cathy Eazio, The Tribe Ha¡ Spoken, Liuen rþ Yon Leagre, Gn¡Np Rnuos Pnnss,

Jan. 20, 2005, at D2.

'6 Sæ De¡initions of tbe Varioas Fantasy Sþorts lzagna, strþra nore 87.e7 See Left Tacþh LLC Súsidiary Annonnces Bl¡ìne¡¡ Gains, Exþansion,Dx:;x Ptr<

Br¡.rrrR (Pakistan) Jan. 24,2011, aaailable ¿t 2OIl \øLNR 1483977 [hereinafterI*ft Tachle) (referring to these games as the "short-term fantasy sports model" or"short-duration leagues"); Nando DiFino, Eoeryday Fantasies, rVau- SrnnnrJoun-NAL ONLINE, Mar. 5, 2010, http://online.wsj.com/article/S81000L42405274870391520457 5 103 61223 3 621286.html.

e" See, ê,g,, F¡Nrasv Snonrs LIve, https://www.fantasysportslive.com/con-tests.html (last visited Nov. 7, 2011); Dn¡rr SrRnnt, srtþra noÍe 78. Sæ generally

Oskar Garcia, Daily Fantasy Sþorts Becone a Ganbling Reality, CoNrm Cosra T¡ves(Valnut Creek, CA), Sept. 26, 2010, at 9A (discussing growing interest amongfantasy sports participants in daily fantasy sports games).

ee See Left Tackle, saþra note 97.

f oo DiFino, trþrø note 97.tut

See infra notes 102 - 169 and accompanying text,ro'

.1ee Shea, tl¿prd îote 2o, at ll,

2012 / A Short Treatise on Fantasy Sports and tbe l-au

participants.roj The typical fantasy sporcs participant is a male, in his micl-

dle to late 30s, with a bachelor's degree, and a hor¡sehold incomc <¡f between

$75,000 and $80,000.r()r He lives in the suburbs, s¡>encls l¡ctween $450 and

$500 per year playing fantasy sports, and competes mainly against friencls hc

knows from real life.¡"5

There are also a number of important sub-segments of fantasy s¡rorts

participants.'u6 One of these sr.rb-segments inclucles the "high-stakes ¡;ar-ticipants," who play in several fantasy sports leagues per season, play inleagues with entry fees that exceed $1,000 per season, and dedicate l0 <¡r

more hours per week to their fantasy team tosters.r"T High-stakes fantasy

participants come from a wide range of different backgrounds. One example

of a high-stakes fantasy participant is a small business owner from Oshkosh,\ùØI, who, in a recent interview with his local newspaper, explained that l're

spends 15 to 20 hours per week attending to his fantasy sporcs teams and r.r¡>

to 30 hours per week researching players for his fantasy football drafts."'"

'uj S¿¿ F¡NT¿sv SpoRrs Tnapn Assocl¡r¡ox, http://www.fsta.org (last visitedNov. 7, 207L); see also Tom Mulhern, Fantasy Becones Realiry: Three Bn¡iæ¡ses Based inMadison are Riding a Rece¡sion-Proof Vaae of Web-Based Fantasy þr'lr, \Øls. S'r. J.,June2T,2010,arFL,aaailableat20lO \üøLNR 13369828 (noting that according toa 2008 report from the Fantasy Sports Trade Association, "[iJt is estimated 25.1

million Americans age 12 and older played fantasy sports in 2008"); Bn't¡¡ R.

Hurrrpsnrns & D¡¡.r¡,¡rs TaMs^y HovARo, THe BuslN¡ss o¡, St ottl's: PnnsprcrrvrsoN rn¡ Sponrs INpusrnv 269 (2008) (estimating the number of people who have triedfantasy sports to be as high as 35 million).

ror S¿¿ Mulhern, rîtpra note 103; see also Jeremy Fowler & Chris Silva, Liaing in a

Fantasy tV'orld: 'General Managas' Taþe Their Sports Leagnes Serioruly, F¡-,c. ToDav(Melbourne, FL), Jun. 29, 2003, ar I, auailable at 2003 \øLNR 18145423; Lee,rilpra note 5, at 69-70 (describing the typical fantasy sports contestant as beingeducated and having disposable income); cf. Patti Valdmeir, Protecl the Facts forFdntatl, Fttt.TIvrs, Oct. 23, 2007, auaìlable at http://us.ft.comlftgarewaylsuperpage.ft?news-id -- fto 10232007 L 30647 9921 &.page : 2 ("[A]ny Americanwhose social group includes 20- or 30-something men with a broadband connectioncan attest to the popularity of sports fantasies online: at every cocktail party orbackyard barbecue, talk soon turns to the fantasy leagues.").

'05 S¿¿ Mulhern, silþra note 103; ¡ee also Fowler & Silva, supra nore 104.

'n6 See infra notes 107 - 110 and accompanying text.to'

See generally Josh Bousquet, Hopefuk Span Age and Gender, rùloncnsr¡RTere-

cnn¡'¿ & G¡zrrrE, ¡{ug. 22,2O08,arC4 ("Anothergroup that is being caught up in thefantasy world is composed of high rollers. If any of you upper-crust members hap-pen to come across these words, I direct you to the Fantasy Football OpenChampionship.").

to8 Fantasy Footballers Catlt In, Posr-Cnpsc¡nr (Appleton, \ùØl), Jan. 16,2009,at A1 (referencing fantasy sports participant Dave Gerczak).

t7

18 HaruardJoarnal of Sports €t Enterlainnenl l-du / VoL 3

Another example is an associate professor of computing and software systems

at the University of \Øashington.roe In an interview with the Neu, Yorþ,

Timø, he explained that l're "spends about l0 hours a week hanclling tl.¡e

budgets of fantasy teams in high-stakes events," and pays a $1,300 entry fee

each year to compete in the National Fantasy Baseball Championship.""A second sub-segment of fantasy sports pafficipants are female partici-

pants.' r' According to a recent survey by the Fantasy Sports Trade Associa-

tion, female participants are the fastest growing sub-segment of fantasy

sports participants."' While once representing just two percent of all fan-tasy sports participants, females now compose between l5 and 20 percent ofthe overall fantasy marketplace."' \ü7hen compared to fantasy sports par-

ticipants overall, female participants are often described as being more inter-ested in the social component of fantasy leagues."r In addition, manyfemale participants prefer to obtain their fantasy sports advice from websites

geared toward women, such as Jordan Zucker's Girls Gaide to Fantasy

Football.t t5

roe S¿¿ Vincenr M. Mallozzi, ln Fantasy Sports, It Helþs Being a Rochet Scientist,

N.Y, Ttnans, Apr. 15, 2007, aaailable at 2007 \øLNR 7152547 (referencing fantasysports participant Clark Olson).

,ro I¿.r" .leeJon Boswell, Nore, Fantasy Sþort: A Gane of Shill tbat is to¿u lnpticitly

I*gal Under State Latu, and nota Exþlicitly Legat Under Federal Latu, 21 CnnuozoAnrs & ENr. L. J.1257 ,1259 (2008) (noting that "[o]ur of rhe 8.5 million people whoplay fantasy football, I million are women"); see al¡o Jonathan Beer, Media lVorld:Ranks of 'Vonen Fantary Football Players Grotuing, D¡rly FlNaNcE, Aug. 13, 2OO9,

http://www.dailyfi nance.com/story/media/media-world-ranks-of-women-fantasy-football-players-growing/1!125945 (noting that Yahoo! estimates about 12 percentof its fantasy sports contestants are women).

tt' See Anna Kim, Wonen Share tbe Fantasy ox Football Drafi Day: Local All-Fenale

Grcuþ Reflects Trend of a Ne¿u Ardience Trackixg tbe NFL in Leagtes of tbeir )tun, Bur-FALo NE\rs, Sept.9, 2009,atDL;Gana PeoþlePlay, Gnaxp Rrp¡os PRess, Sept.4,2008, at D8.

"3 Calling All Fantasy Sports tYidotus - \Vhen His Fartasy is His Sþorts Team ¿ndNot Yoa, Bus. rVtne, ll,ug. 27, 2009, http:llwww.businesswire.com/news/home/20090827005l54lenlCalling-Fantasy-Sports-\ùüidows---Fantasy-Sports (estimatingthe percentage of women fantasy participants at l5 percent);Kim,suþra note 112 atDI; Ganes Peoþle PIøy, vQø note ll2, at D8 (noting that women currently make up15 percent ofall participants, compared to 3 percent in 2000).

ttl C¡. Kim, ntþrd îote ll2, ar Dl (noting rhe number of all-woman leagues has

increased steadily, as well as the number of women participating in workplaceleagues).

tD Sea Beer, tilpra note 111 (noting rhat Jordan Zucker is an actress and female

fantasy sports participant, who previously appeared on the television sitcom

2012 / A Sltort Treatise on Fantasy Sþorn and tl¡e l.atu

A final sub-segment of tl're fantasy sports partici¡rants arc those wh<¡

compete in "family friendly" or educational leagues."(' Partici¡>ants in fam-

ily friendly leagues seek to participate within "an onli¡re environmcnt whcrcgrownups and kids can enjoy fun and interactive features that arc educa-

tional."rrT In stark contrast to the high-stakes participants, family gamcrs

are generally unconcerned with league entry fees ancl ¡rrizc money. "*Rather, they care primarily about the interactive ex¡:eriences their games

provide."e

2. Host Sites

For each type of fantasy league, one of the first league decisions in-volves choosing a "host site." "Host sites" are the welrsites that st<¡re

league data and serve as the place where participants make changes to theirrosters.t'n These sites provide a platform for real-time sratistical updates

and tracking.'2' In addition, some host sites collect league entry fees, dis-

tribute prize money, manage message boards, and provide expert analysis.'"In terms of market share, there are currently three dominant host sites

in roday's fantasy sports marketplace: ESPN, Yahoo!, and CBS Sports.'trBoth the ESPN and Yahoo! sites offer only one type of hosting: a basic, free

service available to all users.'2'r By contrast, CBS Sports offers three types of

"Scrubs"); ¡ee also Gtxrs Gulor ro F^NT^sy Foor:tl,tLL, http://girlsguidetofantasyfootball,com (last visited Oct. 17, 2011).

t'6 See infra notes 1 I7 - lI9 and accompanying text.

ttt FAMILv F¡Nrasv Sponrs \ürusIrt, http:llfamilyfantasysports.com/about-us(last visited Oct. 17, 2011).

tt8 See id.

t te See id.

'20 Sea Humphrey v. Viacom, Inc., No. 06-2768,2007 tüøL 1797648, æ *l(D.NJ. June 20, 2007) (noting that host sites obviate the need of early fantasy

sports participants to compile lineups and update player statistics manually).t2'

See id.

'2' See id.

"i Cf, lÏ/ang, ytpra note 3, at D3 ("Yahoo is the most visited fantasy footballsite, according to recent data compiled by Experian Hitwise, a leading Internetanalytics service provider. Yahoo, which offers free team scoring but charges for itsenhanced game tracker function, claimed nearly 46 percent of all fantasy footballvisits in September 2010, with ESPN next at 34 percent.").

"'t Set E.çPN Fantasy Ba¡eball 2011: Rttles, ESPN.cor,t, http://games.espn.go.com/flb/content?page:flbrulesindex20l I (last visited Oct. 17,201 1). Note, however, that both ESPN and Yahoo charge users for the purchase ofpremium add-on services. For example, Yahoo sells four premium-add on-services:

t9

20 HarvardJoarnal of Sport €t Entertrtitnrcnt l-ctut / Vol. 3

hosting: Free, Commissioner, and Premium.'" The CBS C<lmmissioner ser-

vice costs participants 6I79.9t per league (917.99 per team in a lO-team

league), and gives participants the ability to view live game scoring, as well

as "complete control of . . . rules, scoring, and overall setu¡r."'"' Meanwhile,the CBS Premium service costs anywhere from 829.99 rc 849c).99 per team

and includes a cash prize for the league winner that ranges from 5O%o to

70/o of the league's total entry fees.''7 Thus, fantasy sports participants that

select CBS's Premium hosting service do not need to privately collect entryfees or pay prize money.''"

In addition to these three dominant host sites, most professional sports

leagues offer free hosting services through their own centralized league,''"

and a number of niche businesses operate host sites for specialized partici-pant groups.'rt' For example, high-stakes participants today have a variety

of web-hosted competitions from which to choose.''' One such competitionis the \Øorld Championship of Fantasy Football ("\øCOFF"), which offers

an annual, approximately 600-participant, fantasy football tournament witha $1,800 entry fee and a $300,000 grand prize.t t' Another competition, the

Fantasy Football Players Championship ("FFPC"), offers a somewhat smaller

a league counting report; a trade review service; a fantasy sports guide; and team-

mânagement and recommendation software. See Yahoo Fantat! Bavball Pren¿iun

Add-On¡, YRHoo! SeoRrs, http://baseball.fantasysports.yahoo.com/bI/premiumaddons.

t2t See Fantasy Ba¡eball 2011, CBS Seonts, http://baseball.cbssports.com/splash/

baseball/spln/single/chart (last visited Oct. 17, 201 l).tt6 Fantasy Ba¡eball 2011 Conmissioner, CBS Seonrs, http://base-

ball.cbssports.com/splash/baseball/spln/mgmt (Oct. 17, 201 l).t21 See Fantasy Baseball Pranitm Ganet 201 1 , CBS Sponrs, http://base-

ball.cbssports.com/splash/baseball/spln/single (last visited Oct. 17, 2011).t28

See Fantaty Ba¡eball Pren¿ian¿ Games 2011, sapra note 127.

