by Miles Jolley, Associate Staff
Your initial response to this question is probably, “No way bro!” But answering this question under Virginia law may not be as easy as it seems. If your league requires an entry fee and then allocates the pot to your league’s best, you may be breaking Virginia law.
Illegal betting in Virginia is prohibited by statute. The statute reads, in pertinent part: “‘Illegal gambling” means the making, placing or receipt of any bet or wager . . . made in exchange for a chance to win a prize . . . dependent upon the result of any game, contest or any other event the outcome of which is uncertain or a matter of chance.” Broken down, this means that if you put down money in order to win a prize (more money), and winning is dependent upon events out of your control, you are an illegal gambler in Virginia. However, there are exceptions in the code as well. The relevant exception to Virginia’s gambling law reads: “Nothing in this article shall be construed to prevent any contest of speed or skill between men . . . where participants may receive prizes or different percentages of a purse . . . dependent upon their position or score at the end of such contest.” This exception carves out immunity for people who involve themselves in games of skill for gain. The big difference between these two statutes is whether the contest involves a game of chance or skill. So the title question boils down to another question: what are fantasy sports, games of chance or games of skill?
There are certainly elements of both involved. On the skill side, fantasy sports require fantasy owners to evaluate hundreds of real-world players’ potentials before the draft to determine when to, if at all, draft certain players. Additionally, players are constantly assessed during the season for trade value, starting spots, and free-agent acquisitions. All of this seems to include some sort of skill. Owners need to interpret a player’s past performance, future matchups, etc. Any first-time owner will tell you this is not easy, and requires loads of skill and experience.
On the chance side, all of that assessment hinges on the performance of a real-world player. Everything about this aspect of fantasy sports is out of the owners’ hands. A player’s performance depends on coaching decisions, injuries, the other team’s performance, etc. Again, any fantasy owner can tell you how unpredictable fantasy sports can be. This chance is the reason gambling is illegal in most states; as wagering money on unknown outcomes is seen as morally defect. The distinction between skill and chance is what this issue hinges on, but federal law may provide a guiding light for future Virginia statutes.
Betting on fantasy sports is not illegal under federal law. In fact, there is a special carve out for this activity. In 2006, the Unlawful Internet Gambling Enforcement Act established widespread provisions limiting online gambling. However, members of Congress (I wonder how contentious that fantasy league must be) made a specific exception for fantasy sports. Betting is allowed on fantasy sports so long as rosters aren’t based entirely on the rosters of real sports teams, prizes are established at the outset of the league, outcomes are based on the skill of fantasy owners and the collective statistical performance of several individuals, and so long as outcomes aren’t based entirely on one team’s or one individual’s performance. Virginia, if it so chooses, can use this statute as an example to exempt fantasy leagues from its illegal gambling law.
While nobody in Virginia has ever heard of fantasy sports leagues being prosecuted, it still could very well be illegal.