FanDuel wins big victory for daily fantasy sports’ legality

District court claims the fantasy site was not a “winner” under the Illinois Loss Recovery Act

At this point, even if most people don’t play fantasy sports, they at least know what it is: You pick a team for the entire season based on real-life players, you make trades within your league, and you get made fun of by your peers if you finish in last place. It’s that simple.

However, daily fantasy sports are slightly different. You only select a team for a given day, and often, you pay an entry fee to compete against others for a daily grand prize. For many websites such as FanDuel.com, daily fantasy games are the lifeblood of their company.

But recently, a U.S. district court answered a very important question: How is this distinguishable from gambling, and are daily fantasy sites liable to the same laws as casinos such as the Illinois Loss Recovery Act?

Turns out, they are not. On Oct. 9, the U.S. District Court for the Eastern District of Illinois ruled in favor of the FanDuel following a lawsuit claiming the company’s daily fantasy games were illegal games of chance.

The court ruled in FanDuel’s favor on mainly two accounts. First, the court ruled that plaintiff Christopher Langone “failed to make even a bare assertion that he could recover more than $75,000,” the minimum to bring legislation under the Illinois Loss Recovery Act. Second, the court claimed that FanDuel was not a “winner” based on the Act, but rather the operator of an online gambling site, similar to a 2007 ruling in favor of CBS concerning CBS Sports’s full-season fantasy games.

According to Forbes contributor Marc Edelman, the court skirted around the key question of whether daily fantasy sports contests are illegal games of chance. This is important to legal counsel because it opens up the possibility for lawsuits on different grounds, especially from a plaintiff who reaches the $75,000 threshold.

Many smaller sites such as FanDuel, StarStreet, Draft Kings and others run daily fantasy games, but larger fantasy sports giants such as ESPN and NFL.com are starting to get into the daily fantasy game as well. By not answering the key question at hand, the district court opened these companies up to potential litigation down the road. Another suit, filed by Langone, against the daily fantasy site DraftDay is ongoing in Illinois courts, and Edelman speculates that suit may have a better chance of success.

Through his lawyer, Langone said he plans to pursue the FanDuel case. The 7th Circuit Court of Appeals has not yet commented on whether it will pick up the case. 

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