"e See, ê.t., Major Leagae Ba¡eball's Fantasy Barcball, MLB.cou, http://mlb.mlb.com Imlblfantasy|?tcid:nav-mlb-fantasy (last visited Oct. I7, 20I I); N¿-tional Football Lcagadt Fantaty Football, NFL.cov, http://www,nfl.com/fantasy (last

visited Oct. 17, 201L).

')n See infrd notes 132 - 136 and accompanying text.ttt

See infra notes 132 - 134 and accompanying text.ri2,leeWang,tupranote62arT;seealsoFantasyFootballersCa:hln, Posr-Cnns-

crNr (Appleton, $ØI),Jan. 16,2009,at A1 (noting that che rü(/orld Championship ofFantasy Football most recently consisted of 600 total teams); Mark St. Amanr,WltenFantasy Players Go All /2, N.Y. Trvrs, Aug. 2, 2O07 , ar l6 ("The \X/COFF is thiscountry's original high-stakes fantasy football league, the Super Bowl of the hobby.The entrance fee alone is almost $2,000 . . , including a whopping $300,000 cham-

pion's purse.").

2012 / A Short Treatise on Fantasy Sports and ¡be ktu

fantasy football tournament, where all league entry fees are ¡rlaced into an

escrow account.rìi Meanwhile, the National Fantasy Baseball Championship('NFBC") offers a high-stakes fantasy baseball contest, which inch"rdes over

300 teams, a $1,300 per participant entry fee, and a grand prize of more

than $100,000.'31Finally, for the family-oriented segment of fantasy sports l)artici¡:ants,

Family Fantasy Sports provides hosring services for games that are free to

enter.'" \yr'hile many of the Family Fantasy Sports games have prizes for the

winners, these prizes "are focused on kids ancl families," and are intended t<l

encourage healthy lifestyle behaviors such as fitness and saving money for

college.'l('

3. Commissioners

In addition to selecting an appropriate hosting service, every fantasy

sports league also needs to select a commissioner."t "Commissioners" are

those who manage fantasy sports leagues by establishing league rules and

resolving disputes over rule interpretations.''" In many high-stakes com-

mercial leagues (e.g., the \øCOFF, FFPC and NFBC), the competition pro-

ttt See Fantasy Footballa¡ Cash In, rttpra note 108, at Al.

lì{ Se¿ Mike Rainey, Vanl to Maþe a Bet. . . On Fantasy Baseball?, Sr. LouIs

Posr-DrsparcH, Mar. 12, 2O07, at C2.

']t S¿¿ FaMILv FaN¡¡sv Sponts, http://familyfantasysports.com/fantasy-leagues/prize-rules/ (last visited Oct. 17,2011).

tt6 Id.tt'

See infra notes 138 - 143 and accompanying text.rJ8

S¿¿ tùüalke r, rilpra note 5, at lD; see also Bernhard & Eade, tilpra note 4), at 30("The commissioner manages the league by establishing league rules and resolvingdisputes over rule interpretations. Commissioners may also be responsible for pub-lishing league standings (or selecting the Internet service that will do so), ensuringthat all fees are paid, and organizing drafts, league parties, and/or award ceremo-nies."); Hancock, silþra note 20, at 325 ("Using online websites to host the league,

the 'commissioner' of the league gathers each gamer's entry fee to create a cash

prize.").

2t

22 HaraardJoarnal of Sports & Entertainnent lzut / Vol. .)

vides a league commissioner.rre In most ¡>rivatc fantasy leagues, onc of thcleague's participants is nominated to serve in that role.'r"

In recent years, there has been movement in both commercial ancl pri-vate fantasy leagues to outsource some of the commissioner's responsibilitiesto a third-party dispute resolution business, such as SportsJuclgc.com.'r'While the decisions of these thircl-party clispute resolution businesses arc

not inherently legally binding, a fantasy league could write int<¡ its league

constitution an arbitration clause that woulcl give these rulings a bindingeffect.ra2 For example, the SportsJuclge.com Model League Constitution rec-

ommends that fantasy sports participants adopt language in their league

rules that states "[aJny and all disputes amongst league members about any

of the rules and terms related to either this league or tlìe league constitutionshall be resolved, in a final and binding manner, by SportsJudge.com."'ar

4. Treasurers

Fantasy sports leagues with entry fees and prize money also must select

a treasurer to collect money at the beginning of the season, and to distributeit to the winners ar che season's end.'{a In high-stakes commercial leagues,

an employee of the host site serves in this role.''rt In private leagues, chis job

"' See, e.g., National Fantasy Ba¡eball Chanpiontbip Rzler, Nnt. FnNlasv Bnsa-B¡u- CuauptoNsHIp, hrtp://nfbc.srars.com/baseball/nfbcdoubleplay-rules.pdf (dis-cussing throughout the role of the NFBC's internal commissioner) (last visited Oct.L7,20Ll); cf.Talalay, supranote 64,atlA. ("ForrLauderdale-basedCBSSports.comgets daily inquiries but encourages players to resolve their own clisputes unless theyare playing premium games in which the company, rather than a league member,serves as commissioner.").

tao See Fantasy Spons: A Booming Bnsiner, silþrd note :3 ("ln addition to ou/ners,

each league carries a commissioner, someone responsible for managing the league.").

'lt S¿¿ SponrsJuDcE, http://www.sportsjudge.com (last visited Oct. 17, 2011)(discussing SportsJudge's role in providing ourside dispute resolution to fantasysports leagues); \Taldmeir, tilpra note 104 ("Bur, as always, where two or threepeople gather together online there will be disputes and, as fantasy sports continueto grow, there are likely to be more and more of them. Mr. Edelman has set up a

website, www.SportsJudge.com, to arbitrate these virtual disputes online. All thislegal activity is a sure sign that fantasy sports have finally come ofage. Even al¡erna-tive realities need some rules to live by.").

ta2 See infrø note 143 and accompanying text.

r{J See Sample SportsJudge.com League Constirution (documenr on file).

taa See infra nores 145 - 154 and accompanying text.

'15 See, e.g., National Fantasy Baseball Chantþionsltip Rules, snþra note 139 at 11.

2012 / A Sbort Treøtise on Fanrasy Sports and the l-au

is often performed by one of the participants.''ró Like with commissioner

services, however, a growing number of private leagues are outsourcing the

treasury role to third parties.''r7

The most well-known of these third-party treasury sites is LeagueSafe,

which was launched in March 2008.'4* LeagueSafe allows fantasy sports par-

ticipants to transfer funds directly from their bank accounts to the \À/eb-

site.'ae Once LeagueSafe receives league funds, it deposits them into an

interest-generating, FDlC-insured bank account with either U.S. Bank orThe Bancorp Bank.ttu At the end of the season, LeagueSafe disperses these

funds "in accordance with leach fantasy) league's rules."'tr In exchange forits services, LeagueSafe charges users who wish to transfer money (by paper

check or through an "electronic funds transfer") a 83 fee.ts)

.A,nother company that provides third-party treasury services to fantasy

sports leagues is Fantasy Sports Vault ("FSV"), which declares on its website

that its mission is "to provide a secure, efficient, flexible, easy to use and

neutral 3rd party proprietary virtual treasurer system to manage your fantasy

league's money."rt3 According to the FSV website, like LeagueSafe, "FSV

secures . . . money into one of two holding accounts, both located at FDICinsured banks."'ta However, the FSV website does not prominently disclose

which banks hold the participant funds.

ta6 See Hou to Elinindte Tbo¡e Roto Danþ Trødes, CrNcrxNarl Posr, Aug. 11,

L998, at 5D (suggesting that every fantasy league should select one of its partici-pants to serve as its treasurer).

'a' See infra nores 148 - L54 and accompanying text.l{8

.9e¿ Steve Bil\s, Offering Real Sættrity to Fdnrary Lzagø, A,u. BaNrnR, Oct. 5,2O08, at 5, aoailable at 2008 \íLNR 18602682.

t4<) See Hou It'V/'orhs, Leacunsane.cou, https://www.leaguesafe.com/Howltrü(/orks (last visited Nov. 9, 2011).

"u Id.; sæ also BllIs, stpra nore 148.

"t See Ho¿a It rVorþ¡, suþra note L4).

"2 Sæ Payncent Prouider Offers Prepaid Cørds fa Fantasy Sports, CtnørINE, Oct. l,2008, at 3, aaailable at 2008'ùøLNR 18808298.

"u lvlty Fantasy Sportt Vault, FaNrasvSponrsVAULT.coM, http://www.fantasysportsvault.com/Viedwhyfsv.aspx (last visited Nov, 9, 20LI).

"o ,^Qt, Faxr,rsvSpoRrsVautt.cotr,t, http://www,fanrasysportsvault.com/View/Faqs.aspx (last visited Nov.7, 2011)

23

24 Haruard Journal of Sports €t Enîertainntent l.atu / VoL 3

5. Strategic Aclvisors

Then there are the strategic advisors, who make their living lry provicl-

ing advice to other fantasy sports partici¡>ants.'tt Much like stock analysts

on \Wall Street, fantasy sports advisors devote their careers to following theperformances of professional athletes in far greater detail than thc average

working professional could do independently.'t6The range of services provided by fantasy sports advisors varies signifi-

cantly.rsT Some advisory websites provide generalized information abor.¡t

premier players. For example, the advisory sites of Sandlot Shrink and llotoExperts provide information about specific players they believe are likely toperform well.'tn Other sites, such as Rotowire.com, provide news wire up-dates on a broader range of players, many of whom still compete on a minorleague level.'te Still other websites provide a call-in line, to which fantasy

sports participants may call and pay by the minute to speak with a self-proclaimed fantasy sports "expert."rr'o

Finally, the newest form of fantasy sporcs advice occurs thrclugh "ana-

lytical tools" that assist participants in drafting players and optimizing theirweekly lineups.'"' One such provider of fantasy advice via "analytical tools"is Bloomberg Sports: a division of the financial services company BloombergL.P.ró2 In 2010, Bloomberg Sports launched its analytical tools business to

help fantasy participants optimally draft their teams at the beginning of the

season, and then analyze trade offers and potential roster moves during the

season.'ói Today, the Bloomberg Sports advisory software "syncs withCBSSports.com, ESPN and Yahoo! to read the settings and teams in those

'55 See infra notes 158 - 164 and accompanying text.

't6 See infra notes 158 - 164 anð accompanying text.

"' See infra notes 158 - 164 and accompanying text.tss

See Sttbscription Info, Tr¡¡ S¡NpI-or SHRINK, http://www.sandlotshrink.com(last visited Nov.7, 20Il); ¡ee al¡o RoroBxntnrs, http://www.rotoexperts.com/sjowbranch.php?id:94 (last visited Nov.7, 201 1).

'te .ia¿ Rorovtnr, hrrp://www.rorowire.com (last visited Nov. 9, 2011).

'("' .1¿¿ Apvrson F¡NrnsvSpoRTS GuRU, hrrps://www.keen.com/derails/Advisor-FantasySports-Guru/Fantasy-Sports/5 300988 (last visited Nov. 9, 201 L).

t6t Front Office 2011, Broovsrnc Seonrs, http://bloombergsports.com/frontof-fice/about (last visited Nov. 9, 2011).

t6' Freqrcntþ AsÈzd Quations, BLoovarRc SpoRTS, https://www.bloombergsports.com/faq (last visited Nov. 9, 2011).

,6t Id.

2012 / A Sbort Treati¡e on Fantasy Sporr and tbe Lau

leagues and customize rankings, recommendations and analysis to the sct-

tings of che league."'n'

6. Insurers

Finally, there is even an emerging insurance market to protcct high-stakes fantasy sports participants from monetary loss in the event of an in-jury to a player on one's fantasy sports team.'6t The first insurance company

to get into the business of fantasy sports was Fantasy S¡rorts Insurance("FSI"), which is based out of Long Island, NY.'6ó Like all traditional in-surance policies, FSI insurance policies are unclerwritten by an A-rated car-

rier, Lloyd's of London.'ótCurrently, FSI policies insure fantasy participants for up to $1,900 in

losses ofleague entry fees, league transaction fees, and fantasy magazine sub-

scriptions, if the purchaser of the policy has a player on his fantasy team thatmisses more than a certain number of games in a season due to injury.'68 Inat least one instance, FSI has partnered with a high-stakes fantasy sports host

site, the National Fantasy Baseball Championship, to provicle contest par-

ticipants with the ability to immediately insure one of their players drafted

in that contest.tr'e

IV. LEcer Rrsrs Fon F,l¡¡rlsv Sponrs Hosr Srrns

,{lthough some fantasy sports stakeholders would like their games tobe free from government regulation, the fantasy sports industry today isindeed subject to a wide range of federal and state laws.''" Most directly,

,6' Id.tr'5

Se¿ Nando Di Fino, A Nat Kind of Protection,lù(/n¡-l Sr. J., Sept. 1,2009,http://online.wsj,com/article/SB 1 000 14 240 1297 02035 5 060457 4360691 0 I 97 5 7 7 3 8. html.

