September 19, 2016
The Michigan State House of Representatives recently introduced legislation proposing to exempt certain fantasy sports contests from the prohibition against gambling contained in the State’s penal code. The proposal is the second attempt to legalize fantasy sports contests within the State, after an earlier bill was introduced into the State Senate but never acted upon.
What is the key component to Michigan’s proposed legalization?
The bill contemplates an exemption from State gambling law prohibitions for fantasy sports contests in which the prize is $3,000 or less. Furthermore, the bill states that in addition to the monetary threshold under which the prize must remain, fantasy sports contests must also satisfy the conditions expressly set forth in the federal Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”), a statute on which we have written extensively. Fantasy sports contests that comply with UIGEA’s mandates must meet the following conditions:
- all fantasy sports league prizes must be established and made known to the participants in advance of the game or contest, and the value of the prizes cannot be influenced by the number of participants or the amount of fees they pay;
- all winning outcomes must be determined predominantly by accumulated statistical results of the performance of athletes participating in multiple real-world sporting events;
- no winning outcome may be based solely on any single performance of an individual athlete in any single real-world sporting event; and
- no winning outcome may be based on the score, point-spread or performance of any single real-world team or combination of such teams.
Keeping Your Fantasy Sports Venture Compliant
Fantasy sports contests and the laws and regulations that govern them, continue to grow and evolve. Michigan’s most recent legalization effort follows successful legislative pronouncements in states including, but not limited to, New York, Colorado, Mississippi and Indiana. Comparable initiatives are underway in statehouses across the country including, among others, Wisconsin, California and Florida. Against this backdrop, it remains imperative to engage competent legal counsel to become/remain compliant with applicable law when setting up or operating fantasy sports contests.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.