Driver Kyle Busch celebrates after winning the Monster Energy NASCAR Cup Series Toyota Owners 400 at Richmond Raceway on April 21, 2018 . (Photo by Robe
FanDuel has announced the launch of a new daily fantasy NASCAR game even though, under current law, the product’s legality is murky or even dubious.
The NASCAR DFS game — which chief rival DraftKings has been operating since 2015 — launches on Tuesday with a free contest for this Sunday’s race at Talladega.
The 2006 Unlawful Internet Gambling Enforcement Act (UIGEA) included a specific carveout that protected fantasy sports gaming from the Professional and Amateur Sports Protection Act (PASPA) by permitting fantasy so long as the games required skill and “multiple real-world sporting or other events.” This was an effort to diffuse the risk of any one game or match being rigged or thrown based on a gambler’s influence. These NASCAR DFS games are decided by a single race.
Fantasy sports legal consultant Marc Edelman — a professor of law at Baruch College’s Zicklin School of Business who has taught a seminar on fantasy sports — said nothing has changed with the law but indicated three factors that “may reduce the legal risk of FanDuel entering daily NASCAR.”
The first is the prospect of the Supreme Court’s pending ruling on PASPA; if the law is overturned, that concern would “evaporate,” Edelman said.
Second is precedent. DraftKings has not yet received a legal challenge from the federal government or any state. “Even though nothing has changed in the law itself, the fact that FanDuel’s competitor has operated these games for so long without federal challenge may have led the lawyers over at FanDuel to decide that the benefit of entering this market is greater than the legal risk,” he said. “At some point, irrespective of whether these contests indeed violate the black-letter law — which, I would argue, they do — a company such as FanDuel has to ask itself the question of whether they believe it’s likely they will face a challenge.”
Third, Edelman said there is an argument to be made that, if an activity is compliant with state law where it is offered, then that renders UIGEA irrelevant. DraftKings and FanDuel have been extremely active, along with the Fantasy Sports Trade Association, in employing lobbyists to engage just about every state legislature, with many states having passed bills that sanction a broader range of contests.
“If a client were to ask me whether operating one-race fantasy NASCAR in 40 states is an activity that’s compliant with state and federal law, my answer is clearly ‘almost certainly not,’ however, the seemingly strong black-letter conclusion that this activity is illegal needs to be balanced against the reality that neither the federal government or any state government is going after DraftKings, even though DraftKings has operated this seemingly illegal activity for a very extended period of time in the public domain,” Edelman said.
A FanDuel spokesman responded to a SportTechie request for comment with the following statement: “FanDuel adheres to all local and federal guidelines regarding fantasy sports and has implemented important consumer protections for its users. Our regulatory framework for fantasy sports has led to more states passing legislation protecting fantasy sports ensuring the continued growth of the industry. We are excited about the legislation passed in 18 states and feel that that this is the right time to launch a NASCAR contest ahead of the GEICO 500 at Talladega SuperSpeedway.”
Former FanDuel CEO and board chairman Nigel Eccles responded to a question on the fantasy site RotoGrinders.com in 2015 and said that the company’s lawyers viewed the legal status of NASCAR DFS as “very negative.” Eccles left the company in late 2017.
Legal Sports Report cited sources indicating that DraftKings CEO Jason Robins hinged his defense of NASCAR DFS on the fact that it does not violate any state law. NASCAR and DraftKings have an official partnership, naming the site as the official DFS provider of the auto-racing circuit.