'66 See id.; see alrc Alex Prewitt, Thi¡ NFL lt¡rrance Poliry is No Fantasy,IJSAToDry, l':ug. 26, 200p, http://www.usatoday.com/sports/football/fantasy 12009-08-24-insurance-N.htm?csp : 34.

t61 SeeDi Fino, sapra note 165; ¡ee also Prewitt, utþra note 166.t('" See Fantasy Baseball, FrNrasv SpoRrs lNsunarucn.cou, http://

www.fantasysportsinsurance.com/fantasy-baseball.aspx (last visited Nov. 9, 2011)(noting that Fantasy Sports Insurance offers insurance policies to protect againstinjury to a single player, two players, or three players).

t6e See Fantasy Sporß lnsarance, N¡r. F¡Nrasv Basrsart Cg¡vptoNsnlt, http://

nfbc.stats.com/baseball/insurance.asp (last visited Nov. 9, 201 1).t'o

See infra notes 172 - 305 and accompanying text.

25

26 HaruardJoarnal of Sports €t Entert¿tinaent Lau, / Vol. .J

fantasy sports host sites must follow federal ancl state laws relatccl to gan'ring

activities and intellectual property rights.'''

A, State Ganliling l-au

State gambling law is perhaps the most relevant area of law pertaining

to fantasy sports host sites.'" Accorcling to che Meniam-tVebster )nline Dic-

tionary, "to gamble" is defined as "to play a game for money or property"'

or "to bet on an uncertain outcome."'tt However, in most states, not every

"game for money" or "bet on an uncertain outcome" is defined as illegalgambling.'ta Rather, most states maintain explicit carve-outs that permitcertain activities, such as stock trading, that otherwise would seemingly fall

under the category of gambling.'tt

1. Is Fantasy Sports Illegal Gambling under State Law?

In most states, a plaintiff can make a prima facie claim of illegal gam-

bling by showing that an activity involves three elements: "consideration,"

"t See infra notes 172 - 305 and accompanying text.f tr

S¿¿ Anthony N. Cabot & Louis V. Csoka, Fanlasy Sports: )ne Fonn of Mait-strean V{/'againg in the United States,40 J. Mansuarl L. R¡v. 1195, 1202 (2007)("[The) natural approach to accessing the legality of fantasy sports is to begin withan analysis of state laws for two reasons. First, most federal gambling laws were

enacted to help states enforce their own gambling laws. Second, given the comple-mentary [sic] or supplemental nature of federal gambling laws to state gamblinglaws, those rha¡ firsr look to rhe federal laws can sometimes miss the larger theoreti-cal framework underlying these federal laws.").

t" G¿nble Definition, MrnRlav-lùlnBSTER.coM, http://www.merriam-web-ster.com/dictionary/gamble (last visited Nov. 9, 2011).

t1a See, e.g,, MoNr. Cop¡ ANN. 923-t-802 (2010) (permitting under gambling

law certain fantasy sports games); see ako S.E.C. v. J.\W. Howrey Co., )28U.5.293,298-99 (1946) (noting that Congress, under the Securities Act of 1933, has insu-lated from state gambling liability "investment contracts," which the Supreme

Court has defined as contracts pertaining to ransactions "whereby a Person [(i)]invests his money [(ii)) in a common enterprise and [(iii)] is led to expect profits

[(iv)] solely from the efforts of the promoter or a third party . . . .").ltt

S¿¿ Christine Hurr, Reylating Public Morals and Priuate Marþels: Online Secari-

ties Trading, Internet Ganbling, and the Spemlation Paradox, 36 B.U.L. Rnv.371,173(2006) ("To characterize investing as gambling has become a trite and toothlessanalogy. However, most worn-out proverbs remain in the conventional wisdom be-

cause a kernel of truth continues to resonate wi¡h those who need them. In fact, thestereotype of an investor as a gambler seems particularly well deserved.").

2012 / A Sltort Treatise on Fanlasy Sþorts and tlte lttu

"reward," and "chance."'tó Each of these elcments has its <¡wn clistinct

definition.'ttThe element of "consideration" is clescribccl as a "qnid þro r¡a0," or

something in exchange for something else.''* Most cot¡rts have constrt¡ed

the term "consideration" narrowly in the context of gambling, limiting itsdefinition to instances in which a participant provided moncy or a valuable

item of property in exchange for the chance of greater winnings.'/e How-

ever, a minority of courts have adopted the true contract-law meaning of the

word "consideration," and found that "consicleration" involves any legal

detriment, even non-monetary in value, in exchange for the chance to win a

prize.t*t'

I'r' S¿¿ Geis v. Cont'l Oil Co., 5ll P.2d 725,727 (1973) (noting, for example,

that under Utah law "the statutory elements of a lottery are: (1) prize; (2) chance;

and (3) any valuable consideration."); see also McKee v. Foster, 347 P.2d 585, 590(1959) (noting same under Oregon law); Valentin v. El Diario Prensa, 427

N.Y.S.2d 185, 186 (N.Y.C. Civ. Ct. 1980) (notinS that in New York State, three

elements are needed to constitute an illegal lottery: (1) consideration, (2) chance,

and (3) a prize); People v. Hunt, 162 Misc. 2d 70, 71 (N.Y.C. Crim. Ct. 1994)("Gambling occurs when a person stakes or risks something of value upon the out-come of a contest of chance or a future contingent event not under his control orinfluence, upon an agreement or understanding that he will receive something ofvalue in the event of a cercain outcome.") (internal citations and quotationsomitted).

t" See infra notes 178 - 188 and accompanying text.

'tt Conn¡¡.¡o¡{CoNTRncrs$lLO;seeaIsoREST^TEMENT(Ssco¡.¡u)orCoN'rRAcrs

ç 71 (1981) ("To constitute consideration, a performance or a return promise mustbe bargained for. . .The promise may consist of (a) an act other than a promise, or(b) a forbearance, or (c) the creation, modification, or destruction of a legal rela-

tion."); Tnovas D. Cn¡Np¡rL & DoucI-^s J. \üH^LEY, Courntcts: Casns,

Pnoslrvs aNp Mnr¡R¡ar-s 137 -18 (5rh ed. 2008).t7')

See, e.g,, Alberrson's, Inc. v. Hansen,600 P.2d 982,986 (Urah 1979); Cuddv. Aschenbrenner,3TT P.2d 150, 155-56 (Or. 1962) (finding that participant's ex-pending of time, effort or inconvenience do not amount to consideration for pur-poses of Oregon's anti-gambling statute); Glick v. MTV Networks, 796 F. Supp.

743,747 (S.D.N.Y. 1992) (noting the New Jersey Attorney General's position thatunder the current New Jersey gambling statute, "legislative intent was to excludefrom the statutory elements composing the gambling offense the sort of personal

inconvenience which will constitute consideration sufficient to suPPort a

contract.").

'to .1¿¿ State ex rel. Schillberg v. Safeway Stores, Inc,, 450 P.2d 949,953-54(\Øash. 1969) (en banc) (applying simple contract theory as a basis to find consider-ation in the gaming context); ¡ee also Aífiliated Enters., Inc. v. \ùØalker,5 A.2d 257,259-60 (Del. Super. Ct. 193Ð (using Professor \Øilliston's classic definition of con-

27

28 Haruard Joarnal of Sports €t Entertaianent l-atu / Vol. 3

Similarly, the element of "reward" is the prize rhat one gcts for win-ning a bet. Courts have held that a reward must be tangible in form.r^lHowever, something tangible, even of small value, is sufficient to constitr¡tea reward.t"2

Finally, the element of "chance" is defined as "something that happens

unpredictably without discernible intention or observable canse."'"t Inother words, courts have found that the element of chance reqnires that a

game's result be driven not by "judgment, practice, skill or adroitness," åzl

rather by factors entirely outside of the participant's control.'"r To deter-mine whether a particular activity satisfies the gambling element of chance,

courts will traditionally apply one of three tests: the "predominant purpose

test," the "any chance test," or the "gambling instinct test."rtrt The "pre-

dominant purpose test," which is applied by most states, deems an activityto be one of chance where "greater than 50 percent" of the result is derived

sideration in the contract law context to determine whether consideration \vas pre-sent in a gambling context).

t8t See, e,g., Srare v. 26 Gaming Machs., 356 Ark. 4l ,51 (ZOO4) (noting that an

intangible reward, such as viewing a nude woman on a video strip poker game, does

not quali$r as a reward for purposes of gambling law).t82

See, e,g,, South Carolina Law Enforcement Div. v. 1 Speedmaster S/N 00218,2001 \øL 2139081, at *4 (May 25,2011).

t83 Cbance Definition, Mrnnlar',r-\ùØrBSTER.coM, http://www.merriam-web-ster.com/dictionary/chance (last visited Nov. 7,201 l).

't{ Srate v. Gupton, 30 N.C. 271,273-741tS48X see al¡oYalenrin v. El DiarioPrensa, 427 N.Y.S.2d 185, 187 (N.Y. Civ. Cr. 1980) (noting that a game is besr

defined as one ofchance if"[tJhe winners are not chosen on their personal qualities,but rather on whether or not their loved ones can get together enough money tobeat the competition in buying sufficient seventeen(É)-cent coupons."); People v.Hunt, 616 N.Y.S.2d 168, 170 (N.Y. Crim. Ct. 1994) (finding that a "contest ofchance is defined as any con¡est, game, gambling scheme or gaming device in whichthe outcome depends in a material degree upon an element of chance, notwithstand-ing that skill of the contestants may also be a factor therein.") (internal citationsomitted); Utah State Fair .A,ss'n v. Green, 249 P. 1016, 1020 (Utah 1926) (notingthat a Utah state statute describes a game of chance as "a game determined entirelyor in part by lot or mere luck, and in which judgment, practice, skill, or adroitnesshave honestly no office ar all, arc thwarted by chance; a game in which hazardentirely predominates").

'tt ,{nthony N. Cabot et al., Alex Rodrigtez, A Monhey, ønd ilte Gane of Søabble:

Tbe Hazard of Using lllogic to Define Legality of Ganes of Mixal Sþill and Chance,57Dn¡rr L. R¡v. 383, 390-94 (2009) (noting a fourth test, the "material element test,"which seems to conflate with the predominant purpose test).

2012 / A Short Treatise on Fantasy Sports and tbe lanu

from chance.''o By contrast, the "any chance test" finds that an activity isbased on chance if "a particular game contains any chance that infh.rences

the outcome of the game,"r87 and the "gambling instinct test , . looks tothe nature of an activity to determine if it appeals to one's gamblinginstinct. " r88

2. Is Fantasy Sports Illegal Gambling? (Majority View)

A majority of states adopt a liberalizecl definition of "consicleration"

and the "predominant purpose test" as the measure of chance. In these

states, a host site's risk of liability under state gambling law varies based on

the rules and structure of that particular fantasy sports game.r*e

On one end of the spectrum, host sites that offer free league entry are

unlikely to violate state gambling laws because those games fail to meet the

element of "consideration."teo Similarly, fantasy sports games that do notprovide prizes to winners are not likely to violate state gambling laws be-

cause they fail to meet the element of "reward."'tt Meanwhile, seasonal and

perennial fantasy sports leagues that initially allocate players via a cradi-

rional auction are probably legal because the results of these games are

driven primarily based on skill, rather than chance.'e2

By contrast, other forms of pay-to-play fantasy sports games present

greater legal risk.rer For example, "modified auction," "draft," and"autopick" leagues are more likely to be categorized as games of chance

because fantasy participants in these leagues are denied the strategic oppor-tunity to bid up the price of certain players based on their presumptions

t"6 Id. at 392 (citing Dep't of Corr. v. Worker's Comp. Appeals Bd., 90 Cal.Rptr. 2d716, 72O (Cal. Cr. App. 1999) (defining the term "predominanr" as

"greater than 50 percent").t87 ld. ar 393.t88 ld, at 3g3-94.

'8t .S¿¿ Cabot & Csoka, ¡uþra note 172, at 1207 (arguing that whether a fantasysports game is illegal under state gambling law "varies based on the method of playof the fantasy game at issue").

Leo See, e,g., HtnnphrE,'WL 1797648 at *10 (noting that a minimal entry fee paid

by a fantasy sports participant to a host site to compete in a fantasy sports game was

not consideration for gambling purposes but rather consideration merely for theday-to-day statistical services provided by the website).

tet See sapra notes 178 - 180 and accompanying text.

t')2 See supra notes 181 - 182 and accompanying text.

tei See supra notes 183 - 188 and accompanying text.

