Despite the United States District Court for the District of New Jersey's injunction against the State of New Jersey concerning its sports gambling laws (or lack thereof), Monmouth Park has announced plans to soon allow for fantasy sports betting at its racetrack. Although it is currently unclear how New Jersey's fight to allow legalized sports gambling may impact the move, Monmouth Park officials have nevertheless decided to push forward with its plan for fantasy sports betting.
Federal Fantasy Sports Betting Liability Issues
The Unlawful Internet Gambling Enforcement Act of 2006 ("UIGEA") prohibits any person engaged in the business of betting or wagering from knowingly accepting payments in connection with the participation by another person in unlawful Internet gambling. Violation of this statute may result in criminal penalties, including monetary fines and imprisonment for up to five (5) years. However, the UIGEA does contain a "carve out" for fantasy sports contests.
First, for a fantasy sports contest to be legal under federal law, the outcome of the contest must be determined by the statistics generated by multiple athletes (on different teams) participating in multiple real-world sporting events. Accordingly, at a minimum, fantasy sports contests should require contestants to assemble a roster consisting of several athletes from more than one team and participating in more than one game.
Second, the prizes offered to the winners must be preset and not influenced by the amount of fees paid by the contestants, or the number of contestants in any given fantasy contest. While it might be tempting as an operator of a pay-for-play fantasy sports contest to treat the purse for each contest like a lottery pool – the more players that enter, the greater the prize – such a scenario would be in violation of applicable law. Instead, fantasy sports contest operators must set a prize amount prior to the commencement of the particular contest, and not modify that amount based on the number of entrants participating in the fantasy contest or the amount paid in entry fees.
Is Monmouth Park's Fantasy Sports Betting Legal
The legality of fantasy sports games that are played for money is clear on the federal level, but remains unclear in a handful of states, where laws, and interpretations thereof, are in a regular state of flux. Fantasy sports betting in the State of New Jersey appears to be on sound legal ground and, as much, it seems unlikely that the Attorney General of the State of New Jersey will take any action to block Monmouth Park's fantasy sports betting venture.
Sports and Fantasy Sports Betting
Fantasy sports betting has been a hot topic of late, and both the National Hockey League and Major League Baseball have taken steps to promote fantasy sports betting. While lawmakers in the State of New Jersey are actively pursuing the legalization of sports gambling to help their struggling casinos and racetracks, Monmouth Park's planned fantasy sports betting venture is being set in motion to bolster revenues pending full-blown sports gambling coming to the State at some point in the future.
If you are interested in learning more about this topic or pursuing a fantasy sports venture, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
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