Multi-Billion Dollar Startups FanDuel and DraftKings Pave the Way for Legalized Sports Betting

Fantasy sports fanatics, rejoice, as a safe and legal way to wager on fantasy sports has been established with sports gambling starts ups like FanDuel and DraftKings, who are taking advantage of federal provisions regarding the sport as legal. Perhaps, eventually, even paving the way for the legalization and regulation of all sports betting.

Fantasy Sports

Millions of participants from celebrities to professional athletes to even politicians, in the US and Canada, participate in fantasy sports, with numbers growing every day.

Fantasy sports allows participants to build a fantasy team comprised of real-life players, utilizing real-time stats. The results of the game are dependent upon the individual performance of the chosen players, with points accumulating for the players actual game performance.

And just like the real NFL, NHL, MLB and more, the success of the fantasy team is dependent upon the fantasy owner’s management of all aspects of the team. The fantasy owner can bench, cut or add players and trade players with others players in the league, all in an effort to see their team on their way to a fantasy championship win.

Under today’s laws, fantasy sports participants now have the opportunity to bet and win big on their favorite fantasy sports teams, thanks to startups like DraftKings and FanDuel.

Federal Regulations and Sports Betting

Outside of Montana, Delaware, Montana and Oregon, sports gambling is considered illegal, however, fantasy sports may qualify as an exception to the rule.

Federal Regulations and Fantasy Sports Betting

Under federal guidelines, fantasy sports is defined as legal as long as it remains a game of skill and not game of chance.

In 2006, the federal government passed the Unlawful Internet Gambling Enforcement Act, which prevents gambling over the internet, but establishes “fantasy sports” as legal as long as it operates under the stipulation that:

(a). it is not dependent solely on the outcome of any single sporting outcome of any single sporting event or non-participants singular individual performance in any single sporting event, and:

(b). it has an outcome that reflects the relative knowledge of the participants, or their skill at physical reaction or physical manipulation (but not chance),and, in the case of a simulation sports same, has an outcome that is determined predominantly by accumulated statistical results of sporting events, including any non-participants individual performances in such sporting events.

Since fantasy sports results are determined utilizing real-life players and points are based on real-game performance, by law, it qualifies as a game of skill. Therefore, fantasy sports-betting is considered legal.

DraftKings and FanDuel

FanDuel and DraftKings, both backed by venture capitalists with investments in excess of a billion dollars, are daily fantasy-sports sites that allow participants to place legal bets on fantasy sports teams. Since their launch, both sites have grown in popularity and are even endorsed by major networks and sports leagues.

Fantasy sports are not only backed by millions of sports fans, including professional athletes and celebrities, eager to see the outcome of their favorite fantasy picks, but it is also heavily endorsed by major American sports leagues as well. Adam Silver, commissioner of the National Basketball Association, has gone on record himself endorsing, not just fantasy sports sites like DraftKings and FanDuel, but the legalization of sports betting altogether (The New York Times).

Then there’s major networks, who are also adamant about showing their support of sports betting with major endorsements in fantasy sports sites like DraftKings and FanDuel. In fact, one of DraftKings most prominent investors is none other than Fox Sports. Other DraftKings investors include Jerry Jones of the Dallas Cowboys and Robert Kraft of the New England Patriots.

FanDuel is no exception, boasting major investors like NBC sports and Comcast as well as NFL’s Jacksonville Jaguars, who began the season with FanDuelVille, a private area hosting 3,000 fans, who tracked fantasy football stats while enjoying the game and cocktails.

What Does It All Mean?

It is estimated that approximately $400 billion in profits are illegally wagered on sporting events annually, which serves as a testament to the desire of sports fans to wager on their favorite teams. Fantasy sports sites like FanDuel and DraftKings provide a safe and legal way to bet on professional sporting events.

Not only are these startups estimated to bring in hundreds of millions in earnings, but their stern backing by major networks and leagues are believed to help drive interest in the game and spur continued growth and maybe event prompt traditional casinos to push for the same legalization of traditional sports betting.

Though both startups are still in the early stages of development, some believe it is possible they may still be subjected to legal probing, as startups often run the risk of government intervention to ensure legality. However, given their backing by major establishments, which attests to their business legitimacy, and the vast profits to be gained by leagues, teams and the government, it may be safe to conclude that these 2 fantasy sports-betting startups are here to stay.

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