29

)o HaruardJoarnal of Sports & Entatainnent Laut / Vol. 3

about competitor preference.re'r In addition, the "draft" methocl <lf initiallyallocating players includes an additional element of chance with respect to a

participant's selection order in the fantasy league's draft.ret Mcanwhile, the"autopick" method is based exclusively on chance, as parcicipants arc notmaking any independent decisions about player allocarion."'6

Along these same lines, pay-for-play fantasy sports leagues that extendfor less than a full professional sports season involve substantially grcaterlevels of chance than full season leagues, and rhus also presenr heightenecl

risks under state gambling law.'e' This is because shorr-season fanrasy

sports games do not extend over a period of rime sufficient in lengtlr f<lr a

fantasy sports participant's strategic and negotiating skills ro offset "chance

factors such as the physical and mental conditions of players, porentialproblems between team members, and the game-time wearher condi-rions."res In addition, team-owners in one-day fanrasy sports leagues lackthe opportunity to participate in strategic gamesmanship, such as negotiat-ing trades with other owners, or engaging in other "team management"activities, such as adding or dropping players.'et

3. Stricter Views Toward Fantasy Sports

Fantasy sports games, meanwhile, face a far greater risk of liability in a

minoriry of states that adopt one of four alternative positions.""' First, in

")a See Cabot & Csoka, !îQra note I72, ar 1209 (noting rhar in aucrion-basedfantasy sports games, "the fantasy oìrvner must use srraregy in assessing rhe otherteam owners, For example, do you risk bidding on players that you do not wanrsimply to drive up their price and to reduce the amount of money that other teamshave to bid on players that you want? Further, the team owner musr prepare tomake adjustments in the course of the draft ro accommodare rhe players chosen andthe price paid."),

te' Sæ sttpra notes 181 - 182 and accompanying text.

te(' See sapra notes 181 - 182 and accompanying rext.

re' Sae Joker Club, L.L.C. v. Hardin, 643 5.8.2ð 626, 629 (N.C. Ct. App. 2007)

(noting that the length of a game is also an important issue in poker, as in the shortterm the game is primarily one of chance, whereas in the long rerm skill seems ropredominate); d Geoffrcy T. Hancock, Note, Upstaging U.S, Ganing I¿w: Tbe Potn-tial Fantasy Sports Qtøgnire and tbe Reality of U,S, Ganbling Lau, 31 T. JrrnrnsonL, Rev. 317 ,349 Q008) (noting that in regular, full-season fanrasy sporrs conrexrs, rhe"prolonged period" of che competition may lead to the conclusion rhar less luck isinvolved).

'es Boswell, tilþra note lll, at 1265.tee

See Cabot & Csoka, slþra note 172, at l2l}.2oo

See infra notes 201 - 231 and accompanying texc.

2012 / A Sbort Treatise on Fantasy Sþorts ard the l-atu

states such as Delaware,:t" Kansas,2t'2 Michigan,"'J Ohio,'t''t rVisconsin,"''tü(/ashington,"'r' ancl Vermont,"" fantasy sports encounter a grcater risk <lf

liability because courts in these states have adopted the true contract-lawmeaning of the word "consideration." Thus, in these states, tlìe gambling-law element of "consideration" is met, even absent an entry fec, so long as

the contest participant expends substantial time or effort that benefits the

contest's host in some way.2t'" Stated in terms of fantasy sports, even if a

host site offers a free fantasy sports game, the game may mn afoul of state

gambling law if the elements of "chance" and "reward" are both met.'ì()e

Second, fantasy sports host sites face greater risk of liability in states

such as A,rkansas,¿ro lowa,zrr and Tennessee,t'' which interpret the element

of "chance" as outlawing games that require any chance ("The Any Chance

Test").2'r In these states, all fantasy sports games would viol¿te the state's

pertinent gambling laws because even the most intricate fantasy sports game

'nt See, e.g,, Affiliated Entas,,5 A.2d ar 261 (Del. Super. 1939) (finding thatfilling out a registration and appearing at a particular lobby, at a particular time, is

sufficient to constitute consideration ro enter a free contest).2n2 KA¡s. Srar. A¡{N ç Zl-6403(c) (Vest 2011).20ì

Sea Sproat-Temple Theater Co. v. Colonial Theatrical Enters., 267 N.\ø 602,603 (Mich. 1936) (finding that there is consideration even in a free entry contestwhen it induces someone ¡o attend an event that they would not otherwise attend).

'or Jae Kroger Co. v. Cook, 244N.8.2d790,797 (Ohio Ct. App. 1968) (findingthat the element of "consideration" may be met even when entering a free contestmerely based on the advertising benefits derived by the contest's host).

2nt State ex. rel. Regez. v. Blumer, 294 N.tü(/. 491,492 (\üis. 1940) (defining"consideration" as "the disadvantage to the one party or the advantage to theother" and determining the travel to a store to fill out a free entry for a prize metthis definition).

'u6 .οestate ex. rel. Schillberg,4l0 P.2d ar 953-56 (\Øash. 1969).

''u' See, ¿.g., Srare v. lVilson, 196 A. 757, 758-59 ffr. 1938) (noting that inVermont the element of considerarion is mec as long as some participants p y an

entry fee, even if all parcicipants do not need to pay entry fees).2os

See flpra notes 201 - 207 and accompanying text.2oe

See supra notes 201 - 207 and accompanying texr.2'o

,i¿¿ State v. Torres, 831 S.\7.2d 903,905 (Ark. 1992).2rl

T¿¿ Parker-Gordon Imporring Co. v. Benakis,238 N.\ø. 6ll, 613 (Iowa1931) (noting that Iowa gambling law finds it irrelevant whether a particular gameis predominantly based chance or skill).

"t Se¿ TENN. Cope ANN. $ 39-17-501 (2010) (defining "gambling," subject toa number of exceptions, as "risking anyrhing of value for a profit whose return is toany degree contingent on chance").

'tt See infra note 214 and accompanying text.

1l

32 HarvardJoarnal of Sports €t Entutrtinnent l-aut / Vol, 3

involves at least some level of chance with res¡rect to wcather conclitions ancl

player injuries.2''rThird, fantasy host sites face greater risk of gambling liability in the

states of Florida and Louisiana because, in these states, their atcorneys gen-eral have already issued advisory opinions cautioning against certain fantasy

games.''t In Florida, former Attorney General Robert A. Butterworth pub-lished an advisory opinion inJanuary t99l tlrat concluded it was illegal to"participat[e] in a ldraft-basedJ fantasy sports league whereby contcstantspay a fee for the opportunity to select actual professional sports 1>layers."''r'Meanwhile, in Louisiana, former Assistant Attorney General Thomas A.rù(/arner III issued an advisory opinion in April 1991 stating that a commer-cial fantasy sports game with prizes, which was entered into by the partici-pants dialing a 1-900 telephone number that charged a fee of $2.00 perminute, violated Louisiana's state gambling law.'''

Finally, fantasy sports host sites face a greater risk of liability in Ari-zona and Kansas because these states call into clor.rbt the legality of certainfantasy sports games on their state websites.''* Specifically, Arizona's De-partment of Gaming Guide to OfÊReservation Gambling states that "fan-

tasy sports team games are illegal if the host of the event receives a fee forservices provided or if all the pooled money doesn't go back to the partici-pants."2re In other words, "[iJf the host takes a percentage of the pooledmoney, the Fantasy Sports Team contest is illegal."2t" Meanwhile, Kansas's

Racing and Gaming Commission website states that "as with any other ille-gal gambling rnatters, if a fantasy sports leagr.re involves the elements of (1)

prize, (2) chance, and (3) consideration, then it is an illegal 'lottery' prohib-

2t1 See Cabot er, al., tnþra note 185, at 393.

2r5 SeeFla. Op. Att'y Gen. 91-3 Q99D, aaailable at 1991 WL 528146; La. Op.Att'y Gen. 9I-14 (199D, aaailable at l99l \üL 575105,

2t6 See Ela. Op. A.tt'y Gen., suþra note 2li.

2t' See Ela. Op. Art'y. Gen., ruþrø nor.e 2lJ; see al¡o Ln. R¡v. Sr,rr .At¡N.

$14:90(AX1)(a)(2011) (stating that "[gJambling is the intentional conducting, ordirectly assisting in the conducting, as a business, ofany game, contest, lottery, orcontrivance whereby a person risks the loss ofanything ofvalue in order to realize a

profit."). See generally Jan Moller, Bill to Legalize )nliæ'Fantasy' Sporß Ganes Dies inHolse, THn Tlv¡s-PlcayuNr, May 10, 2010, hrtp://www.nola,com/polirics/in-dex.ssf/20 1 0/05/bill-to-legalize-online_fantas.html.

zts See infra notes 219 - 223 and accompanying text.

''" Gaide to Off-Reseruation Gaming, Ânrzo¡.¡a D¡p¡R'rt'tr¡q.r oF GAMINc, auaila-ble at htrp'' I /www.gm.state.az.us/misc-pdf/TopGamingViolations.pdf.

2).o l¿.

2012 / A Sltort Treati¡e on Fantasy Sþorts and the l-atu

ited by Kansas criminal law.""' However, because in thc C<¡mmission's

opinion "chance predominates over skill in fantasy sports leagues," "if a

fantasy sports league has a buy-in (no matter what it is called) for its manag-

ers and gives a prize, then all three elements of an illegal lottery are satis-

fied.'222 The language of both the Arizona ancl Kansas websites inclicates

that, in those states, CBS Premium fantasy sports games, as well as many ofthe existing high-stakes fantasy sports competitions, are likely illegal."t

4. Montana's Alternative Test of Fantasy Sports

Finally, the State of Montana provides a different, and perhaps more

insightful, way to test the legality of a particular fantasy sports game."rUnder Montana State Code 23-t-802, it is lawful to conduct or participatein a fantasy sports league as long as no wagers take place by either the

telephone or internet.2tt The Code further defines "fantasy sports leagues"

to include games that meet the following requirements:

any fees for adding or trading players, in cotal, are less than the league

entry fee;2'6

the total value of payouts to all league members equals the amount col-lected for entrance, administrative, and transactions fees, minus paymentfor administrative expenses;?" and

the administrative fee for conductin g a fantasy sports league, if any, is notmore than L5/o of the amount charged as a participant's entrance fee.22E

22t FreEtently AtÈed Quetionr, Kansas Racing & Gaming Commission, http://krgc.ks.gov/index.php2id:42#Fantasy Sports (citing KaN. Sr¡r. ANN. $ 2l-43O3(\X/est 2011)).

'22 ld, (stating that, "\ùíe do nor argue rhar rhere are some elements of skillinvolved in fantasy leagues. Particularly, fantasy managers must be knowledgeableof player statistics, and must execute some strategy in selecting the best players forrheir fantasy team. On the other hand, a manager leaves to chance a number ofthings, including: (l) how a drafted athlete performs in a future event; (2) whether a

drafted player is injured; (3) whether the player's actual team in a given week exe-

cutes a game plan that fits the player's talents; whether the coach calls plays thatfavor the player; and (4) how opponen¡s ofthe actual player (who may be drafted byanother manager) actually play. For those reasons, chance predominates over skill infantasy sports leagues.).

22) See snpra notes 218 - 222 and accompanying texr.

"1 See infra nores 225 - 231 anà accompanying texr.

"t MoNr. Cope ANN. g 23-5-802 (2011).

"ó $ 23-5-801(3).2'?7

$ 23-5-805(1).,,' g 23-5-805(2)(a).

33

34 HantardJoat'nal of Sþorts & Entertainntent l-au / Vol. 3

\ùØhen applying the Montana State Code to existing fantasy sporrs gamcs,

the ESPN and Yahoo! games seem to l¡e free from any liability bccause thcydo not charge entry fees to parcicipants.2'" I{owever, the CBS Sports Prc-mium games seem to violate the Montana code because the differencc be-

tween the total entry fees charged to participants and the total amor,rnt ¡raiclback to participants in the prize pool exceecls the l5o/o maximr¡m thrcsh<llclpermissible for administrative fees.'r" The same problem may also apply tosome of the other high-stakes fantasy sporrs comperirions.2'l

B. Fedual Ganbling l-aw

In addition to state gambling laws, fantasy sporrs host sires also mayface risks under federal gambling laws. Federal gambling laws serve an

important role in preventing individual states from having their anti-gam-bling laws circumvented by gambling businesses that are based outside ofstate lines.2r'z rJØhile these statutes supplement srare gambling law,"ì theydo not create immunity from, or reduce the reach of, any individual state'slaws.tsa

l. lntersrare Wire Act of 196l

One federal statute that is relevant to fantasy sports host sites is theInterstate $Øire Act of 196l ("tffire Act"¡.'r: The \Wire Act bars "engaging

in the business of betting or wagering [through the knowing use ofl a wirecommunication for the transmission in interstate or foreign commerce.""r'

22e See snpra notes 225 - 228 and accompanying rexr.

2Jo Sæ vrpra notes 225 - 228 and accompanying rexr.

2)t See sapra notes 225 - 228 and accompanying rexr.

2r2 S¿¿ Mitchell E. Kilby, Note, Táa Moase that Roared: Imþlications of the IVTO

Ruling in US - Ganbling, 44 Tnx. INr'r LJ. 233, 240 (2008); see aho Schneider v.United Srates, 459 F.2d 540,542 (9th Cir. 1972) (noting that "þ)ambling activityconducted in one state may be a federal offense, while rhe same acriviry in anotherstate may not be a federal offense.").

233 .i¿¿ Vacco v. !Øorld Inreracrive Gaming Corp., 185 Misc. 2d 852,861 (N.Y.

1999) (discussing ovedap between federal and state gambling law).

'lr 18 u.s.c. g to84(c) (1994).

'3t 18 U.S.C. $ 1034; see also Kilby, raþrd. note 232, ar 239 (discussing implica-tions of the tüØire Act).

'3r' 18 U.S.C. $ 10S4(a) (stating rhar rwo elements must be presenr for a viola-tion of the \ùØire Act: (1) that information transmitred via wire assisted in placing ofbets or wagers; and (2) the defendant during such time was engaged in businesses ofwagering or becing).

2012 / A Short Treatise on Fantasy Sports and the Laut

According to at least one court, "wire communications" may inclucle not

only telephone communications, but also Internet transactions.'rt Violatorsof the lVire Act are subject to both fines and imprisonmenr for a peri<lcl ofup to two years.238

\yr'hile there are many instances where courts have founcl tl'rat sporcs

bookies have violated the \Øire Act, there have not yet been any cases thathave applied the \ùØire Act to fantasy sports leagues.'ìre Nevertheless, if a

given fantasy sports website were to develop a commercial fantasy sportsgame that was deemed to be a "game of chance," then that website wouldpotentially face liability under the \ùØire Act.2'r('

2. Illegal Gambling Business Act

A second statute that potentially places fantasy sports host sites at riskof liability is the Illegal Gambling Business Act ("Gambling Act").'a' The

Gambling Act, which was passed by Congress in 1970, states that"[w]hoever conducts, finances, manages, supervises, directs, or owns all orpart of an illegal gambling business shall be fined not more than $20,000 orimprisoned not more than five years."2'¡2 According to the Gambling Act,activities of "gambling" include, but are not limited co, "pool-selling,

bookmaking, maintaining slot machines, roulette wheels or dice tables, and

conducting lotteries policy, bolita or number games, or selling chances

therein."2ar

In certain respects, the Gambling Act encompasses a broader range ofconduct than does the \Øire Act.2a{ For example, the Gambling Act prohib-its certain gambling activities even if they occur without the use of wiretechnology.24t Thus, even if a particular courr were ro find a wireless In-

'1' SeeYacco v. Vorld Interactive Gaming Corp., 185 Misc. 2d 852,860 (N.Y.I99Ð ("To the contrary, the \üire Act, Travel Act and Paraphernalia Act all applydespite the fact that the betting instructions are transmitted from outside theUnited Srares ora the Internet,) (emphasis added).

23' 18 u.s.c. g lo84(a).

"' See, a.g., Truchinski v. United Srates,393 F.2d627,631 (Sth Cir, 1968).

'ao See generally United States v. Bergland, 2O9 F. Supp. 547, 548 (E.D. \lis.1962).

24' 18 u.s.c. $ 19i5.

'r' 18 u.s.c. g 1955(a).

'4, 18 u.s.c. g t9t'(bxiii)."o Stt 'of-o nores 245 - 246 and accompanying rexr.2at

See L8 U.S.C. 0 1955.

35

36 Hantard Joarnal of Sports & Enrertainuent l-rttu / Vol. 3

ternet transaction to lie outside the scope of the \ùüire Act, the same transac-

tion might fall within the scope of the Gambling Act.'ar'

In other respects, however, the Gambling Act's scope is narrower than

that of the lù(/ire Act.2a7 For example, the Gambling Act only targets "ille-gal gambling activities of major proportions."2as Thus, the Gambling Actexempts gambling activities that produce less than $2,000 in daily gross

revenues.'ae As a result, it is highly unlikely that any fantasy sporcs enter-prise that avoids \Øire Act liability would meet the threshold for liabilityunder the Gambling Act.2tu

3. Professional and .A,mateur Sports Protection Act

A third federal statute that could potentially apply to fantasy sports

host sites is the Professional and Amateur Sports Protection ,{,ct

("PAPSA"¡.ztr After a successful lobbying effort by the professional sports

industry, Congress passed PAPSrq. tn 1992 in response to "growing concerns

over state sponsored gambling on sports."ztz PAPSA, in pertinent part,makes it illegal for any private person to operate a wagering scheme based

on a competitive game in "which professional or amateur athletes partici-pare."2t3 PrtPSA, however, includes a grandfather clause that exempm pre-viously authorized government sponsored games as well as casino-style

wagering from liability.2saOn its face, it may seem that all fantasy sports lie within the scope of

PAPSA.2tt However, that would be an absurdity, as r{merica's premier pro-fessional sports leagues were the chief lobbyists for PÁ.PSA,2t6 and most

246 I¿.2a'

See infra notes 248 - 250 and accompanying rexr.2aB United States v. Riehl, 460 F.2d 454, 458 (3¿ Ctu. 1972).24e t8 u.s.c. g l9ii(bxiiÐ.25o l¿.2t' 28 u.s.c. g 37or (t992).

"t Sæ Lee, stþra noæ 5, a¡ 78,

"' 28 u.s.c. g 3702<2).

'54 Sæ Lee, rtþra norc 5, at 78.2t5 28 u.s.c. g 3702.256

See Mike Freeman, Congres Totd Sporls Lotteries Threa¡en Teenagø's, Ganns,rVasu. Posr, Jun. 27 , 1991, at B5 (noting the "passionate testimony" in support ofP.APS^A by commissioners of Major League Baseball, the National Basketball Ässo-ciation and the National Football League).

2012 / A Short Treatise on Fantasy Sports and tlte I'a¿a

American professional sports leagues both host ancl enclorsc scasonal fantasy

sports,ttT

It is far more likely, however, that PAPSA could be usecl against <laily

and weekly fantasy sports games, as these games havc never bcen f<lrmally

endorsed by the professional s¡>orts industry. In aclclition, the subscantial

emphasis on buy-ins and payouts in daily fantasy sl)orts games make it morc

probable that such games cor.rld be viewed as wagering schemes.""

4. Uniform Internet Gambling Act

Finally, in 2006, Congress passed the Uniform Internet Gambling En-

forcement Act ("UIGEA"), which made it illegal for those "engaged in the

business of betting or wagering" to "knowingly accept" firncls "in connec-

tion with the participation of another person in unlawful Internet gam-

bling."2te The primary purpose of the UIGEA, is to supplement "traditional

[gamblingJ law enforcement mechanisms" and to facilitate tl're regulating of"gambling prohibitions or regulations on the Internet, especially where such

gambling crosses State or national borders."'n"

Pursuant to the UIGEA, the term "unlawful Internet gambling" in-volves knowingly transmitting a bet or wager, by means of the Internet,

where the bet or wager is otherwise illegal under tl're laws of the place where

the bet or wager is "initiated, received, or otherwise made'"t6' Thus, if a

person located in a state where gambling is illegal places a bet over the

Internet, any business that knowingly accepts a financial instrument in con-

nection with that bet, irrespective of the gambling business's location,

would unambiguously be violating the act.262'Whether the Uniform Internet Gambling Enforcement Act applies to

certain fantasy sports host sites remains unsettled.2r'ì On the one hand, the

UIGEA includes an explicit carve-out for "fantasy sports games" that meet

three criteria: (1) the "value of the prizes is not determined by the number

of participants in the game or the amount of fees paid by the participants;"

25' See snpra note 129 and accompanying text (showing that most professional

sports leagues even operate their own fantasy sports host sites).2t8

See 28 U.S.C. $ 3702 (1992).

"e 31 u.s.c, g i363 eoo6).t6u Interactive Media Entm't & Gaming Ass'n v. ,{tt'y Gen. of U.S., 580 F.3d

tl), Ll6 (3d. Cir. 2009).

'o' 3l u,s.c. g 5362(1ox,t).262 Seelnreractive Media Entm't & Gaming Ass'n 580 F.3d at 116.t6i

See infra nores 264 - 266 and accompanying text.

31

38 Haruard Journal of Sports & Entertainnent l¿tu / VoL 3

(2) "[a]ll winning outcomes reflect the relative knowledge and skill of the

participants and are determined preclominantly by accumulatecl statisticalresults of the performance of individuals . . . in mr.rltiple real-world sportingevents"; and (3) no winning outcome is based on the outcome of the score ofgames or on the single performance of an individual athlete in a single, rcal-

world event.'6'¡

Nevertheless, it is possible that not all fantasy sports games fulfill thisthree-part test. For instance, in daily and weekly fantasy games, "winning

outcomes [may notJ reflect the relative knowledge and skill of the partici-pants" because the limited duration of these games heightens the impor-tance of luck in game results.rr Further, as a matter of public policy,

Congress may not want to provide special protection to short-duration fan-

tasy sports games because the shortened duration of these games may feed

the desires of compulsive and addicted gamblers.'ór'

C. lntellecaøl Proþuty Laws

In addition to the risk of liability under federal and state gamblinglaw, fantasy sports host sites also risk liability under intellectual propertylaws, including patent law, copyright law, trademark law, and right to pub-licity laws.26t

1. Patent Law

Patent law, in general, relates to technological innovations."'* A pat-ent is a form ofintellectual property protection that is granted by the federal

government to an inventor to exclude others from making, using, or sellinga particular invention.2('e Modern patent law takes root in Article 1, Section

"'r 3l u.s.c. g t362(ixnXix)(rÞ(rrr) (2006).

"'t 3r u.s.c. g 5362(rXEXix) (II).2óó Boswell, silþra note 111, at 1272 (noring that, prior to the creation ofshort-

duration fantasy sports games, fantasy sports leagues may have been viewed as in-nocuous to society because "these games could only have a substantial negativeaffect on the crime rate and the economy if every participant were to compete in agreat number of fantasy games [and such] an occurrence would be logistically im-possible due to the amount of time that it takes to effectively compete in a singlefantasy league.")

261 See infra notes 268 - 30J and accompanying text.

268 See infra notes 269 - 270 and accompanying text.

2óe ,!¿ø UNrtrn St:¡rus P¡r¡Nr ¡Np Tn¿p¡¡r¿aRr OFFIcr, lYhal i¡ a Patenl?,

http://www,uspto.gov/patents/index. jsp (last modifi ed Sep 28, 20 1 I ).

2012 / A SÌtort Treøtise on Fantasy Sports and tbe l-a.u

8 of the U.S. Constitution, which grants the U.S. government the power "to

promote the Progress of Science and useful Arts, by securing for limitedtimes to Authors and Inventors the exclusive Right to their respective \ù7rit-

ings and Discoveries.""nCourts have held that certain aspects of fantasy sports games are indeecl

patentable.2Tt For example, in Fantasy Sþorts Properties, Inc, u, ESPNlStanaaae

Partnas, the Federal Circuit found a genuine issue of relevant fact as towhether CBS Sports (F/IIA Sportsline) infringed on a patent relating to "a

method of and apparatus for playing a 'fantasy' football game on a com-puter," whereby players earned "additional points awarded beyond those

given in an actual football game for unusual scoring plays, such as when aplayer scores in â manner not typically associated with his position."272

Based on the court's reasoning in Fantøsy Sþorts Properties, all fantasy

sports host sites need to ensure thar their products do not allow users toexploit scoring methods that have already been patented."' l¡ addition,fantasy sporcs games that adopt unusual methods of scoring may wish toseek patent protection for their own methodologies as a way to secure a

comparative advantage over competitor host sites."l

2. Copyright Law

Copyright law, rneanwhile, relates ro content.2Tt Like a patent, a copy-

right is a form of intellectual property protection grounded in the U.S. Con-

stitution.276 A copyright protects "original works of authorship fixed in a

tangible medium of expression."ttt Vhile a copyright covers both pub-lished and unpublished works, it does not protect "facts, ideas, systems, or

methods of operation."tt"Fantasy sports host sites do not have to worry about copyright issues

when publishing player statistics because player statistics are factual in na-

"u U.S. CoNsr. arr. I, $ 8, cl. 8.21t

Seø ixfra notes 272 - 274 and accompanying text.212 287 F.3d at 1111, 11i4 (Fed. Cir. 2002).211

See sapra notes 271 - 272 a¡d accompanying text.214

Sæ sttpra notes 271 - 272 and accompanying text.275

See infra notes 276 - 278 and accompanying text.

"6 See Coþyright in General (FAQ), U.S. Copvnrcsr Onrtcr, http://www. copyrigh t.govlhelp/faqlfaq-general. html (revised J ul. L2, 200 6),

,r, Id.,r" ld.

39

40 HaruardJournal of Sports & Entø'tainn¡ent l-¿tut / Vol. 3

ture, and once published are deemed to lie within the public domain.zTe

Nonetheless, fantasy sports host sites still neecl to ensure that thcir acldi-tional content, such as stories and illustrations, do not violate anothcr site'scopyright.2s(' In addition, if a fantasy sports host site believes anothcr web-site is violating its copyrighted material, it is imperative for the fantasy host

site to immediately send out a cease-and-desist letter (commonly kn<¡wn as a

"notice and take down" letter) and to not sit on its rights.?*l

3. Trademark Law

Trademarks are a third form of intellectr"ral property protection thatprovides consumers with a sense of certainty about a particular product'ssource, and allows holders to "develop and control the goodwill associated

with a given product."2*2 A federal cause of action for trademark infringe-ment typically accrues under Section 32(l) of the Lanham Act where "a

person uses (1) any reproduction . , , of a mark; (2) without the registrant'sconsent; (3) in commerce;(4) in connection with the sale, offering for sale,

distribution or advertising ofany goods; (5) where snch use is likely to cause

confusion, or to cause mistake or to deceive."283 Jn addition, some courtshave found that, even absent the element of confusion, the Lanham Act pre-

vents both individuals and businesses from capitalizing on the goodwill ofanother's trademark.tsr

27e See C.B.C. Distribution & Markecing Inc. v. Major League Baseball Advanced

Media, 505 F.3d 818, 823 (8th Cir. 2007) ("The information used in CBC's fantasybaseball games is all readily available in the public domain.").

28o Cf, Copyright in General (FAQ), sapra note 276.2st

See Joy Butler, Raþonding to Stolen Conten, uitb a DMCA Take-Døun l*tter,GuIoa Tr¡noucn rg¡ LecnrJuNcre, http://www.guidethroughthelegal jungleblog.com I 2009 I O4lresponding-to-stolen-content-with -a-dmca- take-down - letter.html(intellectual property attorney and Harvard Law School graduate Joy Butler dis-cusses best practices for responding to the use of "stolen content" on the Internet).

282 S¿¿ Mark A. Kahn, May tbe Be¡t Mercbandise lVin: The Latu of Non-Tradanarh

Uæs of Sports Logot, 14 Manq. SpoRrs L. R¡v. 283,284 (2004). "Goodwill" is notan easily defined term. Id, ar 288. However, one court has defined it as "thefavorable consideration shown by the purchasing public to goods known to emanatefrom a particular source." lù(/hite Tower Sys. v. \ùflhite Castle Sys. Of Eating HousesCorp., 90 F.zd 67, 69 (6th Cir. 1937).

"t Boston Profl Hockey Ass'n v. Dallas Cap & Emblem Mfg. Inc.,510 F.2d1004, 1009-10 (5th Cir. 1975).

t"I Id. at lOL2-13 (preventing Dallas Cap & Emblem Manufacturing from usingNHL team trademarks on apparel); Univ. of Georgia Athletic Ass'n v. Laite,756F.2d 1135,1547 (Llth Cir. 1985) (preventing a wholesaler of novelry beers from

2012 / A Short Treati¡e on Fcrntasy Sþorts anl tlte ltut

Sports teams have been one of the more successful parties at using thccourts to prevent the misappro¡rriation of the go<-rclwill of their marks.'"'Most notably, in Boston Profasional HockE Association u. Dallas Caþ & ßnl¡lant

Mannfacturing, the National Flockey l-eagr.re tcanrs convincccl thc U.S. Courtof Appeals for the Fifth Circuit that the court shoulcl awarcl traclemark ¡rro-tection against the unauthorizecl use of their logos on sl)ortswear a¡r¡>arel,

even though consumers were not necessarily confi¡secl about tl'rc ap¡rarel's

source or origin.'o6 In that case, the court concluclecl that trademark protec-

tion extends to the need to protect "the major commercial vah.re of [sportsteams'l emblems lwhich isJ derived from thc efforts of [the teams]."''*t

Nevertheless, trademark protection rarely extcncls to the use of an-

other's mark for purposes of non-commercial specch, which is deemecl by the

courts to be "fair use."r'r'J While the fine line separating commercial speech

from fair use has often been a source of more confusion than clarity,'¿¡re theU.S. Court of .Appeals for the Second Circuit currently applies a balancing

using a symbol of an English bulldog wearing a swearer emblazoned with the letter"G" because it appeared too similar to the University of Georgia Bulldogs logo).

28t See infra notes 286 - 287 and accompanying text.

t"6 Boston Prof t Hockey Ass'n.,5L0F.2d at 1012-13 (5rh Cir. 1975).28' ld, ar l01l; see al¡o llnia, of Ga. Athletic Ass'n,756 F.2d at 154647 (noting

that a likelihood of confusion may be demonstrated by showing confusion amongconsumers as to the sponsorship of the mark). ln Uniaertity of Georgia Athle¡ic A¡soci-ation, rhe Eleventh Circuit upheld the finding of a Lanham Act violation againstBattlin' Bulldog Beer for distributing a novelty beer with a logo that strongly re-sembled the Georgia Bulldog. ld, at 1536-39. According to the court, "confusion

stems not from the defendant's unfair competition with the plaintiffs þroducß,butfrom the defendant's misuse of the plaintiffs reputation and good will as embodiedin the plaintiffls marks." ld. at 1547 . In addition, no disclaimer can save a parrythat misuses the reputation of good will of another's marks because "[o]nly a prohi-bition of the unauthorized use will sufficiently remedy the wrong." ld.

"t 4 C¡Lv,rr.¡N oN UNFATR Covp¡rrrlo¡,¡, Tnaoruanrs & MoNopolrrs $22.59(4th ed. 2}ll); ¡ee also Atlanta Civil Liberties Union of Georgia v. Miller, 977 F.

Supp. 1228, 123), n.6 (N.D.Ga. 1997) ("Congress acknowledged the first amend-ment problems with banning non-commercial use of trademarks); JA Apþarel Corþ.,

682 F. Supp. 2d ar 309 ("The fair use defense, which allows for some level ofconfusion, is an absolute defense to claims of trademark infringement, trademarkdilution, and false designation of origin."). Sæ generally id, ar 309-10 (citing Car-Freshner Corp. v. S.C. Johnson & Sons, Inc., 70 F.3d 267,269 Qd.Cir. 1995))(holding that a court will assess three factors in order to determine "fair use": (1)whether the mark is use descriptively; (2) whether the mark is used to indicate theorigin of consumer products; and (3) whether rhe mark is being used in good faith).

28' Conpare Rogers v. Grimaldi, 875 F.2d 994, 999 (2d. Cir. 1989) (using a

balancing test to weigh "the public interest in avoiding consumer confusion"against the public interest in free speech) uith Face¡da v. NFL Films, Inc., 542 E.3d

4t

42 HaruardJournal of Sports €t Entatainntent Laut / Vol. 3

test that weighs the public's interest in avoicling consumer confirsion,against the public's interest in free expression.'e" Meanwhile, the U.S.

Court of Appeals for the Third Circuit lras expressecl support for a test thatplaces a somewhat stronger burden on the non-traclemark holcling party.'e'

NØith lingering disagreement among the circuits about where deprecia-tion of a trademark holder's goodwill ceases ancl fair use bcgins, fantasy

sports host sites are best advised to minimize their legal risk under the Lan-

ham Act by avoiding the use of actual sports teams' logos without a li-cense.2e2 Additionally, in instances where fantasy sports host sites seek toidentifr a professional sports team by name, rhe host site shor,¡ld either ob-tain a license, or reference the team's name in small print, while l-raving itsown site's name and marks appearing far more conspicuously.2')r

4. Right to Publicity

Finally, state "right of publicity" laws govern the use of names and

identifying characteristics of famous individuals.'e'r Right of publicity laws

are derived from the common law right to privacy, which is grounded inboth property law and tort law.2e' Today, publicity rights are defined byBlacþ's Law Dictionary as "the right to control the use of one's own name,

picture, or likeness and to prevent another from using it for commercialbenefit without one's consent."2eó In addition, according to the Supreme

Court, the right of publicity serves as "an economic incentive for [one] to

1007, 1018 (3d. Cir. 2008) ("[\l]e need not reach the issue whether our Court willadopt the Rogers resr.").

zeo See Rogers 875 F.2d ar 999.

2')t See Fdcenda, 542 F.3d at 1019.

"' Cf,, ruþra, notes 288 - 291 and accompanying text.2ei

See JA A,pparel Corp., 682 F,Supp. 2d at 313-14, 316 (noring that where a

company places its own trademark in far larger and more noticeable font than an-other's trademark, it "arguably removes the likelihood of any confusion").

2e{ ,1¿¿ \Øilliam Sloan Coats & Kenneth Maikish, The Rigltt of Pablkity: PrEer

Licensing of Celebrity Endorsemmß, 1025 PLI/Pat 269, 279 (2010) (noting that"[c]urrently, nineteen srates, including California and New York, protect the rightofpublicity via statute . . . an additional twenty-eighr states recognize the right viacommon law."); see al¡o C.B.C. Distrib. & Mktg. Inc., 505 F.3d at 822 ("An ac¡ioobased on the right of publicity is a srare-law claim.").

2e' See generally Keller v. Electronic Arts Inc., No. C 09-1967 C\X/,,2010 \øL

530108, at *3 (N.D. Cal. Feb. 8, 2010) ("The statutory right of publicity comple-ments the common law right of publicity, which arises from the misappropriationtort derived from rhe law of privacy.").

'e6 Blacx's L¡v DlcuoNanv (9¡h ed. 2009).

2012 / A Short Treatise on Fantasy Sþorts and the Latu

make the investment requirecl to [perform a skill] of intcrest to tlìcpublic."zqr

'Whether a fantasy sports game's unauthorized use of players' names

and statistical information would violate state righr of publicity laws re-

mains an unsettled issue on which the Supreme Cor¡rc has not yet s¡>oken.'"*

The strongest argument that tl'¡e r.rnlicensed use of players' names ancl statis-

tics in a fantasy sports game violates athletes' publicity rights comes from

Gridiron.con u. National Football Players Associatiox, a case in which the U.S.

District Court for the Southern District of Florida rejected the argument

that a website operator may use players' names and images for the purl)oses

of selling football memorabilia and operating a fantasy sports game.'""By contrast, the strongest argument in favor of a fancasy sports host

site's right to use players names and statistics without a license comes from

the 2008 case C.B,C, Distribution & Marh,eting Inc. u. Major Leagae Baseball

Aduanced Media, in which the U.S. Court of Appeals for the Eighth Circuitheld that rhe First Amendment trumps Major League Baseball players' as-

signable right to publicity in their names and statistics.r"" This split in

2e' Zacchini v. Scripps-Howard Broad. Co.,433 U.S. 562, 576 (1976); see also

Haelan Lab. Inc. v. Topps Chewing Gum, Inc., 202 F.3d 866,877 (2d, Cir. l9ti)("[I]t is common knowledge that many prominent persons far from having theirfeelings bruised through public exposure of their likeness, would feel sorely de-prived if they no longer received money for authorizing advertisements, populariz-ing their countenances, displayed in newspapers, magazines, busses, trains and

subways. This right of publicity would usually yield them no money unless it couldbe made the subject of an exclusive grant, which barred any other advertiser fromusing their pictures.").

2e8 See infra nores 299 - 301 and accompanying texr.

2ee 106 F. Supp. 2d 1309,1315 (S.D.FIa.2000) ("Plaintiff actively sought outand obtained over 150 NFL Player's publicity rights, and now argues that the infor-mation the websites produce are entitled to Free Speech protection. Plaintiffs argu-ment is not persuasive.").

ro0 505 F.3d 818 (8th Cir. 2007). According ro rhe Eighth Circuit view, theFirst Amendmenr trumped the right of publicity in fantasy sports cases for threereasons. First, the information used in the fantasy baseball games is already in thepublic domain. ld. at 823. Second, baseball players whose names appear in these

games "are rewarded separately for their labors." Id. at 824 (noting, in separate

paragraphs, the athletes' compensation through their salaries and compensationthrough other endorsement opportunities). Finally, consumers of fantasy productsare nor misled by the use of baseball players' names and information into believingthe players are endorsing a particular fantasy sports game. Id. at.824, Thereafter, inCBS Interøctiue Inc. a. National Footltall Leagte Players Association, the U.S. DistrictCourt for the District of Minnesota (a lower court within the Eighth Circuit) heldthat a fantasy sports host site did not need a license to use National Football League

43

44 Haruard Journal of Sport €t Ettertainntenl l-aut / Vol. .3

authority has not only led to some confusion for fantasy s1>orts br.rsinesscs,

but also potentially invites the practice <¡f "forum shopping" by plaintiffs.t"'In addition, even if a court were to conclt¡cle that the First Amenclment

trumps the right of publicity with respect to tlÌe use of professional athlctes'

names and statistics, that same court might rule differently where the fan-

tasy sports game involves college athletes.ìo2 This is because, unlike profcs-

sional athletes, who "are rewarded separately for their labors,"tt'J collegiate

athletes are not otherwise compensated based on their fame.t"' Thus, the

American legal system has an especially strong interest in protecting the

proprietary nature of the collegiate athlete's right to pr.rblicity.r"'

players' names and statistics in its fantasy football game. See 259 lì.R.D. )98,419(D. Minn. 2009) ("Because the Eighth Circuit's decision in C.B,C. Disn'il¡ation is

controlling, CBS Interactive is entitled to judgment as a matter of law.").¡t" Eric J. Goodman, A National ldentity Cri¡i¡: 'l'l¡e Næd for a lleder¿l Rigbt of

Pnblicity Stattue,9 D¡P,rul-LCA J. or Anr & ENr. L. 227 ,244 (199Ð. Absent the

creation ofa unified, federal right to publicity, there indeed are a number ofpossi-ble ways that a court could determine which state's right to publicity laws shouldapply, includinS: (1) the player's domicile; (2) the location where the players unionis located; (3) the location of the alleged infringement; or (4) simply the law of theforum. .1eø, e.g., Keller, 2010 \øL 530108, at *2 (N.D. Cal. Feb. 8, 2010) ("Plain-tiff alleges that NCAA violaced his Indiana right of publicity. He argues that Indi-ana law applies ro NCAA becalse iß headqaarters are located in ltdiana and the atleguluiola¡ion ocatrred in Indiana.") (emphasis added). It is interesting to note that in theclass action suir Keller u. Electronic Arts, the plaintiff class, which brought suit in theU.S. District Court for the Northern District of California, argued not only a breachof California's statutory and common law right to publicity law, but also those ofIndiana: presumably based on the belief that Indiana's law, based on its broad pur-ported applicability, would apply to all class members. Sae Complaint, Keller v.Electronic Arrs, LEXSEE 2009 U.S. Dist. Pleadings 36879I, at *26-27, n I7-28(May 5,2009).

tu' See infra notes 303 - 305 and accompanying rext; see ako Chrixian Dennie,

Note, Tebota Droþs Back to Pas¡: Videoganes haue Cro¡¡ed tbe Line, bnt Doe¡ the Right ofPnbliciry Protect Smdent-Athhn's Liþenes¡ tYhen Balanced Against the First Antendnenl?,62 Anr.L. R¡v. 645, 673 QÙOÐ ("The fac that student-athletes are not paid mayactually work in favor of a student-athlete's argument that he or she is entitled toright-of-publicity protection. "),

rni C.B.C. Disrrib. & Mktg. Inc, 505 F.)d ar 824.r"r See Marc Edelman, Note, Reeualnøting Amateurism Standard¡ in Men's College

Ba*etball,35 U. Mrcr. J.L. Rrronu 861,862 (2002).t"t See Zacchini, 433 U.S. at 573 (noting "the State's interest in permitting a

'right of publicity'is in protecting the proprietary interest of the individual in hisact in part to encourage such entertainment").

2012 / A Short Treatise on Fantasy Sports and the l-au

V. Lrc¡,1 Rlsrs Fon Fr¡¡rasy Sponrs Pnrrrrcrp¡n¡rs

\X/hile fantasy sports host sites face numerous legal issues related totheir business practices,rt'6 they are not the only stakeholcler group poten-

tially subject to liability for their engagement in fantasy sports."'' Fantasy

sports participants also face some degree of legal risk, albeit to a far lesser

extent.30'

A, Crininal Liability under Ganl¡ling l-aus

Unlike fantasy sports host sites, fantasy league participants have mini-mal risk of violating federal gambling laws because they are unlikely to be

deemed to be "engaged in the business of wagering or gambling."loe Muchlike the operators of their host sites, however, fantasy sports participantsbear some risk, albeit small, of running afoul of states' criminal gamblingstatutes. n

'u

The earliest known criminal lawsuit involving a fantasy sports partici-pant took place in Fort Lauderdale, Florida in 1991, when a local firefighterand fantasy baseball player, Randy Bramos, was charged with a misde-

meanor gambling offense for running a l2+eam fantasy baseball league in-volving $5,000 in league entry fees.j'r These charges, however, were

eventually dropped.t'' Since then, there have not been any other instances

ofcharges filed against fantasy sports participants.t"

to6 See npra nores 172 - 305 and accompanying rext.

'o' See infra notes 309 - 359 and accompanying text.\o"

See infra notes 309 - 331 and accompanying rext.jne l8 U.S.C. g 1084(a) (1994) (emphasis added); ¡ee aho United Srates v.

Becker, 461 F.2d 23O, 232 (2d. Cir. 1972), uacated on other gromds by 417 U.S. 9O3(L974) (inrernal citations and quotations omitted) (noting that illegal "conduct"

under the Illegal Gambling Business Act "does not include the player in an illegalgame of chance, nor the person who participates in an illegal gambling activity byplacing a bet); Kilby, ruþra note 232 ar 24041 (noting that the Wire Act onlyapplies ro rhose "engaged in the business of betting" and not ro individual gam-blers). Bø see gen*ally United States v. Crocketr, tl4 F .2d 64, 7 5 (5th Cir. L975)(noting that customers who are in effect partners in the operation of an illegal gam-bling business are within the scope of the Illegal Gambling Business Act).

\to See infra notes 311 - 313 and accompanying text.

rrr S¿¿ Skolnick, srþra nore 29 at 118.

", I¿,rt3

See id.; ¡ee al¡o Roben J. Nobile, HuruaN RrsouRc¡s Gulp¡ $ 5:12.50 (Dec.

2010) ("\øhile technically illegal, it is virtually unheard of for someone to get ar-rested, prosecuted and convicted for taking part in an office pool.").

45

46 HantardJoarnal of Sports €t Entertainment l-aw I Vol. 3

B, Ciail Liability for Ganliling Actiaities

Fantasy sports participants also risk disgorgement of cheir gamblingwinnings under civil anti-gambling statutes.t''r These civil anti-gamblingstatutes, which derive from England's 1710 Statute of Queen Anne,"t assert

that, as a matter of public policy, a gambling winner "shall not be protected

in his unlawful gains," and a gambling loser or gambling informer "may

sue to recover back the money lost."rr(' In addition, most states that recog-

nize disgorgement statutes refuse to allow gamblers to opt out of their home

state's choice of gambling law.stt This is because states that enforce dis-gorgemenr statutes are trying to prevent gambling losers from becomingwards of the state due to their risky financial behavior.lt"

Although one recent case has held that fantasy sports host sites are

immune from civil liability because they are neither "participants" nor"winners" in gambling activities,ìre the same conclusion does not necessa-

rily extend to fantasy participants in leagues that, under state law, are

deemed to be gambling (meaning those found to involve consideration,chance, and reward).3'n

C, Violating Comþany Anti-Solicitation Policies

Fantasy sports participants, on a more remote level, also are subject totermination of cheir employment if found to be soliciting other employees

t" So, e.g.,Ga. Code Ann. $ 13-8-3(b) (ìüíest 2011); Oslo Rrv. Copr AN¡.¡.

3763.02 (\íesr 2011).3t5 Hanpbreyt,2007 WL 1797648, ar *3.

'ró Hardin v. NBC Universal, lnc., 283 Ga. 477, 478 (2008).at1

See, e.g., In re Baam, 336 B.R. 649, 657 (Bankr. N.D. Ohio 2008) (notingsome courts that do nor enforce anti-gambling contracts will not allow gamblers touphold these contracts based on out-of-state choice-ofJaw clauses).

t'8 Sæ gnnally tr¿þra note 317 a¡d accompanying text.tte Hxnpbrey,2007 \üfL L797648, at '(9-LOi sæ also id. at x7 (noting that fantasy

sports host sites are not winners in a gambling activity but rather are "neutralparties in the fantasy sporrs games" thar do nor compere for prizes, and are indiffer-ent about who wins the prizes.").

t2o Seegnerallysalamon v.TaîtBroadcasting Co,,475 N.E.2d 1292, 1297 (OhioCt. App. 1984) (noting that Ohio's civil anti-gambling statute gives a stranger to aparticular gambling transaction the "right to recover only the money actually lost,and only from the winner").

2012 / A Sltort Treati¡e on Fantasy Sports and the Lata

to participate in their fantasy sports games during work hours, in violationof company policy.s''

\X/hile some employers might oppose fantasy sports games based on thelost productivity of workers who spend time looking at their fantasy sports

teams during the work duy,"' other employers may disallow solicitingmembership in fantasy sports leagues for reasons grounded in labor law."t

According to the Human Resources Handbooh' any employer that seeks todisallow union solicitations in the workplace must, pursuant to the NationalLabor Relations .A,ct, mainrain a broader, conrenr-neurral ban on solicira-tions.'24 Such a broad, content-neutral ban would logically extend to fan-tasy sports.32t For instance, in'Webco lndu$ries, Inc. u, NLRB, the U.S. Courtof Appeals for the Tenth Circuit upheld a National Labor Relations Board

finding that a no-solicitation policy was "selectively enforced with discrimi-natory intent" and thus impermissible because a company disallowed em-ployees from soliciting union membership, but allowed employees to soliciteach other for "recreational activities (such as sporting event pools, fantasy

football, and baseball leagues)."rzr'

D, Bankraþtcy

Finally, even if fantasy spor$ participants are insulated from gamblingprosecution under most federal and state laws, high-stakes fantasy sportsparticipants still run a heightened risk of bankruptcy based on their finan-cially risky behavior.J2t One of the reasons why some fantasy sports partici-pants may run a heightened risk of bankruptcy is because, like compulsivepoker players and slot machine users, they "get addicted" to the gamblingaspects of fantasy sports and gamble incessantly on short-duration fantasy

rtt Nobile, saþra note 3L3.r22 Vecchione, trpra note 58 ar 1698.tti

Sæ in¡ra notes 324 - 326 and accompanying text.12{

.1¿¿ Nobile tttþra, nate 313 ("Although a company's non-solicitation policymay not be violative of the NLRA, if it selectively enforces this policy by toleratingsome solicitation (such as solicitations for office pools, fantasy sports, erc.) but notunion solicitation, it will likely - with some limited exceptions - be found to haveviolated the NLRA by discriminaring against the union.").

ì2t .S¿¿ Nobile, supra nore 313.

t26 2t7 F.3d t3o6,l3t2 (t0ch cir. 2000).)27

See Ix re Baam, 86 B.R. 649 (Bankr. N. D. Ohio Feb 29,2008) (case in whicha parties' excessive Internet gambling led to bankruprcy); see also Hancock, supranote 20, at 348 ("Studies show increased debt in areas of legalized gambling.").

47

48 Hantard Joarnal of Sports €t Enrerìainntent lttu, / Vol. 3

sports contests.r2s Indeed, "pathological gambling" is one of the few formsof addiction currently recognized by the fourth edition of the Diagnosticand Statistical Manual of Mental Disorders (DSM-IV)."e

Other fanmsy sports participants, meanwhile, may wager incessantly onshort-duration fantasy sports contests because they suffer from Internet ad-diction, which "can be a symptom of other mental illness, or conditions likeautism.",o Although Internet addiction is not a recognized form of addic-tion under DSM-IV, Dr. Jerald Block of the Oregon Health Sciences Uni-versity in Portland notes thar "[aJmong psychiatrists there is generalrecognition that many patients have difficulty controlling their impulses tochat online, or play cornputer games."r¡'

VI. L¡car Rrsrs Fon ANcnmny Ferr¡resy Sponrs Buslr.¡rssrs

Finally, various ancillary fantasy sporm businesses also may risk legalliability if their business owners fail to knowledgably structure business

activities.'r ì2

1. Føntasy Sports Treasary Sites

Fantasy sports treasury sites bear two forms of potential liability: suitsfrom fantasy sports participants for failure to turn over contested winnings,and challenges from a broader range of plaintiffs alleging a Wire Actviolation.3ri

lVhere a fantasy sports treasury site fails to turn over contested win-nings to the proper league participant, liability may follow.33a This is be-

cause the treasurerþarticipant relationship is comparable to one of bank and

328 Fantasy Sporu: A Boøning Basiness, ttþrd note 53, at BIi c;f. King, rilþra îore5I, at 7 L (Advocates of banning online gaming argue that it "is harmful to minors,a source or bankruptcy and addiction among adults, and a means for illegal moneylaundering.").

3'e Genes Play a Role in Probletn Ganbling, Mvapolcr¡oN.cot"t Çun. 9, 2OlO),http://www.myaddiction.com/news/gambling-addiction-news/genes-play-a-role-in-problem-gambling.

"o N¡cholas K. Geranios, Treatment One CIicþ øt a Thne: Ixternet Addiction,Cnanr¡stoN G¡zsrr¡ & DaItv Man, Sepr.4,2009,at lA,auailableat 2009IøLNR17614750.

ìt. I¿.tt' See infra notes 333 - 359 and accompanying text.

'13 See infra notes 335 - 338 and accompanying text.3t1

See infra notes 335 - 336 and accompanying text.

2012 / A Sbort Treatise on Fanîasy Sports and the lttu

customer, in which "the bank is indebted to the customer ancl promiscs todebit his account only at [the customer's] direction.""' Thus, "[i]f the

bank pays, on an instrument drawn by its customer, any l)erson otlrer thanthe designated payee or a person to whom the instrument is negotiatecl, thc

bank's indebtedness to the customer is n<¡t diminishecl.""nIn addition, if a particular fantasy sports game is cleemed to be gam-

bling, there is a remote argument that the affiliated fantasy sports treasurywebsite, in collecting and dispersing firnds, may be founcl to be in violati<ln

of the Wire Act.'r7 This is based on the argument that by collecting leagr.re

entry fees and distributing prize money over a wired Internet, these treasury

sites are "engaging in the business of betting or wagering."Ìr8

B. Fantasy Sports Adaisors

Fantasy sports advisors, meanwhile, risk liability under both tort law

and contract law, if they fail to meet promised standards.r'e Under tort law,

fantasy sports advisors risk liability if they negligently supply misinforma-tion that is used in a business transaction, even if that information is notsold directly to the party that suffers a financial loss as a result.''r" For exam-ple, Section 552 of the Restatement of Torts describes the tort of "informa-tion negligently supplied for the guidance of others" as occurring if "[o]ne

who in the course of his business or profession supplies information for theguidance of others in their business transactions [and] fails to exercise thatcare and competence . . . which its recipient is justified in expecting."ra'

Under contract law, if a fantasy sports participant purchases advisory

services that are not performed as warranted, the fantasy sports participant

ttt Cooper v. Union Bank, 9 Cal. 3d 371,377 (197Ð.))6 Id.t3' See 'd,

]3t l8 U.s.C. $ 10s4(a) (1994). Two elements musr be presenr for a violation ofthe lVire Act: (1) that information transmitted,via wire assisted in placing of bets orwagers; and (2) the defendant during such time was engaged in businesses ofwager-ing or betting. TntchinsÞi,393 F.2d at 630.

Ðe See infra notes 340 - 348 and accompanying text.ttn See genaally Rrs.rR.r¡vrxr (Frnsr) oF ToRTs ç 552 (2011) (discussing the

tort of "Information Negligently Supplied for the Guidance of Others); ¡ee also Oddiv. Avco Corp.,947 F.2d 257 (7¡h Cir. 1991) (finding financial advisor liable for an

error in "simple number crunching").rrt REsr¡T¡vnNr (F¡nsr) or Tonrs $ 5 5 2 (201 1).

49

50 Haruard Jomnal of Sports & F.nterhinnenl laut / VoL 3

may attempt to sue their advisors for breach of an express warranty.r'" In

addition, where an advisory service proviclcs aclvice in the f<lrm olan analyti-cal tool, such a tool might be deemecl to bc a "good" under the Unift¡rmCommercial Code,'aj and thus the purchaser may sue adclitionally i[the tool

fails to meet either an implied warranty of merchantability,'1r <.rr an im¡>liccl

warranty of fitness for a particular purpose.trt

Given these contract-law risks, fantasy s¡rorcs advisors are always besr

advised to try to minimize their potential liabilities by clrafting clear "clis-

claimers."ra6 One of the better disclaimers of liability in the context offantasy sports advice appears on the Bloomberg Sports website ¡.rncler itsTerms and Conditions of Service.'1' This disclaimer requires all use¡s to"bear all risks associated with the use of such material, inclucling, witl'rot¡t

limitation, any reliance on the accumcy, completeness, or usefulness of such

material," and to agree that "neither Bloomberg nor its affiliates make any

warranty of any kind, express or implied, as to the services or results to l¡eattained . . . [andJ disclaims all express or implied warranties."rr* In many

courts such a disclaimer if clear and conspicuous would be deemed valid.

ir2 J¿¿ CBS lnc. v. Ziff-Davis Publ. Co.,75 N.Y.2d 496,503 (1990) (defining a

contractual warranty as "an assurance by one party to a contract ofthe existence ofafact upon which the other party may rely").

ì{i Many courts have held that computer software qualifies as a "good" underArticle 2 of the Uniform Commercial Code (UCC) and thus contracts for analyticaltools, such as those provided by Bloomberg Sports, will most likely be interpretedbased on the UCC, where adopted by the relevant state. See, e.g., Advent Sys., Ltd.v. Unisys Corp., 925 F.2d 670, 67J (3rd Cir. 1991) (finding computer softwaresubject to Article 2 of the UCC because the fact that a computer program "may be

copyrightable as intellectual property does not alter the fact that once in the form ofa floppy disc or other medium, the program is tangible, moveable and available inthe marketplace"); bu see Pearl Invs., LLC v. Standard I/O, Inc,, 257 F. Supp. 2d

326,353 (D. Me. 2003) (If the computer software in question is custom designed, a

court may find the predominant purpose of the transaction was the design services).

'{' u.c.c. ç 2-314 (1992).r{' u.c.c. ç 2-315 (1992).t16 SeelJ.C.C. $$ 2-316, (noting, in the context of goods, the possibility of dis-

claiming warranties); Burr v. Sherwin \üØilliams Co,,268 P.2d 1041,1049 Q954)(If a merchant wishes to do so, he must disclaim warranties in a way that makes itclearly known to the buyer.).

rt7 BlooMs¡RGspoRTs.coM, https://www.bloombergsports.com/frontoffice(click on terms of service) (last visited October 21, 2011).

,1" ld.

2012 / A Sltort Treatise on Fønîasy Sports and tlte Law

C, Fantasy Sþorß Insarance

Similarly, fantasy-sports insurance businesses need to ensure that theirservices are deemed, under state law, to be bona fide insurance contracts and

not a disguised form of illegal gambling.]ae Under most state laws, bona

fide insurance contracts must conform to two doctrines: the "doctrine ofinsurable interest" and the "principle of indemnity."rtu The "doctrine ofinsurable interest" requires that any insurance contract involve "some sig-nificant relationship between the insured and the person, the object, or the

activity that is the subject of an insurance transaction."3tr Thus, in apply-ing the "doctrine of insurable interest," a court will void an insurance con-

tract "where an insurance policy is obtained by a party who has no interest

in the subject of the insurance."ltt In addition, the principle of indemnityrequires that "the amount of insurance benefits paid when a loss is sustained

by an insured party is not to exceed the economic measure of the loss."itrAccording to one treatise on insurance law, "among the potential evils thatwere originally regarded as an undesirable consequence of insurance con-

tracts which permitted a net gain by an insured was the prospect that such

transactions would be used for gambling."3ta

Fantasy sports insurance presents a close call under the "doctrine ofinsurable risk."3tt On the one hand, sports participants have no direct rela-

tionships to the lives or health of the players on their fantasy sports teams.

'nt Robert E. Keeron & ¡{lan I. \ü7idiss, INsuRa¡{cs Lav: A Gulnr To FuNp¡-MENTAL Pnrucrnrns, Lnc¡r DocrnrNes, lNo Cor'r¡rarRc¡ar Pn,{crIcES $8.1(a),930(Student ed., \Øest Publ. Co., 1988) ("In the United States, administrative regula-tion ofinsurance has been and conrinues to be primarily the responsibilities ofstateauthorities.").

tto See infra notes 351 - 3J4 a¡ accompanying text.

"' Keeton & \ü7idiss, tlpra note 349, ar. L35-36.3t2 Ruse v. Murual Ben. Life Ins. Co., 26 Barb. 556,561 (N.Y. 1361) (voiding

an insurance policy where the party taking the policy has no interest in the life ofthe insured).

"' Keeton & \üflidiss, saþrd rlote)49,^t 135 (noting thar ir "is now agenerallyaccepted fundamental tenet of insurance law that opportunities for net gain to an

insured through the receipt of insurance proceeds exceeding a loss should be re-garded as inimical to the public interest.").

3t1 Keeron & tù(/idiss, silþrd. note 349, at 136- 37 ("[I]nsurance transactions thatappeared to be wagers generally were declared to be illegal in the United States byjudicial acrion, even though rhere was usually no basis for these decisions in statu-tory prohibitions.").

3tr Id. at 135-36.

5l

52 Hantard Joarnal of Sports €t Enteruinnent Laut / Vol. 3

However, fantasy sports participants seem to have a real financial stake in a

property right pertaining to the staristical output of these atlrletes.Fantasy sports insurance also presents some uncertainty r.rncler the

"doctrine of indemnity."r6 To meet the requirements of this <loctrine, fan-

tasy sports insurance agencies need to make sure that their ultimate payout

never exceeds the difference between the expected winnings <lf a given fan-

tasy sports owner if a parricular player remains healthy throughor.rt the sea-

son, and the expected winnings of that same fantasy sports owner given tlreoccurrence of the insurable event.

D. Fantasy Sports Dispute Ilesohtion

Finally, fantasy dispute resolution services face the lowest risk of legalliability among ancillary fantasy sports businesses.tst Any decision providedby a fantasy sports dispute resolution service may be challenged in the

courts, on the basis that the dispute arbitrator acted arbitrarily, capriciously,fraudulently, or in violation of public policy.t5* Nevertheless, the conrts

will probably look favorably upon fantasy sports dispute resolution services

because these services not only allow courts to avoid using their limitedresources on resolving fantasy sports disputes, but also allow courts to avoid"becomling] marred down in what has been called the 'dismal swamp"' of a

particular private association's rules.ite

VII. Corqcrusro¡,¡

\ùØhen Daniel Okrent hosted the inaugural Rotisserie League baseball

draft in April 1980, there was little need for him to consider how legal risks

applied to his "goofy" comperirion.i6u However, with the fantasy sportsindustry today valued at $5 billion, an understanding of the legal risks thatapply to fantasy sports games has become imperative.

tt(' Id. (¡oting thar it "is now a generally accepted fundamental tenet of insur-ance law that opportunities for net gain to an insured through the receipt of insur-ance proceeds exceeding a loss should be regarded as inimical to the publicinterest.").

137 See infra notes 358 - 359 and accompanying text.

t'" See, e.g,, Aviles v. Charles Schwab & Co., 2010 VlL 1433369 (S.D.Fla 2010),

ac *7 (discussing grounds for challenging a neutral arbitrator's decision both underthe Federal Arbitration ,tct and under common law).

]te Crouch v. National ,{ss'n for Stock Car ,{uto Racing, 845 E.2d 397,403 Qð.Cir. 1988).

160 Townsend, silþra note 25, at LC.

2012 / A Short Treatise on Fantasy Sports and tlte Laut

For fantasy sports host sites, one source of lcgal risk emcrges from U.S.

gambling laws. \ülhile there are few cor¡rt opinions that aclclress lrorv gam-bling laws apply to fantasy s¡rorts host sites, host sites can nevertheless mini-mize their potential liability uncler gambling laws by structr.rring contests ina way that either (1) does not awarcl prizes or (2) allocates players thr<-rugh a

"traditional auction," and lasts for at least a frrll professional sports season.

Another source of legal risk comes from intellcctual 1>roperty laws.

Host sites can minimize their intellectual propcrcy risks by ensuring tlrattheir game scoring systems do not infringe on existing patents and that theirwritten and illustrated content does not infringe on existing copyrights, as

well as by obtaining licenses from the requisite players associations before

using player names in their games, and obtaining licenses from the requisitesports leagues before using individual team trademarks.

For fantasy sports participants, the main sor¡rce of legal risk entails thepossible disgorgement of fantasy winnings under Queen Anne statutes,which disallow winners in gambling contests from keepin g prize money.Fantasy sports participants should avoid competing in high-stakes fantasy

leagues in states that maintain Queen Anne statutes.

Fantasy sports participants are also at a potentially heightened risk ofunemployment and bankruptcy. Thus, fantasy sports parcicipants shouldfamiliarize themselves with workplace policies related to participating and

soliciting participation in fantasy sports leagues, as well as with how, if at

all, fantasy sports entry fees would compromise their personal finances.

For ancillary fantasy sports businesses, their main legal risks relate togambling laws, as well as traditional contract and tort law. Specificâlly,fantasy sports treasury sites risk liability if they fail to properly turn overwinnings or they collect and dispense funds in a way that violates the rù(/ire

Act. Fantasy sports advisory sites risk liability under both tort and contractlaw if their websites make inaccurate representations about their services.

Fantasy sports insurance businesses risk liability under gambling law if theirinsurance policies are found to not serve a legitimate purpose of insurance,

but rather to be a disguise for illegal gambling. Meanwhile, fantasy sportsdispute resolution businesses run the risk of having their arbitration deci-

sions challenged in federal court.Recognizing all of rhese legal risks, it is no longer fair to view fantasy

sports as simply a "tongue-in-cheek exercise."r6t However, for the manyprofessional sports fans who wanted to experience a true simulation of theprofessional sports marketplace, they now have it: legal risks and all.

t6' v/alker, tîtpra note 5, at lD.

t3